Section 106 Payment Deferrals for SME Builders Prompts Mixed Reaction

Deferring Section 106 and Community Infrastructure Levy payments for small and medium-sized (SME) builders must not impact upon affordable housing in England, trade bodies have warned. But the Federation of Master Builders (FMB) has welcomed the move. 

The government announced on Wednesday that it will support smaller housebuilders and developers struggling with cash flow by allowing them to defer Section 106 and Community Infrastructure Levy (CIL) obligations. 

Section 106 and CIL are planning obligations which aim to mitigate the impact of new housing on the local community and infrastructure. These are paid by developers and housebuilders to local authorities prior to a home being built, and are then used to help build affordable housing and local infrastructure projects.

Housing secretary Robert Jenrick confirmed that the measure has been introduced to support homebuilding during the coronavirus crisis. 

What the Guidance Says

Local authorities have been advised to take a pragmatic and proportionate approach to enforcing Section 106 and CIL obligations to help remove homebuilding barriers and minimise the stalling of sites.

Late CIL payments accrue interest of 2.5% above the Bank of England’s base rate, and local authorities which charge CIL can order building work to stop when payments are overdue,