COMMUNITY INFRASTRUCTURE LEVY
From the developer’s perspective
CHRISTOPHER CANT
Community Infrastructure Levy
Christopher Cant
Contents
Topic Page
Introduction
1. Accelerating need to understand 7
2. Claimed advantages 8
3. Current drawbacks with CIL regime 9
4. Legal basis 10
B. Putting CIL regime in place
5.1 Overview 12
5.2 Charging Authority 13
5.3 Collecting Authority 13
5.4 Charging Schedule 13
5.4.1 Objective 13
5.4.2 Infrastructure 14
5.4.3 Procedure 14
5.4.4 Differential rates 16
5.4.5 Local developers 21
5.4.6 Subsequent change of use 21
5.4.7 Review 21
5.5 Reg. 123 list for infrastructure projects 22
5.6 Application of CIL 24
5.7 Annual reporting 27
C. Triggers for CIL charge
6. General 28
6.1 Charging schedule in place 28
6.2 Grant of planning permission 28
6.3 Commencement of development 32
7. Who charges CIL 33
8. Planning permission 34
8.1 Pre-CIL permission 34
8.2 What constitutes planning permission for CIL 34
8.3 General consents 35
8.4 Section 73 permission 36
8.5 Replacement permission 39
8.6 Stand alone permission 40
8.7 Building for limited period 40
8.6 Section 96A permission 40
D. Chargeable development
9.1 General 41
9.2 Building 41
9.3 Change of use 44
9.4 Unlawful development 50
9.5 Subject matter of the chargeable development 51
10. Excluded developments 52
10.1 Buildings into which not normally go 52
10.2 Change of use from one dwelling to two or more 53
10.3 New build less than 100 sqm 53
10.4 Mezzanines 55
E. Exemptions
11. Exemptions 56
11.1 Charitable exemption 56
11.2 Discretionary charitable exemption 60
11.3 Social Housing 62
11.4 Exceptional circumstances 72
11.5 Self-builds 74
11.6 Residential annexes and extensions 79
F. Procedure
12. Procedural sequence 83
12.1 Anticipated sequence 83
12.2 Liability notice 83
13. Commencement notice 86
G. Computation of CIL
14. Calculation of CIL charge 88
14.1 Formula for calculation 88
14.2 Increase in gross internal area 88
14.2.1 Measuring the internal area 89
14.2.2 Deduction of area 90
14.2.3 Formula for internal area 91
14.2.4 Mixed user developments 94
14.2.5 Internal areas deemed to be zero 95
14.2.6 Indexation 95
14.2.7 Demolition 95
14.3 Section 106 agreements 96
14.4 Remediation costs 96
H.Liability for CIL
15.1 General position 97
15.2 Assumption of liability 97
15.3 Liability when no assumption of liability notice 98
15.4 Default by person assuming liability 99
15.5 Settlements 100
15.6 Demand notice 100
15.7 Suspension of liability 101
15.8 Abatement of liability 103
15.9 Local land charge 104
I Payment
16.1 When payable in full 106
16.2 Instalments 106
16.3 Payment in kind 107
16.4 Default in payment 110
J Enforcement
17. General
17.1 Surcharges 111
17.2 Late payment interest 112
17.3 Stop Notice 112
17.4 Recovery of CIL 113
K. Reviews and appeals
18.1 Review of chargeable amount 115
18.2 Appeal regarding chargeable amount 115
18.3 Timing 115
18.4 Appeal against apportionment of liability 115
18.5 Appeal against charitable relief 116
18.6 Appeal on surcharge 116
18.7 Appeal regarding deemed commencement 116
18.8 Appeal from stop notice 116
18.9 Appeal against levy of distress 116
18.10 Appeal regarding residential annexe exemption 116
18.11 Appeal regarding self build exemption 117
18.12 Interested person 117
18.13 Form of appeal 117
18.14 Appeal process 117
18.15 Commencement of development 117
18.16 Withdrawal 118
18.17 Decision 118
18.18 Costs 118
L. Mayoral charge
19 Mayoral CIL and Crossrail contribution 119
19.1 Infrastructure funding 119
19.2 Charges 119
19.3 Exemption and relief 119
19.4 Collection 119
19.5 Payment 119
19.6 Instalments 119
19.7 Mayoral development areas 120
M. Section 106 agreements
20. Funding 121
20.1 Relationship with CIL regime 121
20.2 General test 121
20.3 Infrastructure 122
20.4 Pooling 122
20.5 Highway agreements 124
20.6 Absence of relief 125
20.7 Purchase of planning permission 125
20.8 Appeals 126
20.9 Crossrail contribution 126
N. Impact on contracts
21. Contractual provisions 131
21.1 Planning permission agreements 131
21.2 Overage agreements 131
21.3 Disposal of land 132
21.4 Leases 133
21.5 Development agreement 134
21.6 Charity/Social housing relief 135
0.Searches and Enquiries
22. Searches 136
22.1 Warnings 136
22.2 Searches 136
22.3 Enquiries 137
First Appendix- Authorities with charging schedules 138
Second Appendix Contribution areas for Crossrail contribution 150
Third Appendix – London zones for Mayoral CIL 153
This revised guide sets out my understanding of the levy as at 16thJune 2014. It is intended to further update this guide when substantial changes are made to the CIL regime. First revision 28th March 2013; second revision 8th May 2013; third revision 5th November 2013; fourth revision 16th June 2014
Illustration by David Thomas
COMMUNITY INFRASTRUCTURE LEVY
From the developer’s perspective
My purpose in writing this guide is to provide information on CIL for those involved in development. It does not cover in detail the process of establishing CIL in an area. It seems to me this is a separate topic with the focus on local planning authorities which have to bear a heavy and changing burden.
