Government publishes Community Infrastructure Levy Regulations

The Government has now published the Community Infrastructure Levy (CIL) Regulations which come into force on 6th April 2010.

The concept of CIL was introduced by the Planning Act 2008 and will be a new charge which local authorities will be empowered to levy on the granting of planning permission for development. The new Regulations set out the detailed provisions enabling local authorities to introduce the levy and how the levy would operate if they do so.

So far the reaction to the Regulations has been positive with the British Property Federation and RTPI both welcoming the changes made since the consultation stage.

Setting CIL

CIL will take the form of fixed standard charges, levied as pounds per square metre of floorspace. A key change to the Regulations following consideration of the consultation responses is that CIL will only be applied to any net increase in floorspace. The Government was persuaded that this would be fairer than basing the levy on the gross floorspace of the new development.

Paying CIL

The Regulations also allow for payments of the whole or part of the CIL to be made “in-kind” in the form of a transfer of land to the local authority, provided the authority ensures that the land is used for the provision of infrastructure. However, some have expressed disappointment that the Government has not gone as far as to allow developers to arrange the building of infrastructure themselves, in lieu of the levy.

It was initially proposed that CIL would be payable within 28 days of commencement of development, but this period has been extended to 60 days in the final Regulations. The Regulations also allow for the payment of CIL in up to four instalments where the chargeable amount is more than £10,000. This is in order to help developer cash flows and to ensure the viability of major developments. This is in addition to the flexibility allowed by the staged payment mechanism in the case of phased developments.

The draft Regulations proposed to include an exemption for developments by charities for a charitable purpose, but concerns were raised that it did not go far enough. Accordingly the final Regulations ensure that the mandatory exemption can be claimed in a broader range of circumstances. There also continues to be discretionary relief where a charity will use a development as an investment.

The Regulations also provide 100 per cent exemption from CIL for most types of affordable housing. This has been welcomed by the National Housing Federation who lobbied against the levy being charged on such developments.

There is to be a procedure whereby a charging authority may allow up to 100 per cent CIL relief in exceptional circumstances for developments that would otherwise not proceed, subject to an independent viability assessment and EU state aid rules.

Planning Obligations

The new Regulations also provide for reform of the current system of negotiated planning obligations under Section 106 of the Town and Country Planning Act 1990 in order to address concerns raised at the consultation stage about the potential for “double counting”.

Whilst the facility to enter into negotiated planning obligations will remain to deal with site specific impacts and affordable housing, the Regulations will prevent authorities from seeking the same contribution towards infrastructure through planning obligations and CIL.

Because CIL is a discretionary tool, it will be for individual local authorities to decide whether to introduce the charge. The Government proposes to scale back planning obligations generally following the introduction of CIL to encourage CIL to become the primary means of funding local infrastructure through developer contributions. Further incentive to introduce the levy is given to local authorities by provision in the Regulations for authorities to draw the implementation and administrative costs of CIL from CIL receipts.

For more information contact Gemma Harris in our planning team on 01223 461155 or click here to email her.