Community Infrastructure Levy (CIL) Regulations Published

The Community Infrastructure Levy Regulations 2010 were laid before the House of Commons on 10 February 2010 and will, subject to Parliamentary approval come into force on 6 April 2010.

The Community Infrastructure Levy (CIL) is to be the new hypothecated local levy which local authorities in England and Wales can choose to introduce to help fund new infrastructure in their areas such as roads, public transport, open space or health centres, in addition to infrastructure schemes to be from mainstream public funding.  

CIL will be charged on most types of development and Local authorities can choose the CIL rate that they wish to set, as set out in a new legal document (a 'charging schedule') which is to be independently examined to ensure that it is evidence-based and appropriate for the local area. The CIL will be based upon the size and type of development and the CIL charge will be required at the commencement of the development.  

The Regulations also provide for the reform of the current system of developer contributions towards infrastructure (‘planning obligations’) so that the two regimes operate effectively alongside each other.  

In response to the consultation exercise undertaken in July 2009 on the draft regulations, the Government has agreed to make some major changes to the CIL regulations which includes:  

• CIL to be now be levied on the net additional increase in floor space as a result of the development (the Government had previously proposed that CIL would be levied on the gross floorspace of the new development).
•  Allowing up to 100 per cent CIL relief in exceptional circumstances for developments that would otherwise not proceed because CIL could make them unviable.
•  Ability to paying CIL in-kind - such as payments of land (including existing buildings or structures) as an alternative to cash subject to certain conditions.
•  Now permit some limited pooling of planning obligations in response to comments from consultees and prevent authorities from seeking the same contribution towards infrastructure through planning obligations and CIL.
•  Most providers of affordable housing to be 100% exempt from CIL.
•  Extend the standard payment period from 28 days (as proposed in the consultation document) to 60 days and also provide for payment of CIL in instalments where liabilities exceed certain thresholds.
•  From April 2010, a planning obligation may only constitute a reason for granting planning permission for the development if the obligation is—

Planning and housing minister John Healey said:

"The CIL remains an important component of our long-term plans. It is a fairer, clearer, more legitimate and more predictable way of seeking contributions from developers towards the costs of local infrastructure compared with the existing system. First floated in the Green Paper, this new statutory charge on development continues to benefit from support within both the local government and developer communities after two years of discussion and debate."

Councillor Gary Porter, chairman of the Local Government Association’s environment board, has welcomed the new regulations and said:

“These rules will make it easier for councils and developers to provide schools, community centres and other important local facilities when new developments are built.“There is a lot of work to do on implementation, but it is good that ministers have listened to councils and developers and made sure Town Halls have the flexibility to work with developers to get important projects off the ground.”

The Chief Executive of the National Housing Federation, David Orr, also welcomed the Government's decision to exempt social housing from the new Community Infrastructure Levy, by saying.

“We are grateful John Healey and his CLG officials have listened to our concerns and recognised the need to protect the capacity of housing associations to deliver desperately needed homes during the economic downturn. “With social housing relief, housing associations’ development programmes will not be hampered by a new development tax that would have reduced their capacity to build social-rented and shared ownership homes.

With housing building this year slumping to the lowest level since 1923 and a record 4.5 million people stuck on housing waiting lists, this is good news not just for housing associations but for people waiting for a social home."

Commentary

Whether CIL will actually be implemented is still a matter for debate given that if elected an incoming Conservative Government is widely expected to abolish CIL. Local Authorities might also not choose not to adopt CIL and still continue with their "tariff based approach" of funding infrastructure through section 106 agreements given the time and resources required to implement the CIL regulations. Nevertheless, the ability to now have planning obligations through a section 106 agreement that are outside the scope of the "circular tests" could become increasingly at risk of judicial review and so "force" Local Authorities down the CIL route.

For further information please contact your usual CgMs contact or Erica Mortimer or Mike Straw .

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