Yesterday the Government released its response to the technical consultation on draft regulations and the Government's view on the way forward, along with draft amendment regulations. These regulations are due to come into force on 1 September 2019.
Changes include the removal of the restriction on pooling, and the replacement of regulation 123 lists with infrastructure funding statements.
Simplification of the process
A key theme of the March 2018 consultation was the desire to simplify the process for putting a charging schedule in place. This was widely supported. The Community Infrastructure Levy Regulations 2010 (the Regulations) will be amended to remove the requirement for two rounds of consultation. However, the charging authority will be required to invite representations on the draft charging schedule from those persons they consider appropriate, for example local businesses and voluntary bodies. The list of consultation bodies has also been widened to include neighbourhood forums.
Section 106 pooling requirement
Since April 2015, local authorities have not been able to fund an infrastructure project or type of infrastructure by pooling contributions from 5 or more separate section 106 agreements. This pooling restriction was designed to encourage local authorities to adopt CIL charging schedules.
The March 2018 consultation had proposed removing the pooling restriction in specified circumstances (e.g. in cases of development on several strategic sites). However, rather than limiting its application, the Government has decided to lift the pooling restriction altogether. This will allow charging authorities to use both CIL and section 106 contributions to fund the same item of infrastructure, providing them with greater flexibility for infrastructure funding.
As the removal of the pooling restriction could lead charging authorities to stop charging CIL, any charging authority that wants to stop charging CIL will have to follow a prescribed procedure. This will involve preparing a statement setting out details of the CIL receipts for the last five years, together with an assessment of the impact in the following five years of not having a charging schedule. The measures that will be put in place to fund infrastructure needs will also need to be published. This information will be made available for a minimum period of four weeks, during which representations about the proposal can be made.
Regulation 123 lists
Linked to the lifting of the pooling restriction is the replacement of Regulation 123 lists with annual infrastructure funding statements.
Regulation 123 of the CIL Regulationsprovides for charging authorities to set out a list of those projects or types of infrastructure that it intends to fund, or may fund, through CIL. Although charging authorities are required to report annually on how much CIL has been received, and how it has been spent, there is huge variation in the depth of information provided by authorities.
Regulation 123 lists will be replaced with a requirement for local authorities (including those who have not implemented CIL) to provide an annual infrastructure funding statement by 31 December each year.
The detail of what must be included is set out in the draft 2019 amendment regulations.
In relation to monitoring fees, the Regulations will be amended to make it clear that local authorities can seek a fee from applicants for monitoring planning obligations. This fee must fairly and reasonably relate in scale and kind to the development and not exceed the authority's estimate of its cost of monitoring the development over the lifetime of the development.
Fairer system of dealing with amendments to planning permissions
Changes to a planning permission can be made using section 73 of the Town and Country Planning Act 1990. Where the new permission (granted under section 73) results in an increased CIL liability, the CIL liability of the whole enlarged area is calculated on the basis of the CIL rate in force on the date of the new permission. This means that the whole floor area is subject to indexation, rather than just the additional floor area permitted by the section 73 permission. The 2019 amendment regulations will change this so that the previously permitted floor area will be charged at the rate that was in force at the time it was permitted.
The Regulations will also be amended so that exemptions and reliefs can be carried over to permissions amended under section 73.
Greater flexibility in relation to exemptions
Under the current system, entitlement to a relief from CIL is lost if a commencement notice is not submitted before the development begins. Those who are not accustomed to dealing with CIL can find themselves having to pay CIL where they should have been able to claim relief.
The introduction of a 'grace period' was mooted, but rejected as being overly complex. The Regulations will be amended to introduce a surcharge equal to 20% of the notional chargeable amount or £2,500, whichever is the lower amount.
We have already mentioned changes to the indexation of CIL for section 73 permissions. Further changes to indexation have also been discussed, with a consideration of the use of different indices depending on the type of development. The Government response to the consultation confirms that the existing approach of indexing CIL to the Building Cost Information Service's (BCIS) All-in Tender Price Index will be retained. However, the Government has asked the Royal Institution of Chartered Surveyors to produce a bespoke index for CIL, based on BCIS.
Boosting home ownership
The Government's continued commitment to boost home ownership is followed through to the intention to exempt starter homes from CIL. Legislation is expected later this year to enable the delivery of starter homes. As this legislation is not yet in place, it is not dealt with in these 2019 amendment regulations, but further amendment regulations are expected to cover the point.
The 2019 amendment regulations are still in draft form so could change. We will continue to monitor and report on developments.