Planning

News - 04/09/2019

Changes to the existing Community Infrastructure Levy Regulations

We review the changes to the existing Community Infrastructure Levy [CIL] regulations, which came in on 1 September.

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Executive Summary

The existing Community Infrastructure Levy [CIL] regulations have changed on 1st September; resulting in a number of notable changes. The purpose of the amendment is to make the process more transparent and fair, both for local planning authorities (LPAs) and developers.

What is CIL?

The Community Infrastructure Levy provides a necessary tool that allows local planning authorities to deliver infrastructure, which supports development in the area. CIL should not be confused with Section 106 agreements. Whilst they too help deliver infrastructure they are often negotiated. The purpose of CIL was to bring in a mechanism that created a transparent and generic approach to all developments. However, given the number of changes to the regulations since their inception (almost annually) and the varying approaches of LPAs on adoption of CIL and the rates, it has been met with some scepticism.

The levy is collected from development proposals that:

  • Contain at least 100 square metres of new build;
  • Contain less than 100 square metres of new build that results in the creation of a new dwelling; and
  • Involve conversion of a building that is not in-use (see definition below), which results in new dwellings.

Whilst most developments fall under these categories there are a number of exemptions, exclusions and relief.

Councils who have adopted CIL, and not all of them have, are required to provide a CIL Charging Schedule. This allows them to control which types of development (e.g. residential) are chargeable. They can also choose which rates they wish to apply to certain types of development. On top of this, local planning authorities can charge different rates, depending on if they choose to implement a zoned charging schedule. This usually results in higher charges in city centres.

In large scale developments that are phased, each phase can be treated as an individual “chargeable development” provided this is agreed with the LPA in advance.

What are the changes?

The purpose of the changes is intended to make the process more transparent and less complex. As a brief overview the following changes are proposed:

Charging schedules (mainly for LPA’s)

  • Only one round of consultation will be required for a council’s draft CIL Charging Schedule
  • Consultation now makes it a requirement to invite comments from neighbourhood forums
  • Local planning authorities will be able to advertise their draft charging schedule online, as opposed to the previous requirement to take out an ad in a local paper.
  • There is now a defined process of requirements for an LPA seeking to cease their CIL Charging Schedule.

Amendments (S.73/MMA) related to CIL

  • increases in floorspace will only be charged at current rates (indexed) on the area of additional floorspace proposed and granted;
  • Any amendments that reduce floorspace will be reduced on the basis of the existing CIL rates when permission was granted (indexed);
  • There will be an ability to carry over relief or exemptions, following a S.73 approval;
  • Developers will be able to offset any resulting increases in Levy liabilities in one phase against decreases in liability in another phase (abatement)
  • An applicant will be able to appeal the calculated notional relief (related to amended permissions) by a relevant body; if they disagree with the determination.

CIL VS Section 106

  • Removal of the pooling regulations (previously only 5 pooled contributions from section 106 obligations could be used – this was the reason many LPAs established their CIL); and
  • Introduction of Infrastructure Funding Statements (intended to add transparency to what infrastructure improvements the money captured has been used to fund).

Other

  • LPA’s can now charge a fee for monitoring and reporting the contributions that have been collected
  • In instances where a developer fails to submit a commencement notice, where a relief or exemption applies, a reduced penalty will be applied (20% of the value of the relief/exemption or a £2,500.00 fine – whichever is lesser) – benefiting the developer
  • Introduction of the RICS CIL Index (bespoke index related to CIL) – to be released in October 2019. 

What do the changes mean?

The key changes affecting developers will be in relation to how CIL is applied in an amendment scenario (S.73/MMA). In such a scenario it is worthwhile being aware that the indexation will, as of October 2019, relate to the newly proposed RICS CIL Levy Index.

However, it will be interesting to see how the overlap of CIL and section 106 will play out. There is a concern there may be double counting for authorities who operate CIL in conjunction with S.106 agreements; but this concern exists already. We may see LPAs modifying their charging schedules and Section 106 given the removal of the pooling restriction. The process is now easier with one round of consultation.

With a more lenient approach to developers who have not notified LPA’s of commencement of development a more reasonable approach has been administered. However, the key here is to ensure your consultants are proactive in advising you in this particular scenario.

Be aware that LPA’s can now propose monitoring fees. These will of course need to be reasonable and appropriate. It is worth asking your consultant to review these fees which could be amongst the jargon in any new Section 106 agreements.

It will of course be interesting to see how clear the Infrastructure Funding Statements are in helping the public and developers understand how the obligatory funds are being divided and spent. This could perhaps lead to challenges, and or attempts, to recoup funds not spent.

Further information 

CIL can be a daunting and complex area of planning. For any advice related to CIL please get in contact with the Planning Development and Regeneration (PDR) team at LSH, details in the Get in Touch section below. We have a wealth of experience in advising on CIL/S.106; as well as monitoring the likely impacts to legislative changes. We would be happy to help answer any questions you may have.

 

 

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