I will seek to keep it updated. This is now the fourth revision to the guide. This time the revision is caused by the amendments in the 2014 Regulations; the issuing of fresh guidance and evolving views. As more local planning authorities introduce CIL it is to be expected that more points will arise. Any points on the Guide or CIL generally will be welcomed.
This guide can be found on my chamber’s webpage at
http://9stonebuildings.com/cc_cv.shtml
or on my personal webpage which has additional material relevant to developments at
http://www.christophercant.co.uk
The current Guide represents my understanding of CIL as at 16th June 2014.
Christopher Cant
9, Stone Buildings
June 2014
Community Infrastructure Levy
Christopher Cant
A. Introduction
1. Accelerating need to understand - The number of authorities putting in place charging schedules to enable the community infrastructure levy (“CIL”) to be charged is accelerating at a very fast pace. So far forty-three authorities have now put the CIL regime in place. There are just over 360 local planning authorities in total in England and Wales. It is anticipated that about 70% will introduce it but it takes anything up to thirty months to complete the process of putting CIL in place. There would have been a pile up if there had been no extension of the original deadline of 6th April 2014 when the pooling restrictions on section 106 agreements (see section 20.4 below) would have affected all authorities regardless of whether they had introduced the CIL regime. Many authorities would have failed to have introduced CIL by then and so would have had funding for infrastructure from section 106 agreements significantly reduced without making it up from CIL receipts. The extension has saved this happening though it may be that even with the new extended deadline of 6th April 2015 there will be a number of authorities that miss the deadline.
The government shows no signs at present of bowing to the pressure from some quarters to place the CIL regime into abeyance at least until there is an improvement in the financial climate. Instead in 2013 a radical overhaul of CIL was announced leading to reforms being proposed for consultation with the outcome published on 25th October 2013 and the amending regulations coming into force on 24th February 2014. This is the fourth set of amendments but it did not really justify the description of a radical overhaul. There are still issues outstanding which have not been addressed. Affordable housing is one such issue. There will be an increasing need for a comprehensive review as more authorities introduce the levy. The considerable divergence between authorities as to rates and instalments policies will possibly have unexpected consequences and this may require change in the CIL regime.
For some authorities the predominant question now is not when to introduce CIL but whether it is viable to introduce CIL. The suggestion is that the further the authority is from the growth areas of London and the South East the less viable it is likely to be to do so. Authorities such as Wolverhampton and North Hertfordshire have said no for the moment. Some authorities such as Redcar have put the introduction on hold. Other authorities are pushing ahead and even increasing the proposed CIL rates. The Royal Borough of Kensington and Chelsea originally proposed a rate of £650 for residential development but has now increased that proposed rate to £750 due to increasing house prices.
However, whatever the final figure for authorities implementing the CIL regime it is clear that there is a need to grapple with the terms and implications of the new CIL regime as it will impact many proposed developments. The immediate question for many developers will be whether to push ahead now to avoid the imminent introduction of CIL if the development site is situate in an area which has yet to introduce the levy. With some developments there may be an advantage in waiting as the cost of the section 106 planning obligations will exceed the CIL charge.
2. Claimed advantages for CIL regime – it is considered that the new regime will have a number of advantages as against the previous predominant reliance on section 106 agreements.
2.1 Simple to operate – once the authority has put in place the CIL charging system it is claimed to be easier and speedier to operate than the system of section 106 agreements. There is a reduced scope for negotiation in contrast to the costly and lengthy negotiations sometimes involving section 106 agreements. This reduces the administrative and legal burden on both the authorities and the developer. Section 106 agreements will still continue to have a role albeit in the main focused on specific infrastructure issues related to the particular site and affordable housing. An element of negotiation and legal administration is being brought back by additions such as infrastructure payments.
