The New Year has started off with a bang as changes to the Community Infrastructure Levy (CIL) Regulations 2010 were laid before Parliament. The draft 2018 Regulations correct an unintended defect in the current legislation. The error had resulted in millions of pounds of extra CIL being charged, even where no extra floorspace or change in use had been applied for.
Out with the old…
The current legislation is supposed to provide that where planning permission is granted before CIL comes into force in the area (Permission A) and a later S73 permission amending Permission A is granted after CIL comes into force in that area (Permission B), no CIL is payable unless extra floorspace or a change of use under Permission B is authorised. However, indexation within the complex CIL formula meant that a CIL can be charged solely due to an indexation change from Permission A to Permission B even where there is no uplift in floorspace. Developers are currently facing this in the Nine Elms Opportunity Area.
This error was highlighted in an appeal to the Valuation Office Agency relating to Peabody’s St John’s Hill development where the valuer interpreted the legislation in a way that corrected the error.
… in with the new
The draft 2018 Regulations provide the much needed clarification. Ultimately, when calculating the amount of CIL payable on Permission B, the same index figure is to be used for Permission A and B. As such, any CIL payable will be based on extra floorspace or a change in use brought about by Permission B and not any indexation changes.
New Year’s Resolution
While the clarification will be welcomed by developers, the draft 2018 Regulations do not address various other technical problems with CIL, such as where a S73 permission is granted in respect of a permission for which CIL has already been paid. It is hoped that the Ministry of Housing Communities and Local Government will correct these as part of the forthcoming CIL consultation.