S106 Contributions Required
As part of any development, the local plan requires you to make contributions towards community infrastructure, including education, open space, health, affordable housing and various offsets including biodiversity, phosphates and others. This is to ensure the development is sustainable and is adequately offsetting its local impact.
However, these contributions can very rapidly stack up to phenomenal figures, particularly as there is often no central organisation of these requests – different stakeholders will simply submit individual ‘shopping lists’ of contributions required, often justified in fairly arbitrary manners,which planning officers will rarely consider in any depth.
The Challenges
Without a central organisational approach to these contributions, they can often overwhelm the viability of open market schemes.
For 100% affordable housing schemes, cumulative s106 contributions can render these entirely undeliverable.
This is why the CIL Regulations provide an exemption at Reg 49 for affordable housing which means that CIL should not be payable on such schemes.
However, where CIL has not been adopted, there are often considerable challenges in reaching planning approval and navigating the various contributions and their justifications.
How can we help?
We provide an in-depth vetting service for any s106 contributions sought on developments.
We will review the justification provided against the method and justification often hidden deep in the local authority’s documentation.
Often contributions cannot be justified against the legal criteria of CIL Reg 122, and therefore these must be dropped by the local authority entirely.
9 times out of 10, there will also either be errors in calculation, outdated data, or flawed justification which requires recalculation resulting in considerable savings which considerably improve the deliverability of affordable housing and open market schemes.
What about viability?
Once all s106 contributions are fully justified, the next step is to consider whether the full amount combined with other policy costs is viable and deliverable. We run a viability assessment on the final agreed contributions level to determine whether this is viable. If it is not, or marginal, then we discuss amendments to the scheme to support its deliverability. This can include tenure changes (from social rent to shared ownership for example) or gentle densification on part of the site to improve viability.
Case Study
We recently acted for an applicant delivering a medium sized 100% affordable housing. C.£500,000 in various contributions, largely dominated by education requirements, had been requested by the local authority. The registered provider partnering with the applicant highlighted that this was considerably outside the usual range of contributions sought. S106 Management were instructed to review the sought contributions and their justification fully against the referenced evidence base and calculative method.
It rapidly became clear that the contributions had been miscalculated, relying on a historic average figure which had not been adjusted for real world circumstances. Our report concluded the contributions should be reduced by c.£300,000. A viability assessment was also run demonstrating the level of contributions sought would require a change in tenure to intermediate to be deliverable.
Through extensive discussions with the local authority and requesting parties the contributions were agreed to be unjustified and these were reduced to a more sustainable level.
Never accept a contribution request at face value.
If you are being asked for high s106 contributions, contact us today for assistance.
