Article published 07/01/2019.
On 20 December 2018 the Government published its consultation on the proposed further reform to the Community Infrastructure Levy Regulations 2010 (the CIL Regulations), which can be seen here: Developer contributions reform: technical consultation. The proposals will feel like the comfortable undoing of the Christmas belt – with the lifting of restrictions and the provision of welcome relief!
The consultation puts in place the key provisions that have already been consulted on earlier in 2018. Other changes have otherwise been seeped into policy by way of revisions to the National Planning Policy Framework (NPPF). There is, however, a current challenge against the validity of the NPPF 2018 reforms currently being considered by the court and so, on those changes at least, the final results are yet to be drawn.
The principle focus of the consultation, which produces as an annex the proposed draft amendments to the CIL Regulations, is the removal of the current pooling restrictions on section 106 developer contributions (planning obligations). The general aim of the proposed amendments is to simplify some of the previously more onerous provisions of the CIL Regulations such as the consultation requirements on the production and amendment of CIL charging schedules, amendments to indexation and abatement, sanctions for the failure to serve a Commencement Notice and revised procedures for applying exemptions.
Removal of pooling restrictions
The removal of the pooling restrictions is a welcome revision to the section 106 regime, with many Local Planning Authorities and developers finding themselves embroiled in unnecessarily complex arguments over proportionate contributions to be written into a legal agreement where there are a number of sites in the same vicinity (the restriction did not cater for the relative size of each site when considering the number of obligations which might be reasonable to ‘pool’).
As the restriction was predominantly introduced to encourage LPAs to ‘convert’ to CIL, it seems only logical and reasonable for it now to be lifted, with over two thirds of LPAs now having either adopted or published a CIL (draft) schedule.
The effect of the pooling restrictions saw the refusal of otherwise entirely acceptable sites, which I cannot begin to believe was the intention of parliament. From the very early days of its introduction, it was clear that in certain situations it simply did not work. So its nationwide removal is welcomed by all sectors. Earlier criticism of the use of overly complex section 106 agreements, delays to which prompted the introduction of the CIL Regulations, can be relatively easily overcome in most situations by the encouragement of the use of carefully selected template precedent agreements, published on the LPA’s website so that developers are clear of the LPA’s standard requirements and which then form a basis for negotiation.
Starter home exemption
The introduction of a new (but somewhat to be expected) exemption from the levy for starter homes as a form of affordable housing will also be a very welcome development to the industry. There has been much debate about whether starter homes should be required as part of the affordable housing on schemes and it has been left to the LPA and developer to come to a mutual agreement over tenure and type of affordable housing provision. The introduction of the exemption will no doubt fuel the provision of this type of affordable housing on some key sites.
Failing to serve Commencement Notice
An important change is that of the reduction in the penalty for failing to serve a Commencement Notice prior to starting works. The proposal is to impose a surcharge of 20% or £2,500, whichever is the lower, rather than the current system which requires the payment of the entire levy as if no exemption existed (with no discretion on the part of the LPA). This supports the like-minded position of both sides of the argument that, whilst it appears inherently unfair that, for the want of a piece of paper and (more often than not) a simple lack of calendar management, the entire levy becomes payable, responsible developers should remain accountable for their own procedures and practices. Those most hit by the regulation as originally drafted (smaller and some medium-sized developers) will continue to need to be on their guard, although the amendment significantly reduces the potential burden.
In addition, the draft proposed amendments aim to:
- Improve the operation of the Regulations
- Introduce fairer consultation requirements on the production of or changes to CIL schedules
- Extend abatement provisions to phased planning permissions secured before the introduction of the levy
- Apply indexation to levy payments where the permission is amended
- Indexing rates to more closely track the development value
- Introduce Infrastructure Funding Statements
- Clarify that LPAs can seek payment in a s106 agreement for the monitoring of obligations.