Community Infrastructure Levy (CIL)

• Posted by David Jones on 5th May ’10 at 10:33 UTC
• 0 comments

New CIL Development Levy regulations published

The Government have now at long last published the community infrastructure levy regulations 2010.

From 6 April 2010, local authorities are now able to impose charges upon most new development via the community infrastructure levy (CIL). Under this new regime, local authorities in England and Wales will be empowered (but not required) to levy on most types of new development a charge to cover infrastructure costs.

In parallel with the introduction of CIL, local authorities ability to require contributions via Section 106 agreements, has been reduced, The Government′s aims and objectives in introducing the CIL, is to create a far greater level of certainty as to the basis for a charge, (something the existing system cannot easily achieve) a broader (and therefore fairer) range of development contributions. The Government aim is to improve transparency, have greater certainty and predictability as to the level of contribution required.

CIL collected by Local Authorities will be used to fund the infrastructure needed to support the development of their area, Local Authorities will decide what infrastructure is needed. CIL should not be used to remedy pre-existing deficiencies which will be made no worse by the proposed development.

The regulations will not be used for the provision of affordable housing. This will still be delivered via section 106 agreements, and in some instances, planning condition.

Charging authorities should normally implement CIL on the basis of an up-to-date development plan, or a draft plan if they are planning a joint examination of their core strategy or LDP together with their CIL charging schedule.

David Jones, Head of Planning at Evans Jones commented: ”Whilst CIL becomes chargeable from 6 April 2010, in practice few if any local authorities will be sufficiently advanced in the production of their local development frameworks to provide a sound enough basis for the introduction of charges in the shorter term.

Developers should therefore have some breathing space between now and the point when individual local authorities develop suitable policies to implement extant consents.

It should also be noted that both the Tory and Liberal manifestos propose to delete the CIL regulations and replace with charging tariffs. The details of the proposed Tory and Liberal Charging Tariff is not know, but in practice this may well simply be a CIL levy under a different name.

Any authority wishing to levy CIL must produce a charging schedule which must have been subject to public consultation. The CIL should be set at a rate which does not have a serious risk of making development in an area uneconomic.

Local authorities will thus be required to strike a balance between the desirability of funding infrastructure via CIL, and the potential effects of the imposition of CIL upon the economic viability of development across their area.“

The process for preparing a charging schedule is similar to that which applies to development plans in England and LDP′s in Wales. Firstly, there is requirement for public consultation and public examination before an independent person (CIL examination), secondly an independent examiners decision will be binding on the charging authority, and thirdly the charging authority is not under an obligation to adopt the final schedule, but can, if it prefers publish a revised charging schedule for fresh consultation and examination.

The charging authority must consult local communities and stakeholders on their proposed CIL rates in an early draft of the charging schedule. The CIL liability will apply to most buildings (over 100m2) that people normally use, it will not however apply to buildings in which people only go intermittently for the purpose of inspecting or maintenance. (i.e farm buildings, wind turbines etc) CIL will be levied in £′s per square meter of the net additional increase in floorspace in any given development.

CIL will thus be applied to new development and extensions but will not apply to conversions or change of use where no additional net increase in floorspace occurs. It is permissible to deduct the floor space of any existing building on site where this is to demolished.

David comments: ”In practice CIL will be chargeable for all but the smallest buildings and extension. The CIL charges will become due from the date that a chargeable development is commenced, commencement being taken to be the same point as development has commenced for the purpose of planning legislation. i.e making a material start.“

Therefore, as soon as physical works are started upon the development, the CIL will fall due.

In cases where the charge exceeds £10,000, local authorities are able to agree a series of instalment payments from the commencement date. Relief from the requirement for CIL payments is given to charitable landowners, who benefit from full relief where the chargeable development will be used wholly or mainly for charitable purposes, and for developments which are intended to be used as social housing.

In exceptional circumstances, it is possible to apply for relief from CIL, in cases where the development would not be viable if a charge were made. As previously stated, the CIL payments run in parallel with existing section 106 obligations. However, local authorities must ensure that CIL and planning obligations do not overlap. Furthermore, the extent to which Section 106 obligations have been paired back from 6 April 2010. S106 obligations may therefore only be imposed where the following tests are met:

• necessary to make the development acceptable in planning terms;
• directly related to the developments and;
• fairly and reasonably related in scale and kind to the development.

David comments: ”S106 agreements have to date been used for a far-reaching array of financial contributions, many of which had tenuous links to the actual development being applied for, limiting of the circumstances in which Local Authorities may legitimately enter into Section 106 agreements, should encourage Local Authorities to progress their LDF schemes and introduce CIL payments sooner rather than later if they are not to lose out on development contributions“

The Government have set out transitional rules for a period of 4 years from 6 April, following which Local Authorities may not seek contributions for pooled resources i.e. play-space contributions and the like via Section 106 agreement. Up to April 2014, pooled resources via Section 106 Agreement will still be permissible.

David comments: ”In a period of economic recession, developers are unlikely to welcome with open arms any new regulation which could give a Local Authority an opportunity to extract more money from the developer.

Whilst the regulations are correct, in their assertion that developers require certainty. In practice, the imposition of a new charging regime without any transitional arrangements will always catch some developers who for economic reasons are unable to develop out, land which may well have already been purchased at a rate well above the current market value.

To hit those same developers with yet another payment, can only in the short to medium-term further slow down the delivery of much-needed new housing.

In the longer term, one can hope that CIL does bring with it more certainty with developers being able to identify from the onset exactly what contribution will be required when negotiating to purchase land. Ultimately, it is the landowner who will pay for CIL contributions either via direct payment or lower land values.

Whilst this may not be necessarily a bad thing, the concern lies in the short-to-medium term where economic conditions are already making many sites unviable to develop. I already see many developers seeking to negotiate down existing S106 agreements whose punitive terms are stifling new development.“

Time will tell whether the imposition of CIL payments exacerbates existing problems in the delivery of new housing to meet the country′s; needs.

For further information upon the implementation of the revised order, or indeed and planning-related enquiry, please contact David Jones MRTPI on 01242 531411 or email

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