2.2 Simple to comprehend – it is not the first time that such a claim has been made for a new tax regime. The complexity of the recent amendments and the unanswered queries being raised suggests that this aim will not be achieved.
2.3 Certainty – developers will know where they are when formulating proposals for a development as it will not to the same extent as previously depend on the outcome of negotiations for a section 106 agreement. The calculation of the prospective CIL charge will be comparatively easy. However, the benefit of this certainty is reduced by two factors. First, with many developments it will be necessary to still negotiate section 106 agreements. Second, the amount of the CIL charge may well be at a level which discourages development notwithstanding the requirement that when setting the local CIL rates account must be taken of the need not to deter developments.
2.4 Increased infrastructure contributions for authorities - in contrast for authorities it is likely that there will be a greater contribution to the provision of infrastructure than with section 106 agreements only. At the end of 2012 the government estimated that the annual receipts for CIL by 2016 would be £1 billion so substantial sums are involved. Concern has been expressed that the CIL regime merely changes the mechanism by which the same pot is produced as was achieved before the introduction of the CIL regime. However, it may be in some areas at least that the pot will increase in size. It is expected to capture a broader range of developments. This is the enthusiastic outcome reported by Newark & Sherwood DC which was one of the first authorities to put in place a charging schedule. This continues to be supported by Redbridge BC. It will be easier to charge a wider range of developments and the level of contribution will take into account the authority’s overall infrastructure priorities without having to relate them to the particular development site. One issue for authorities in this context could have been the increasing potential for CIL liabilities to be revised due to development changes even after the development has started. If such revisions resulted in a reduced CIL liability and the need to make a repayment this would mean less certainty for the authorities. This is the case with section 73 planning permissions but not abatement as a result of a subsequent standalone planning permission. With the later there is no entitlement to a repayment if the CIL liability arising from the subsequent stand alone planning permission is less than the earlier CIL liability.
2.4 Reduces scope for purchasing planning permission – one of the criticisms of unrestricted section 106 agreements is that large developers can seek to purchase planning permission by unilaterally offering to undertake infrastructure works. It is anticipated that the scope for this to occur with the CIL regime is very significantly reduced (see para. 20.7 below). It will be interesting to discover whether that expectation is fulfilled.
2.5 Section 106 system – the current section 106 system is criticised for being ineffective, arbitrary, lacking transparency, not encouraging or assisting with funding of major infrastructure projects, having a disproportionate effect on major developments and open to purchase. The scope of section 106 agreements will be significantly reduced but not wholly removed as they will still be available for site-specific matters.
3. Current drawbacks with CIL regime – until the CIL regime has been fully brought into force by a significant number of authorities the full impact of this new charging system will not be fully appreciated but there are already serious complaints against the regime.
3.1 Delivery of infrastructure – until the 2014 Regulations a very considerable drawback was the absence of any procedure in place by which the developer could ensure the provision of particular infrastructure for the benefit of the development site and certainly not within a timely manner. The developer will pay the CIL charge but not be certain that the infrastructure needed will be put in place. The only guarantee of delivery is if the developer provides it. As a result of reg. 9(6) of the 2014 Regulations it is now possible that a developer may at the election of the authority provide infrastructure in lieu of all or part of a CIL liability. Dependent on how liberally this new procedure is operated by authorities this could be a practical and significant change which will have advantages for both the developer and the authority. It will remove the burden from the authority of organising and funding such infrastructure whilst giving the developer certainty. It will be dependent on the particular authority agreeing to use the procedure. One further limitation will be that this will only apply to land which is owned by the developer or where the developer can ensure that the infrastructure will be provided but it is a valuable start.
3.2 Reduce construction of affordable housing – at present it appears that fewer developments which include affordable housing will be put forward. This problem is under review but no real solutions have been put in place. It is noted that at least one authority, Dartford, has introduced varying CIL rates for residential development dependent not just on the number of dwellings comprised in the development but the extent to which affordable housing is included. This could be a real encouragement dependent on the extent to which the rates vary.
3.3 Discouraging developments – it has been said that the level of CIL being fixed particularly for residential development is discouraging developments. For example it has been reported that the house builders Galliford Try have stated that the respective CIL rates for residential development fixed by Exeter and Torbay of £80 psm and £100 psm respectively are overcharging when £35 psm would suffice. The challenge in the judicial review case R (on the application of Fox Strategic Land & Property) v Chorley (see section 5.4.4.3 below) the CIL rate for residential development challenged was £65. Many developer’s views on Wandsworth residential rate of £575 psm for one zone or Kensington and Chelsea’s £750 would probably be unprintable It will be interesting to see whether instead of stopping developments one effect may be for a portion of such developments to be moved to other areas with a more attractive CIL rate.
