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Hot Topic Highlight - Section 106 and CIL

Updated: Oct 30, 2023

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What is today's blog about?

This week, we are looking at Section 106 and CIL and the differences between them. During our mock interviews this Autumn, this has been a source of confusion for many candidates - so make sure you read this prior to your final assessment interview!

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What is Section 106?

A Section 106 agreement (under the Town & Country Planning Act 1990) is a legally enforceable agreement negotiated between a local authority and a developer on a site-by-site basis. They are attached to land subject to planning permission and aim to mitigate the negative impacts of development.

When should S106 agreements be used?

Revised NPPF 2 states that ‘planning obligations (i.e. S106 agreements) should only be used where it is not possible to address unacceptable impacts through a planning condition'. They must be:

  • Necessary to make the development acceptable in planning terms

  • Directly related to the development

  • Fairly and reasonably related in scale and kind to the development

What are Section 106 contributions used for?

S106 contributions are used to pay for site-specific infrastructure supporting a development, including affordable housing.

What is CIL?

The Planning Act 2008 introduced the Community Infrastructure Levy (CIL) in April 2012, to fund infrastructure through planning charges. It is a tariff-based approach which the Government considered to be more transparent, fairer and quicker than the existing S106 system.

Where is CIL payable?

CIL is payable where a levy charging authority has published a CIL charging schedule within their Local Plan. It will set out specific rates for different types of development, e.g. retail, offices and residential. The rate should have a positive economic effect, i.e. it should not threaten the viability of development in the local area. 

What is CIL charged on?

CIL is charged on development which creates net additional floor space. It applies to developments with a Gross Internal Area of new build space over 100 sq m. It does not apply to new houses or flats, which will have CIL levied irrespective of size. 

What is CIL not charged on?

Developments creating less than 100 sq m of new build space (e.g. most conversions and changes of use), certain residential self build projects, social housing or charitable development meeting specific relief criteria, ‘zero’ rated buildings under a specific CIL schedule, some mezzanines and vacant buildings brought back into the same use. There is generally no CIL charge where the liability is less than £50.

What is CIL used for?

To fund new infrastructure within the CIL charging area (known as the Regulation 123 List), but not necessarily just the site-specific infrastructure supporting the subject development (unlike S106). It cannot be used for affordable housing provision. 

How do S106 and CIL differ?

S106 is still used for site-specific infrastructure and affordable housing, whereas CIL is used to fund wider infrastructure. S106 is sometimes paid alongside CIL (but never double charged), but only for infrastructure required to mitigate the specific impacts of a development proposal.

How can we help?

  • Head to our blog archive to access even more free CPD and AssocRICS and RICS APC training and support.

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  • Find out more about our bespoke AssocRICS and RICS APC training and support, before booking your free 15 minute consultation and signing up for your services online.

  • Not sure about signing up? Make sure you read what our recent successful candidates have to say in our Testimonials.

Stay tuned for our next blog post to help build a better you

N.b. Nothing in this article constitutes legal or financial advice.


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