Draft regulations were laid before the House of Commons this month which will make further amendments to the Community Infrastructure Levy (CIL) Regulations 2010, once they come into force.
The key change is to end the restriction on local planning authorities that prohibited them from using five or more separate planning obligations to fund the same infrastructure project. The purpose of this restriction was to encourage local authorities to adopt CIL, but there have been some unfortunate side effects. This includes the refusal of acceptable planning applications that were unable to secure mitigation because of this restriction. Does this mean developers are at greater risk of “double dipping” – where they pay CIL and s106 contributions for the same infrastructure project? The tests in regulation 122 continue to apply, the s106 agreement should be:
(a) necessary to make the development acceptable in planning terms
(b) directly related to the development, and
(c) fairly and reasonably related in scale and kind to the development.
Local authorities will also have to publish an annual infrastructure funding statement which sets out (amongst other things) the projects and infrastructure types that will be funded by CIL. This should provide some comfort to developers and set clear parameters in the negotiation of s106 agreements.
It’s also worth noting that monitoring fees will be given a statutory footing in the regulations, they will be subject to the test in paragraph (c) above and should not “exceed the authority’s estimate of its costs of monitoring the development over the lifetime of the planning obligations which relate to that development.”
Important changes are to be made to the current regulations that resulted in developers being sent demand notices for the full amount of CIL, despite being granted exemptions from CIL. Why? The charge was payable solely because of the failure to serve a commencement notice on the local authority before the day the chargeable development is commenced. Many developers thought that the grant of the relief alone was enough and, in some cases, (exemptions in respect of residential annexes or extensions) there were conflicting provisions in the regulations.
To simplify the process, a failure to serve a commencement notice will not result in the loss of the exemption and will only incur a surcharge. Developers should remember that these are proposed changes to the regulations, they are not yet in force and commencement notices should continue to be served to prevent the loss of exemptions that have been granted.
The latest set of changes to the CIL regulations simplifies the administration, many of them will be welcome. There should be transparency that avoids double dipping, experienced developers will already be alert to this. There have been numerous changes to CIL since it was first introduced in 2010. Most of those changes have been made to respond to the practical aspects of the development process and to iron out wrinkles. It remains to be seen how the new changes will work in practice and if any further changes are needed.
If you require further information about anything covered in this briefing, please contact Karen Phull, or your usual contact at the firm on +44 (0)20 3375 7000.
This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.
© Farrer & Co LLP, June 2019