3.4 Section 106 agreements – the CIL regime does not wholly replace the system of section 106 agreements and there will be a continuing need for such agreements with certain types of sites. Further sites subject to existing section 106 agreements may be caught by the operation of the CIL regime although the scope for double charging has been reduced by the new regulations in 2012 (see para. 8.4.1 below). It seems that some authorities will attempt to mitigate the restrictions on them relating to section 106 agreements and this is likely to further complicate matters. There is a significant immediate need to renegotiate some current section 106 agreements and a mediation service focused on this has been set up to assist such renegotiations.
3.5 Negotiations – as more amendments are made the need for negotiations involving authorities increases. In the context of section 106 planning obligations it is still there but to a much more limited extent. However, it will also be needed if CIL charges are to be discharged in part or whole by a transfer of land payment or the provision of infrastructure. Such negotiations are likely to take some time.
3.6 Land bank – there is a substantial land bank which was acquired at prices which did not take into account the application of the CIL regime to possible developments of such land. This may deter developments in some areas where high CIL rates have been fixed for the particular type of development.
4. Legal basis –
4.1 Sources - the CIL regime was set out in the Community Infrastructure Levy Regulations 2010/948 (“the 2010 Regulations” which took effect on 6th April 2010) based on the authority and in accordance with the provisions contained in Part 11 of the Planning Act 2008 (“the 2008 Act”). The principal charging provision is section 206 of the 2008 Act. Amendments have been made principally by the Community Infrastructure Levy (Amendment) Regulations 2011/987 (which took effect on 6th April 2011); the Community Infrastructure Levy (Amendment) Regulations 2012/2975 (“the 2012 Regulations” which took effect on 29th November 2012); the Community Infrastructure Levy (Amendment) Regulations 2013 (“the 2013 Regulations” which took effect on 25th April 2013); and the Community Infrastructure Levy (Amendment) Regulations 2014 (“the 2014 Regulations” which took effect on 24th February 2014). There is the threat of many more amendments to come. A comprehensive review of CIL has been promised which will result in more amendments but it may be that piecemeal change will occur periodically.
4.2 Simplicity – one objective with the CIL regime was that it should be simple and readily comprehensible. The terms of the amendments to the 2010 Regulations show how hard it will be to achieve the objective of simplicity with this levy. These amendments also highlight what seems to be a continuing problem with the drafting of the CIL regime. There is a failure to spell out clearly how the provisions are intended to operate and an excessive reliance on assumptions. There is also an understandable tendency to rely on concepts taken from planning law which can result in uncertainty. For example, amongst the new amendments in the 2014 Regulations the planning concept of abandonment of planning permission is introduced when determining whether a deduction may be made for the internal floor space of an existing building. This depends on intention and is uncertain in application. When relevant it could throw up difficult issues both legal and factual. This is not desirable with this type of tax.
In addition the new amendments are eating into the underlying rationale for CIL that developers should contribute to the cost of infrastructure because of the impact that the development has on infrastructure needs. Dwellings constructed by a self-builder will impact infrastructure in the same manner as one constructed by a developer. Yet the former is now exempt. Similarly there is a move away when providing for CIL monies to be passed to local councils or to be applied for local communities but not in a manner which does not involve infrastructure.
4.3 Approach to construction – the old presumption that a taxing statute has to be construed strictly in favour of the taxpayer is no longer the guiding principle but with local authority taxes it has been stated by Sales J. in Harrow v Ayiku [2012] EWHC 1200 (Admin) in the context of council tax that “it remains the case that in a context in which a clearly tenable and natural reading of a provision in tax legislation favours the subject, such a reading is (subject to any clear indications to the contrary) to be preferred. The legislator is presumed to have intended to produce a result which is fair to the tax-payer and not liable to defeat his or her reasonable expectations derived from the terms of the legislation.” Later in his judgment he made the point that setting a general rule means that there is a risk of hard cases falling the wrong side of the line but being able to imagine such cases will not be allowed to dictate the correct interpretation.
