Commercial property

What's the difference between Section 106 Agreements and Cambridge City's proposed CIL?

When new developments happen the developers are usually asked to pay a contribution towards the funding of associated infrastructure.

Historically this was through 'Section 106' agreements negotiated between local authorities and developers although the Planning Act  2008 introduced a new way of doing this - the Community Infrastructure Levy, or CIL. 

Section 106 

S106 contributions remain the primary means to ensure that developments pay for infrastructure that supports them. However, only 7% of developments attract a S106 agreement and agreements are by their nature uncertain in terms of what they can deliver.  S106 contributions are negotiated between the local authority and the developer, and can pay for anything from new schools or clinics to roads and affordable housing.  

The Community Infrastructure Levy (CIL) 

Introduced by the Planning Act 2008, local authorities are allowed but, not required, to introduce a CIL. CIL is different to S106 in that it is levied on a much wider range of developments and according to a published tariff schedule. This spreads the cost of funding infrastructure over more developers and provides certainty as to how much developers will have to pay.  It  is simpler and more transparent. 

According to Cambridge City's draft CIL announced recently, developers of residential schemes within Cambridge City Council's administrative area will be subject to a community infrastructure levy (CIL) rate of £125 per square metre draft charging schedule (DCS). In addition to the proposed city-wide residential rate, which would also apply to student accommodation uses, the Council has set a draft rate of £75 to apply to retail developments. A nil rate levy would apply to all other types of development if the rates in the DCS are eventually adopted. 

CIL is now the preferred method for collecting pooled contributions to fund infrastructure. S106 agreements will be scaled back to just cover site regulation and site specific issues (whether or not the local authority has introduced a CIL) and will be subject to a new statutory test post 2014.  After April 2006, s106 agreements with more than five payments may not be able to recover all contributions.  If planning permission was granted on a date before the introduction of the CIL in that area, then CIL will not apply.  CILs will cover the generic payments that a development imposes.  S106 based tariffs are regarded as likely to become problematic and local authorities are being encouraged to adopt a CIL.  The advantage of the CIL is the rate is transparent and does not need to be negotiated.  To ensure developers do not pay for the same infrastructure under both schemes, local authorities will be required to publish a list of what will be funded by the CIL and those items cannot be covered by a S106 agreement.   

The consultation is open for responses until 9 December if you want to have your say, representations must be submitted by this date. The Council hopes to implement CIL from 1 April 2015. 

All seems reasonably sensible.  However, with the introduction of the new system there is likely to be some confusion through transition. Developments subject to a section 106 that have not commenced before April 2014 may have to be subject to a planning appeal.

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