After a period of stability, amended Community Infrastructure Levy (CIL) Regulations came into force in England from 1 September 2019.  While for many CIL has become a standard part of development since its introduction in 2010, there are now further changes to be aware of which will have implications for any schemes yet to secure planning consent.

CIL and s106

The amended Regulations remove the current restrictions on the pooling of s106 obligations. This reflects the pre-2010 s106 regime, whereby Local Authorities can use s106 obligations from as many developers as they wish to secure the delivery of a single piece of infrastructure. 

In addition, the requirement for a Regulation 123 List (the published list of projects upon which CIL will be spent) has been removed, and Local Authorities will now publish an annual list setting out what infrastructure, or types of infrastructure, it intends to be, or may be, wholly or partly funded by CIL (a pretty flexible definition). 

While technically Local Authorities could already amend their Regulation 123 Lists whenever they wished, many didn’t do this regularly, and as such, there was previously a greater degree of certainty around what infrastructure would be funded by CIL and what would fall into s106. 

The combination of these two changes raises the potential for developers to pay twice for the same piece of infrastructure. For example, you may be required to pay a s106 contribution for a piece of infrastructure, such as expansion of a primary school, while your CIL payment may also be used to fund the same thing. 

There is no mechanism in the amended Regulations to prevent this from happening, and we therefore anticipate that how infrastructure is to be funded (CIL and/or s106) will be debated on a site-by-site basis – a potentially time-consuming exercise. CIL itself remains non-negotiable and payable in accordance with an adopted Charging Schedule.

The amended Regulations also provide clarity on s106 monitoring obligations, setting the test that they must ‘fairly and reasonably relate in scale and kind to the development’ and that they should not exceed the estimate of actual monitoring costs over the lifetime of the particular obligation. This provides opportunity to challenge any unreasonable monitoring costs suggested. 

Indexation

The current calculation of CIL Liability (the amount of CIL payable) uses the BCIS All-In Tender Price Index to ensure payments reflect value changes over time. From 2020 a new purpose made index, ‘the RICS CIL Index’, will be used instead. 

At present, little information is available on this new index so it is difficult to estimate how it will impact CIL Liability. The RICS CIL Index will be published annually by RICS and freely available on its website with first publication due in October 2019. 

S73 Applications

The amended Regulations confirm that CIL reliefs (in relation to residential annexes/extensions, charitable, self-build and social housing) granted on a planning consent can then be carried forward in any subsequent s73 application. The calculations vary depending on whether the s73 application results in no change, an increase or a decrease in floorspace, meaning care should be taken when considering the CIL implications of s73 proposals. 

Reliefs and Commencement

Following a number of well-publicised cases in which developers lost their ‘relief’ (most frequently in relation to self-build) through failure to serve a ‘Commencement Notice’ in advance of starting works, the Regulations now change the penalty to either a surcharge of 20 per cent or a fine of up to £2,500.00, whichever is lower. It is no longer the case that the entire relief is lost. 

Charging rates: new and reviewed

The process for setting new, or reviewing existing CIL rates has been significantly simplified and expedited – Local Authorities now have to undertake a single consultation, with this recommended in guidance to be a minimum of only four weeks, followed by an Examination. 

As a result, CIL rates could be updated relatively quickly. It is critical that all interested parties remain aware of Local Authorities’ CIL Review schedules and actively engage with the consultation.

Further information

Contact Savills Planning