Update on Community Infrastructure Levy

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11 August 2009

Draft Regulations Published

Community Infrastructure Levy ("CIL") is the discretionary charge on development which Local Planning Authorities ("LPAs") will be empowered to make in order to fund local infrastructure requirements.  The government has  now published the draft Community Infrastructure Levy Regulations 2010, together with a more detailed explanatory document, both of which are out for consultation until 23 October 2009.  The Regulations are expected to come into effect on 6 April 2010.
 
Charge will apply to new buildings
 
The charge will apply to most types of new development, but it will be levied on buildings rather than other structures.  Buildings such as those which only house plant and machinery, which are only visited for the purposes of inspection or maintenance, will not be subject to the charge.  Charges will be based on a cost per square metre of floor space and will be linked to an inflation index.  Per-unit charging for new homes has been dispensed with due to the fear of encouraging low-density development.  The government's guidance cautions LPAs that CIL should not be set at a level which would risk delivery of the development plan.  Funds raised from CIL will be spent on local and sub-regional infrastructure to support the development of the area.
 
For non-residential development, there will be a de minimis level of 100 sq m below which CIL will not be payable.  Householder development will be exempt, but some permitted development will come within the scope of CIL.
 
According to John Healey (Minister for Housing and Planning):    
"... (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."   However, landowners and developers should remember that the charge is not intended as a replacement for all section 106 planning obligations.  Direct impacts of proposed development and affordable housing requirements, for example, will continue to be dealt with under section 106 agreements. 
 
Meaning of "infrastructure"
 
"Infrastructure"  is defined to include roads and other transport facilities, flood defences, schools and other educational facilities, medical facilities, sporting and recreational facilities, and such housing as CIL regulations may specify.  In relation to London, "infrastructure" includes some works within the meaning of the Crossrail Act 2008.
 
Development Plan
 
There will need to be an up to date development plan for an area before CIL may be charged.  Planning Policy Statement 12 now requires development plans to be supported by an infrastructure planning process to identify the infrastructure needed to deliver the plan.  If a LPA then wants to charge CIL, it will have to identify the gaps in infrastructure funding so that it can calculate the amount it needs to raise through CIL.  The LPA  will  then go on to prepare a draft charging schedule (which will be a Local Development Framework document, but not part of the development plan).  The charging schedule will  however be treated as if it were a Development Plan Document in that: (1) there is a requirement for consultation and for the proposals  to be subject to an independent inquiry; (2) the report of the Inspector will be binding on the LPA; and (3) the LPA will not be bound to adopt the charging schedule but it can instead prepare new proposals and subject them to fresh examination.
 
To which other consents will CIL apply?
 
Planning permissions  granted under section 73 of the Town and Country Planning Act 1990 (eg variation or omission of a condition) will attract liability to pay CIL.  Development consents granted under the new Infrastructure Planning Commission process are included within the definition of "planning permission" for the purposes of the new regulations.

Timing of payments
 
The date when development is first permitted is either (in the case of full planning permission) the date on which the permission is granted or (in the case of outline permission)  the date of final approval of reserved matters.  However if the outline permission envisages phased development, the date will be the date of final approval for each phase.
 
The amount of the charge will be calculated on the grant of planning permission and at that time developers will be advised of the amount of the liability.  Payment will not be due until implementation of the development (defined in accordance with the existing definition in section  56(4) of the Town and Country Planning Act 1990).  Developers will be required to notify the LPA in advance of implementation, and to provide the identity of  the person who will be responsible for paying CIL.  If no person is identified, the landowner will be liable in default.   This procedure is likely to provide greater clarity about when development commences, but developers may in future be deterred from implementing developments just before expiry of planning permission simply to preserve them as this will give rise to CIL liability.
 
A payment 'window' of 28 days is envisaged but phases of a development (as identified in an  outline  permission) will be paid separately.  Payment by instalments and payments in kind are being considered by the government.
 
Enforcement powers will include that CIL will be a local land charge, as well as the power to issue stop notices, and powers  to add interest and surcharges.  There will be limited rights of appeal to the Secretary of State.
 
The consultation raises the question of whether section 106 should be revised to limit its use to mitigating  the direct impact of development, and thus to outlaw local tariff schemes - which would instead have to be replaced by CIL, or be scrapped.
 
Estimates as to how much money will be raised by CIL vary, as nobody knows how many LPAs will  impose the charge, nor the rate at which it will be charged.  Notwithstanding these uncertainties,  according to the government CIL is expected initially "to raise hundreds of millions of pounds" of new funding towards the infrastructure needed by local communities. 

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