What is the difference between a CIL and a section 106 in UK property development?
In the realm of UK property development, both Community Infrastructure Levy (CIL) and Section 106 agreements are essential tools for local authorities to mitigate the impact of new developments on local communities and infrastructure.
While both mechanisms serve the purpose of funding infrastructure projects, they differ in terms of scope, application, and flexibility.
Community Infrastructure Levy (CIL)
This is a standardised, non-negotiable charge imposed on new developments by local authorities, based on a pre-determined rate per square metre of new build floor space. This levy is designed to help fund a wide range of infrastructure projects, such as schools, parks, and transport facilities, that are necessary to support the growth of local communities.
CIL applies to most types of development and is typically charged at a flat rate, offering transparency and predictability to developers. It is worth noting that some exemptions and relief measures are available for certain types of developments, such as affordable housing and self-build projects.
Section 106 agreements
Also known as planning obligations, are negotiated agreements between developers and local authorities that are tailored to the specific needs of a particular development site. These agreements typically require the developer to make contributions, either in the form of financial payments or in-kind provisions, to offset the negative impacts of their development on the community and environment. Section 106 agreements may cover a wide range of issues, such as affordable housing provision, highways improvements, or public open spaces.
These agreements are more flexible than CIL, as they can be negotiated on a case-by-case basis to reflect the unique characteristics and requirements of each development. However, this flexibility can sometimes lead to longer negotiation periods and uncertainty for developers.