Community Infrastructure Levy – Recent Reforms
The Planning Act 2008 (“PA 2008”) introduced a discretionary planning charge known as the Community Infrastructure Levy (“CIL”) and the CIL Regulations 2010 (SI 2010/948) came into force on 6th April 2010. Please refer to our previous article on this topic dated 22nd June 2012 which provides a detailed overview of the CIL provisions - https://www.glovers.co.uk/insights/news/the-community-infrastructure-levy/.
Out of approximately 400 Local Planning Authorities (“LPA”) in England and Wales, roughly 150 have now either established, or are in the process of establishing a formal CIL system. This number includes the large majority of London Boroughs and authorities on the South Coast of England. This figure has increased significantly since our last article when only 6 LPAs had published schedules as at 1 May 2012.
The Current Position
The aim of the CIL is to ensure that owners and developers of land fund (in whole or in part) the costs incurred in providing infrastructure to support the development of the land in question. Where the CIL is adopted by an LPA, it is expected to replace much of the funding provided under section 106 agreements. Where the CIL is not adopted by an LPA, section 106 agreements may continue to be used in the normal manner for approximately the next twelve months.
The use of Section 106 Agreements as the predominant method to seek financial contributions was due to be scaled back by April 2014. However, in October 2013 the Department for Communities and Local Government announced that this deadline would be postponed until April 2015.
Amendments to the Legislation
Subsequent to the original 2010 Regulations (and since our original article) there have been a series of amendments, the most significant of which are detailed below:
• Guidelines have been introduced to calculate CIL liability when amendments to existing planning permissions are obtained by way of the Section 73 procedure. Developers should be aware that even in instances where CIL was not levied upon the existing planning permission (because it was granted prior to 6th April 2010) a variation secured under Section 73 may now attract a CIL liability.
• A relief from the CIL for self-build homes has now been introduced. All homes built or commissioned by individuals for their own use, either by building the home on their own or working with builders, will be entitled to the relief. Community group self-build projects will also qualify for the exemption. The relief for self-build housing will be reviewed after a period of three years.
• Due to an amendment introduced in the last two months, a developer is now permitted (upon agreement with the LPA) to provide land and/or infrastructure, instead of money, to satisfy a charge arising from the levy. In certain circumstances, payments ‘in kind’ will have cost and efficiency benefits. Payments ‘in kind’ can also enable developers and LPAs to have more certainty regarding the timescale for the provision of infrastructure items.
Conclusion
In comparison to section 106 agreements, the CIL is levied on a much wider range of developments. This will result in the spread of infrastructure funding over an increased number of developers. Whilst the predictability of liability through published tariff schedules allows for greater transparency, the impact of the CIL compared to section 106 agreements remains to be seen.
With the vast majority of Local Authorities due to implement the CIL prior to April 2015, further amendments and industry attention are expected over the coming months.
Please note that this information is provided for general knowledge only and therefore specific advice should be sought for individual cases.
For further information, please contact Philip Shotter.