On 1 September 2019, the eighth round of amendments to the Community Infrastructure Levy ("CIL") Regulations 2010 came into force. Some of the changes will be welcomed by developers, including the softening of draconian sanctions for non-compliance with strict procedural requirements. However, the removal of pooling restrictions raises the possibility of developers being double charged for the same infrastructure under the CIL and S106 regimes.
Softening of draconian sanctions
The old Regulations only allowed for certain development, such as residential extensions and self-build housing, to be exempt or gain relief from CIL if a commencement notice had been properly submitted. As highlighted in the case of Shropshire (which we wrote about here), this meant that developers could lose their entire exemption (~£40,000 in Shropshire) for failing to submit the proper form.
The new Regulations introduce the more proportionate penalty for failing to submit a commencement notice of 20% of the CIL amount, capped at £2,500. Nevertheless, strict procedural requirements still exist. For example, failure to submit an assumption of liability form (whether a liability notice has been issued by the Council or not) before commencement of development means any instalment policy is not applicable, and payment is due in full on the commencement date. This could create significant cash flow issues for large projects. The strict procedural requirements of the CIL Regulations should still be complied with to ensure the benefits of reliefs, exemptions and instalments are maximised, and surcharges are avoided.
Section 73 permissions
In cases where planning permissions are amended ("Section 73 permissions"), under a lacuna in the old Regulations, CIL was chargeable on the entirety of the development at the rate of CIL and indexation at the date of the Section 73 permission. This meant that if a charging schedule was adopted with a higher rate of CIL (e.g. Mayoral CIL2 in April 2019) between grant of the original permission and the section 73 permission, the higher rate of CIL (and indexation) was potentially chargeable on the entire development even if there was only a small increase in floorspace. The new Regulations change this, ensuring any higher rate of CIL and indexation would only be chargeable on an uplift in floorspace.
The Regulations have also been amended so that exemptions and reliefs can be carried over to section 73 permissions.
Under the old Regulations, local authorities were prohibited from using more than five section 106 planning obligations to fund a single infrastructure project ("the pooling restriction"). This restriction has now been removed with the purported aim of enabling "more flexible and faster infrastructure and housing delivery". However, the removal of the restriction increases the risk of local authorities using funds from both section 106 and CIL for the same piece of infrastructure ("double dipping"), and developers being double charged.
If you were granted planning permission before 1 September 2019, or you intend to apply for a relief or exemption from CIL in respect of a levy issued before 1 September, then the changes introduced by the 2019 Regulations will not apply. In particular, failure to submit a commencement notice before starting works on site will result in the loss of any relief or exemption.
At CMS, our Planning Team advises on a wide range of CIL matters. We have produced an introductory guide to CIL here. If you need help with CIL, ask us what to do.