B. Putting CIL regime in place
5.1 Overview - CIL does not apply automatically in all areas. It has not been introduced as a normal tax applicable uniformly to the whole country. Each authority has to elect to introduce it to the area for which it is responsible. It will decide the rates at which it is applied in that area. This requires the authority to set in place a charging schedule and to also issue a reg. 123 list of infrastructure projects. The former will set out the rate or rates applicable to all or certain specified types of development for which the authority gives or is deemed to give permission and this will be at a specified rate per square metre. The reg. 123 list sets out the projects or type of infrastructure which are to be financed by the authority exclusively from the CIL income. It is not simply a matter of publishing such a schedule and list. There is first a demanding procedure to be gone through by the authority.
5.1.1 Balance to be struck - regulation 14 of the 2010 Regulations requires a Charging Authority to strike the appropriate balance between the “desirability of funding from CIL (in whole or part) the actual and expected estimated total cost of infrastructure required to support the development of its area” and “the potential effects (taken as a whole) of the imposition of CIL on the economic viability of development across its area”. The rate set should “not threaten the ability to develop viably the sites and scale of development identified in” the relevant Local Plan (in England), the Local Development Plan (in Wales) and the London Plan (in London).
5.1.2 Absolute obligation - until the 2014 Regulations the requirement was that the charging authority “must aim to strike what appears to the charging authority to be an appropriate balance between” the two stated objectives. This permits a subjective element. With effect to authorities who have not published a draft charging schedule prior to 24th February 2014 (reg. 14(2) 2014 Regulations) those words have been deleted and such authorities are now required to strike such a balance rather than aim to and it is no longer enough that the charging authority considers that it has struck the required balance.
5.1.3 Evidence - the preliminary draft charging schedule has to be backed by evidence which is subjected to scrutiny by an examiner who has to be satisfied that the authority has complied with the requirements imposed on it. The charging authority must be able to justify how the proposed CIL rates will contribute to the implementation of the local plan and support development within the area. The authority will need to explain the appropriate balance it has struck; justify that balance; explain and substantiate how the levy will contribute to its local plan and also “support the development of their area”. The concern is that some rates may be set which will affect the financial viability of developments particularly residential developments. It is not intended that CIL should be a means by which the authority takes a share of profits from highly profitable developments
5.1.4 Draft reg. 123 list of infrastructure - as well as providing a draft charging schedule when setting the CIL rates a charging authority will also be expected now to put forward a draft reg. 123 list which it intends to publish as its infrastructure list (see section 5.5 below) as part of the relevant evidence for consideration and examination (reg.14(5) added by reg. 5(3)(b) 2014 Regulations).
5.1.5 Transitional provisions - these changes as regards the balance to be struck and the draft reg. 123 list will not apply if the charging authority has already published a draft Charging Schedule before 24th February 2014 (reg. 14(2) 2014 Regulations). Such authorities will have expended significant time, energy and funds on progressing the implementation of CIL and it would be wrong for those authorities to have to take on an additional burden. Those authorities that have started the process but not published its draft charging schedule by that date shall have to take account of the changes before publishing the draft charging schedule.
5.2 Charging authority – the charging authority will be the local planning authority (defined as regards England by section 37 Planning and Compulsory Purchase Act 2004 and section 78 for Wales) with the exception of the Broads Authority and the Isles of Scilly Council who are the only charging authorities for their areas. As mentioned above there are around 360 such authorities. In London the Mayor of London is an additional charging authority in addition to the local borough councils. This may change as a result of the Localism Act 2011 which confers the power on the Mayor of London to create Mayoral Development Corporations (“MDC”) to act as a local planning authority and thus become a charging authority for the purposes of CIL in place of the local borough council (see para. 19.7 below). The Mayor will also be able to carry out the functions of a charging authority on behalf of a MDC having initiated the establishment of the MDC but prior to that establishment (see new reg. 11A 2010 Regulations). Where a London borough council granted planning permission and then a MDC is established the CIL payable due to the development authorised by that planning permission will be received by the borough council (reg. 63A). For such purposes the borough council will remain the charging authority and the collecting authority as regards that CIL.
5.3 Collecting authority - Normally the charging authority will be its own collecting authority (reg. 10(1)) but it is possible for this to be undertaken on behalf of the charging authority by another body such as the Homes and Communities Agency, an urban development corporation or an enterprise zone authority (reg. 10(5)). In London the local borough council will be the collecting authority for the Mayor of London’s CIL (reg. 10(3)) and that is the case even if the borough council has not set up its own CIL regime. Care has to be taken to check whether the charging authority is also the collecting authority because the regulations distinguish between the charging and collecting authority – for example, notices often have to be given to the collecting authority and if this body is not the charging authority then service on the charging authority will not be effective. For a separate collecting authority to be able to function properly it will have to be provided with the necessary information. In particular planning details must be passed to the collecting authority within 14 days of the grant of planning permission.
