Planning: (more) reform of CIL – and what it might mean for developers
We are approaching the tenth anniversary of the community infrastructure levy (CIL) coming into force and further reforms to the system have been made in regulations which will have effect from 1 September. As those who have followed the long and difficult birth of CIL know, the 2019 amendments are very far from being an initial tweak.
What are their practical effects likely to be?
Some of the changes are administrative only, but no less welcome for that:
- Indexation provisions are clarified with the introduction of a dedicated annual RICS CIL index.
- Removing exposure of planning permissions to CIL rate changes between grant of a consent and submission of reserved matters will give greater certainty to developers.
- Monitoring fees for s106 agreement are given a statutory footing, subject to tests of proportionality analogous to those found in reg 122 for other s106 contributions.
- The inadvertent loss of CIL notice challenge rights in certain situations has also been corrected.
Toning down the penalty system
Perhaps the best change to the perception of CIL is a toning down of the draconian penalty system. It’s easy to fall foul of the regime and the effects of non-compliance can be deeply damaging. A number of recent cases – largely experienced by self-builders but also by small developers – have illustrated the point. A technical failure to notify the charging authority in advance of a start on-site results in exemptions and reliefs being lost outright and substituted with the obligation to pay the entire CIL amount, plus a punishing regime of fines on top.
Unlike with the rest of the planning system there is no scope for compromise or negotiation with the charging authority over CIL. This is because the CIL regulations do not give any discretion in these situations. Making CIL less of a blunt instrument has got to be good news.
Removing the ‘pooling restriction’
The new regulations also remove the notorious ‘pooling restriction’ of reg 123. This is the mechanism intended to incentivise widespread CIL adoption by forbidding local authorities from using more than four s106 obligations to fund an item of infrastructure. The intention was to reduce reliance by authorities on s106 tariff arrangements which were not always well examined or justified.
Removal of reg 123 will spell a return to tariff arrangements in s106. That will presumably focus more of a debate at application stage about the justification for such contributions on a case-by-case basis. The relative certainty of CIL rates and due dates can distract from a developer’s concern not just to be rid of an obligation but actually to have infrastructure provided to serve its site. CIL never gave any guarantee of that and the likelihood must be that it is increasingly going to be regarded, properly, as a general infrastructure charge and not something developers can expect their sites to get much benefit from.
Developers will be well advised to redouble their scrutiny of any new 106 requirements arising as a result of this change. The statutory tests of justifiability and proportionality apply every bit as much to enhanced contributions being sought after reg 123 is abolished.
Changes to planning permissions
Finally, another nettle grasped is the set of very detailed changes brought about to planning permissions which are variations to earlier planning permissions (“section 73 permissions”). The detail and extent of these is the subject of an article in its own right and will take some time to digest as well as to play itself out in the practical working of development. Does it need saying that this will likely bring forward as-yet unidentified further problems which in turn will need to be legislated for in due course?
For more information contact Oliver Bussell, Partner in our Commercial Property Team based in Sevenoaks and Ashford.