By Roy Willis, Partner in Commercial Property & Development.
Before the general election in 2010, the Conservatives announced in their Green Paper that CIL would be abolished as part of its brave new world of planning.
However, the coalition government’s thinking has changed, and the Planning Act 2008 enabled regulations to be laid before parliament to establish CIL.
What is CIL?
Put simply, CIL is a charge that local authorities (LAs) can make on new developments, the proceeds of which are designed to support infrastructure required locally. This concept is not new; planning obligations under Section 106 of the Town & Country Planning Act 1990 have been used for many years whereby developers give something back to the local community in return for the grant of planning permission. The difference is that planning obligations are individually negotiated arrangements whereas CIL will be charged according to known rates published by the relevant LA.
CIL concentrates on delivering local infrastructure, including health or social care facilities, transport facilities, schools and leisure facilities whereas under the planning obligations system, only about 6% of all planning permissions result in contributions being made to support the costs of infrastructure.
CIL does not replace Section 106 obligations. While CIL funds infrastructure, there may be site specific requirements covered by planning obligations.
When can CIL be charged?
CIL is discretionary. LAs have to elect to charge it and prepare a charging schedule setting out their rates which then form part of the Local Development Framework. When establishing its rates, the LA must have regard to the funding gap that CIL is intended to plug, sources of other funding and the effect of CIL on the viability of development in the area. The rates are index linked on an annual basis.
CIL will apply to most buildings ‘which people normally use’ but there are some exemptions. It will not be charged on developments like roads and wind turbines.
On the face of it, CIL is more transparent than planning obligations. More local people and projects are intended to benefit from it. All good news, but as CIL will add to builder’s costs developers need to become actively involved during the consultation period before proposed levy rates are set. If rates are set too high, then any shoots of recovery in the housing market are likely to be trampled underfoot as development becomes unviable.