5.4 Charging schedule –
5.4.1 Objective - the schedule of CIL rates for the particular area is intended to be based on the up to date development plan for the area. The charging authority has to put forward evidence to justify the CIL rate or rates that it wishes to charge. The authority has to balance raising the funding required for the infrastructure needs of the area which are to be paid for from the CIL revenue as against not putting at serious risk the overall development of the area (reg. 14). Account has to be taken of other funding sources which will be principally core government funding for infrastructure and funding from anticipated section 106 agreements and highway improvement schemes. Section 106 obligations will be subject to the restrictions in regulations 122 and 123 of the 2010 Regulations (see section 20 below). As a result of the changes introduced by reg. 12 of the 2014 Regulations the restriction related to the reg. 123 list of infrastructure will apply to section 278 highway agreements (see section 20.5 below). In addition the London boroughs must also take into account the Mayoral CIL to be charged as well when assessing the effect on economic viability (reg. 14(3)).
5.4.2 Infrastructure – the non-exclusive meaning of infrastructure contained in section 216(2) Planning Act 2008 includes roads and other transport facilities, flood defences, schools and other educational facilities, medical facilities, sporting and recreational facilities (such as park improvements or leisure centres) and open spaces. CIL is to be raised for the purpose of “supporting development by funding the provision, improvement, replacement, operation or maintenance of infrastructure” (section 216(1) as amended by the Localism Act 2011). This amendment ensures that the operation and maintenance of infrastructure can be funded from this revenue source and it is not a pre-condition that the provision of such infrastructure should have been funded by CIL receipts. CIL receipts can, therefore, be applied by the authority in funding a very wide range of facilities. It will cover play areas, parks, academies, free schools, police stations.
Importantly what is currently deliberately excluded from this definition is affordable housing so that the monies raised by CIL cannot be applied directly for that purpose and reliance has to be placed on section 106 planning obligations. It has been suggested that CIL receipts should be capable of being applied to fund affordable housing but as yet no proposals have been put forward notwithstanding the current proposals under consultation. Affordable housing may have an indirect effect on CIL. Greater emphasis has been placed on the impact of the proposed CIL rates on affordable housing targets during the examination stage of the introduction process. Differential rates are being fixed taking into account the amount of affordable housing in a residential development.
The suggestion that a meaningful proportion of such receipts be passed to neighbourhood bodies has now been put into effect in the 2013 Regulations and these funds are not subject to such limitation and may be applied with regard to affordable housing (see section 5.6.2 below).
As regards the Mayoral CIL education and health have been specifically excluded so that it cannot be used to fund such projects and is currently focused on transport and in particular Crossrail.
5.4.3 Procedure – I do not propose to go through the process of setting the CIL rates in detail as it is a matter principally for the authority and for those developers and concerns that are able to fund involvement in the statutory process. For example, a major retailer intervened with the drafting of the charging schedule by Poole Council because it objected to the higher CIL rate proposed for large supermarkets. The intervention resulted in the removal of that differential rate so that the rate is the same for all retailers regardless of size. For most developers this will not be a realistic option. In any event the outcome R (on the application of Fox Strategic Land & Properties Limited) v Chorley BC [2014] EWHC 1179 (Admin) will operate as a deterrent to challenging charging schedules in the Courts.
5.4.3.1 Official summary - The process for preparing a charging schedule is set out in para. 2.2.1.1 February 2014 Guidance and involves
(i) evidence arranged by authority on which to base draft charging schedule;
(ii) preliminary draft charging schedule prepared;
(iii) preliminary draft charging schedule published for consultation;
(iv) consultation takes place over a minimum period of four week (the proposal to increase this to six weeks in the 2013 consultation was not taken up);
(v) draft charging schedule prepared taking account of representations received under consultation;
(vi) draft charging schedule published;
(vii) period for further representations to authority;
(viii) public examination of draft charging schedule and recommendations made by examiner;
(ix) examiner’s recommendations published;
(x) examiner’s recommendations considered by authority;
(xi) approval of charging schedule and publication.
5.4.3.2 Steps in process - the authority must first prepare a preliminary draft charging schedule and is now encouraged to also prepare a draft reg. 123 list of infrastructure both with accompanying supporting evidence on which it will then have to consult the specified consultation bodies, local residents and businesses (reg. 15). Following this a new draft charging schedule with the relevant evidence and draft reg. 123 list of infrastructure will be published to enable representations to be made during a period of at least four weeks (reg. 16) which it was proposed should be extended to six weeks but which suggestion was not taken up. The authority has the power to select a longer period. Then unless withdrawn (reg. 18) the draft schedule, the draft reg. 123 list of infrastructure, the relevant evidence, and the representations made with a summary of the main issues raised by the representations will go to an independent examiner to be considered at a public hearing conducted in a manner directed by the examiner (reg. 21). The examiner may recommend one of three courses - approval, approval with specific modifications or rejection on the basis that the legislative requirements have not been complied with. If there are to be changes or a new schedule then the process has to be gone through again. The council must then approve the draft charging schedule and publish it on the authority’s website.
