Community Infrastructure Levy – your questions answered
The CIL is a planning charge introduced in April 2010 that can be applied by Local Planning Authorities (LPAs) to development, to fund other infrastructure and community developments that the Council and local communities want.
The charge applies to England and Wales when the development starts and is paid by the developer. The amount of the charge is in most cases non-negotiable.
Some LPAs have prepared charging schedules setting out the amounts required for different types of development but the majority of the LPAs have not started this process or are in the very early stages of it.
Is this not a development tax?
It certainly is!
Is CIL something like developer contributions/Section 106 Agreements?
Not really. Now for a bit of history: LPAs have been able under the Planning Acts to seek voluntary contributions from developers for matters that cannot be covered by conditions to a grant of planning consent but without the agreement for the contributions, the development would be refused planning consent. These provisions were set out in Section 106 of the relevant Planning Act hence the name S106 Agreements.
What are the differences then between CIL and Section 106 Agreements?
Section 106 Agreements are: a) voluntary – you need not enter into them but then you would not get planning permission; b) negotiable – this enables the contributions to fit the circumstances in a particular place at a particular time; c) must be legal – Section 106 Agreements must under law be necessary, related to the development and reasonable (for example, a housing development may put pressure on local schools or open spaces and the developers may be asked to fund or part fund a school or playing fields/amenity space but it would be inappropriate to require an industrial development to fund a school nor would a small housing development be required to fund a primary school!) and d) need not be financial – in some cases the developer contributions have been in the form of providing a site for a school or for wildlife though most Section 106 Agreements involve a transfer of money.
I take it that with the introduction of CIL, Section 106 Agreements are now dead?
No. There may be cases where Section 106 Agreements will still be sought but these should not duplicate CIL – landowners and developers need to be aware of this complication. Also be aware that Highway Authorities also seek agreements under the Highways Acts for off site highway works to ensure that access to a site is safe. Drainage/flood protection agencies may also require agreements for off-site works to reduce the incidence of flooding and these types of agreement will continue and will be essential to obtain planning consent.
Do CIL arrangements take into account rural issues?
Each LPA will set the charge for each type of development and a few may differentiate between say a village shop development and a high street development, but this is very hit and miss. The Government has said that CIL is not levied on changes of use that do not involve an increase in floorspace, so this should cover the reuse of redundant and other farm buildings/structures. The CIL Regulations allow for different rates to be set for rural development but the limited examples of LPAs who have had their charging structures independently examined does not show a clear differentiation to date.
Sounds as if CIL will inhibit development – what checks are there that the LPA are not being excessive in their charging structures?
Government guidance states that LPAs must ensure that they propose charging rates that do not put the overall development of their area at risk. This charging structure is independently assessed before the Council adopts it as official policy. This is the main check but there are problems when there is an economic downturn and/or a reduction in land values as the viability of marginal development schemes could be jeopardised. Many developers have sought Government help to reduce the burden of Section 106 obligations entered into in the heady days before 2008 for this same reason. There is then a need to ensure that the charging structures are kept under review and address rural concerns.
What about making some of my underused and redundant buildings put to gainful use – is this really not subject to CIL?
Quite right – and if buildings are demolished to make way for new build, it is only if there is a net floorspace increase that CIL is operative. Remember to take advice before you demolish any buildings or structure on your land otherwise you may find it difficult to get the planning consent for any replacement buildings.
In short CIL is here with all its faults and merits. If you are planning development in a rural area and want to look further into this issue then contact CMM Rural.