The Community Infrastructure Levy (CIL) came into effect with regulations in 2010.
Despite being contrary to the Government's pro-development stance, CIL survived the housing and growth announcements in the September Ministerial Statement, and is very much here to stay - with significant effects for developers and landowners.
A number of local authorities have already started to charge CIL, with many more in the consultation stage.
To date, six charging authorities have adopted CIL, but 37 more charging schedules are emerging and will be adopted in 2013. Authorities that wish to charge CIL have to have a charging schedule by April 2014.
The CIL charge will not necessarily be used to fund the infrastructure required for new development, meaning that section 106 agreements will still be required and are unlikely to be scaled back.
Unfortunately, the effect of CIL is to replace a planning obligations system that provided flexibility on a site-by-site basis with a fixed charge, so charging authorities must ensure their charging schedules strike the right balance between scheme delivery and CIL.
However, the regulations are geared to tax, not delivery; and this is a major issue that needs to be resolved, particularly in light of the Government's planning and growth agenda.
On 15 October 2012, the Government published draft CIL (Amendment) Regulations 2012. However, they only clarify technical issues, principally concerning:
- section 73 applications - there will not be double-charging of CIL for the same development
- applications to extend time for implementation of planning permission granted before 1 October 2010 - CIL will not be charged where the original permission was granted before a charging schedule was in place and the replacement permission is granted when a charging schedule is in place
- the CIL formula used to calculate the amount of CIL payable - there will be no overcharging for development involving the retention of some existing buildings and the demolition of others
The draft regulations do not address the substantive issues with CIL raised by the property industry. One concerns differential CIL rates in charging schedules.
For retail developments, the CIL rate can be upwards of £300-per-square metre. For this reason, large food store operators have been submitting representations in relation to a number of draft charging schedules.
In particular, certain retailers have been making submissions to charging authorities that it is impermissible as a matter of law to differentiate between retail uses for the purposes of the CIL Regulations because of the operation of the Use Classes Order; they say that the same CIL rate should apply across all retail development.
However, this is incorrect. Provided the evidence base supports the position, the CIL Regulations do allow for differentiation between different intended uses of development. This is the case even if, for other purposes, the use proposed falls within a wider Use Class.
We are aware of lobbying by the development industry not only on this issue, but also to persuade the Government to hold CIL in abeyance until the economy improves.
As the draft regulations do not address any of the industry's issues, we expect further amendments to emerge in due course.
So watch this space. The CIL today, may change tomorrow.