Further reforms to the Community Infrastructure Levy (CIL) were published by the Department for Communities and Local Government (CLG) on 15 April 2013.
The key elements within the further reforms announced yesterday include:
- A statutory obligation on charging authorities to provide evidence to prove that an appropriate balance has been reached between funding infrastructure from CIL and the potential effects of the levy on economic viability of new development across their area.
- Extending the deadline for authorities to get their CIL charging schedules in place by a year to April 2015.
- Allow developers to provide either on-site or off-site infrastructure in return for a discount on their CIL liability.
- Introduce a mechanism to pay the levy in stages where planning permission is phased to help cash flow and get development started.
- Redefining the ‘commencement of development’ for the purpose of the CIL regulations to enable site preparation works to progress without incurring a CIL payment.
- Removing the ‘vacancy test’ to make the regeneration of vacant buildings more viable.
- Extending the consultation period on the draft charging schedule from four to six weeks.
- Introducing CIL relief for self-build homes.
- Changing the arrangements between CIL and section 278 so highways planning agreements cannot be used to fund infrastructure for which the levy has already been allocated.
- Making it easier to apply exceptional circumstances relief through the possible removal of the requirement for a planning obligation to be greater than the value of CIL.
CLG are consulting on the proposed further reforms. The Consultation closes on 28 May 2013. A link to the consultation paper can be found here.
The CIL regulations have caused big problems for developers, especially those seeking to regenerate larger sites. The proposed reforms to CIL (on top of the first set of amendments announced last year) have picked up on many of the key points and do make things better; however, it is disappointing that it has taken more than 2 years to get to this stage. The Government are now clearly listening to industry concerns, the lobbying has paid off and credit must be given to the British Property Federation (BPF) and others in the industry for pushing hard for these changes.
The reforms are likely to be broadly welcomed. The measures to ensure local authorities provide evidence which can be tested at an Examination to demonstrate the impact of their proposed CIL levy on the viability of development in their area is a particular win.
The 12 month extension will give councils more time to consult and engage with the industry to ensure that the evidence is robust which should result in more sensible and viable CIL levies being proposed.
The removal of the vacancy test and the mechanisms introduced to phase payments and redefine the commencement of development will help in many instances, especially where developers are regenerating larger sites.
However, I sense the reforms have not finished yet and further changes will be required to refine and define how some of the proposed mechanisms would work in practice. For example, the proposed reforms to allow for ‘payments’ in kind’ require agreement on a number of procedural, legal, cost benchmarking and procurement points, which will result in further complexity in the regulations. The proposal to allow CIL relief on new build homes should go further and allow the same relief on residential extensions, especially given the Governments parallel push to increase permitted development rights for householders.
For more information please contact Kieron Hodgson.