As mentioned above with authorities which have not published a draft charging schedule before 24th April 2014 a draft reg. 123 infrastructure list should also be included in the process (see section 5.1 above). Authorities which have published a draft charging schedule before that date do not need to as it would add to an unexpected burden to the process. The reason for the change is so the effect of the list can be taken into account. This change will restrict the flexibility of the authority with regard to what appears on the list. However, it has been reaffirmed that there will be no requirement that CIL receipts can only be applied for infrastructure appearing on that list so that authorities remain free to apply CIL receipts in other ways provided that it is on infrastructure.
5.4.3.3 Challenge to charging schedule - the setting of a charging schedule may be challenged by judicial review. Such a challenge was made in R (on the application of Fox Strategic Land & Properties Limited ) v Chorley BC [2014] EWHC 1179 (Admin) to the CIL rate of £65 fixed in relation to residential developments in charging schedules approved and published by Chorley BC, South Ribble BC and Preston BC. The applicant was a large landowner in the area. The challenge was made on the ground that the examiner’s approach was irrational, based on a misunderstanding of development costs and had failed to take account of the impact of a new development policy to be introduced regarding dwellings in 2016. It failed on all grounds. The task was an uphill struggle. It was not a rehearing of the examiner’s decision but the applicant had to show that the decision was outside the bounds of a reasonable decision-maker. In this case it was held that the decision of the examiner in recommending approval of the draft charging schedule was not outside those bounds. At para. 101 Mr. Justice Lindblom described the allegation of irrationality as particularly ambitious. Much as developers and landowners will dislike the CIL rates being set for residential development it will be difficult to successfully challenge any charging schedules approved by an authority following a properly conducted examination.
As regards the argument that account was not but should have been taken of increased development costs that would result from a proposed change in 2016 to the development plan this was not accepted. The need for a charging authority to keep its charging schedule under review is emphasised in the official guidance (para. 2.2.6.3 February 2014 CIL Guidance). The charging authority needs to ensure that “levy charges remain appropriate over time”. There are no rules as to when such reviews should be undertaken but if there is to be a substantive review in the Local Plan then it is suggested in the CIL Guidance that it would be sensible to link a review of the charging schedule with that review. The need on the part of the charging authority to monitor and when appropriate review the CIL rates meant that in the Chorley BC case it was open to the authorities and the examiner to disregard in 2013 the proposed future increase in development costs in 2016.
5.4.4 Differential rates –
5.4.4.1. General - there are no uniform CIL rates applicable across the country and each charging authority must set its own rates and thus they will differ greatly from area to area. Each area will have its own funding requirements for future infrastructure expenditure, anticipated infrastructure projects and expected types of development. In addition each authority can set differential rates. There is no common approach with differential rates. A few authorities may go for a single rate regardless of location or type of development. Many more will have differential rates depending on the type of development being carried out and, or alternatively, dependent on the part of the area in which the development is to be carried out. Again there will be no uniformity as to the differing types of development that are to be charged at different CIL rates. It has been emphasised in the official guidance that differential rates “should not be used as a means to deliver policy objectives” but must be justified by reference to robust evidence on the economic viability of development. The different CIL rates currently being charged are set out in the First Appendix and a glance through that will show the variety that there is.
(a) Original basis for differing rates - until the 2014 Regulations it had been possible to have different rates set by reference to “different zones” and “different intended uses of development” (original reg. 13). Charging authorities have made great use of the ability to have different CIL rates for different types of user or different areas but without there being a common approach. For example, some, such as Bristol, have imposed a higher CIL rate for student residential accommodation than for ordinary residential development whilst others, such as Exeter, are seeking a lower rate for student residential accommodation. There has been some resistance to different rates by reference to different sizes of development. This has been attempted in particular with regard to retail developments. In some cases it has been accepted by the examiner but in some areas the authority has had to withdraw the proposed differential rate. Both Wycombe and Plymouth have different CIL rates for retail development dependent on the size of the development. For example, in Wycombe there is a CIL rate of £200 psm for convenience based supermarkets and retail warehouses whilst other retail developments are chargeable at the CIL rate of £125 psm.
