to the Community Infrastructure Levy (“CIL”) and section 106 agreement requirements came into force on 1st
September 2019 that change how local authorities will charge, collect and report on developer contributions.
Pooling Section 106 Agreement Payments
The restriction on local authorities pooling more than five section 106 agreement payments to fund necessary infrastructure has been removed. This should assist local authorities in delivering “big-ticket” infrastructure, including large regeneration projects. However, some concern has been raised that by removing the pooling upper limit local authorities could charge developers twice for the same infrastructure – through both the Community Infrastructure Levy and section 106 payments. Developers should therefore keep this is mind when negotiating section 106 agreements. Infrastructure Funding Statements
To aid transparency, local authorities are now required to publish annual infrastructure funding statements setting out the collection and spending of both CIL and section 106 payments. However, the cost of monitoring section 106 payments can now be passed on to developers through an additional fee in section 106 agreements. The fee should not exceed the local authority’s estimated costs and should be “fair” and “reasonable”.Community Infrastructure Levy
The new regulations clarify how the CIL will be calculated when amendments to planning permissions are made. Additional floorspace should be charged at the latest rate whilst the original floorspace will remain at the rate first charged. Any reduction in CIL charges resulting from deceased floorspace should be based on the rate applied when planning permission was granted, instead of the latest rate.
Developers who lose their exemption or CIL relief when they fail to submit a commencement notice will no longer pay the full CIL charge. Instead they will pay 20 percent of the charge or £2,500, whichever is lower. This is of course still a penalty and it can be avoided by submitting the required paperwork before the development starts.
CIL rates will now be adjusted with a bespoke index to take inflation into account. In a further nod to transparency, local authorities are required to publish annual summaries of the index linked CIL rates.
Local authorities, however, are no longer required to conduct two consultation rounds before adopting or making “substantive” changes to CIL charges. Only one round is now mandatory with further consultation at the authority’s discretion. In addition, if the local authority considers ceasing the CIL charges they will now also need to conduct consultation and set out the expected impacts. In theory, the new requirements will give developers meaningful, although fewer, opportunities to engage with local authorities.
For more information or assistance with CIL charges or section 106 agreements, please contact Gemma Dudley on 01223 532747 or click here
to email Gemma.
Community Infrastructure Levy (Amendment) (England) (No. 2) Regulations 2019