It had been emphasised in official guidance that such differences must be justified “by reference to the economic viability of development” of the different areas or the different types of development. In the guidance the point was made that a major strategic site may be a zone for these purposes if justified by the evidence. It was said in the 2014 Consultation paper that “differential rates cannot currently be set in relation to the size of a development.” (para. 21). Even then this last statement needed qualifying. As stated above differential rates have been set by reference to the size of a development. For example as set out above different rates have been fixed dependent on the size of a retail unit. This has been possible because the relevant examiner has accepted the evidence supporting the conclusion that the different types of retail development constitute different markets. With the changes effected by the 2014 Regulations such evidence will presumably no longer be needed albeit that evidence will still be required to justify the difference on the basis of economic viability and to show that it does not give rise to notifiable State Aid.
(b) extended basis for differing rates - the 2014 Regulations (reg. 5(2)) have extended the ways in which differential rates may be set to include different rates set by a charging authority by reference to intended gross internal area of development (reg. 13(1)(c)) and by reference to the intended number of dwellings or units to be constructed or provided (reg. 13(1)(d)).
(i) Retail - the most obvious type of development that will be affected by this change is those applied to permissions for retail development. Attempts to introduce higher CIL rates for new supermarkets have been vigorously opposed. The ability to differentiate by reference to gross internal floor area now removes any doubt as the justification of such approaches by authorities. It is left to each authority to select the size of unit which will qualify as a supermarket. Inevitably there is no uniformity. The minimum area varies between 500 square metres and 2000 square metres.
(ii) Residential - differentiating by reference to the number of dwellings and units has been adopted as a method already by some authorities. For example, there can be different rates dependent on the number of dwellings constructed pursuant to a planning permission and this can be further elaborated by reference to the amount of affordable housing included in the development.
(iii) Taking effect of change - this extension of the methods of differentiating does not apply to any charging schedule if the draft charging schedule was published before 24th February 2014 (reg. 14(2) 2014 Regulations). It leaves open the possibility of challenge to charging schedules which include CIL rates differentiated by gross internal area or the number of dwellings or units constructed and in respect of which the draft charging schedule was published before 24th February 2014. If this is likely to be a real problem then it would be sensible for any such authority to revise or renew the charging schedule.
(c) “Keep it simple” - there has been a strong trend for each authority to set rates which are particular to its area and different from all other areas. Many of the charging schedules have contained complex sets of rates. The official guidance is that charging authorities should seek to avoid “undue complexity” and limit the permutations of different charges set within the authority’s area. One reason is to reduce the risk that the differential rates will not be State aid compliant (see para. 5.4.4.6 below). It has also been emphasised that differential rates “should not be used as a means to deliver policy objectives” (para. 2.2.2.6 February 2014 CIL Guidance). For developers operating in a number of areas or nationwide the differences in rates will be an inconvenience and will require considerable thought to be given to the impact of potential CIL liabilities dependent on the location of a particular development site.
(d) Emergency services - it is to be expected that authorities will want to ensure that developments for emergency services will not be subject to anything other than a zero rating for the purposes of CIL. However, this is not always the case. Brent has a CIL rate of £40 psm for fire and police stations. This rate also applies to water and waste infrastructure.
5.4.4.2 Use –
5.4.4.2.1 Meaning - one basis for differential CIL rates is by reference to “different intended uses of development” (reg. 13(1)(b)). There is no definition of “use” for these purposes. It has been argued that it means the use classes in the Town and Country Planning Act (Use Classes) Order 1987 (“Use Classes Order”). This would not appear to be correct. This is a point which has been made in the official guidance ( the most recent being para. 2.2.2.6 of the February 2014 Guidance) in which the point is explicitly made that “use” is not tied to the meaning in the Planning Act (Use Classes) Order. It was proposed to clarify this point to put it beyond doubt in the 2014 Regulations but that opportunity was not taken. Subject to the case of retail developments it is to be expected that many CIL rates will be set by reference to the use classes in the 1987 Order but this is not a requirement.
5.4.4.2.2 Retail - The main proponent of the argument that the meaning of “use” is linked to the Use Classes Order has been the large retailers and in particular the supermarkets. The reason for this is their desire to prevent authorities establishing different CIL rates by reference to size of retail units. If the meaning of “use” is limited in the manner argued then there would only be scope to have a differential rate relating to retail use and it would not be possible to distinguish between different types or sizes of retail unit or a combination of the two. The larger retailers will then benefit from the single CIL rate applicable to all retail units which must inevitably be much lower as it has to take into account smaller units. So far as I am aware there has been no judicial decision based on this argument. However, when considering some draft charging schedules there has been an acceptance by independent examiners that it is possible to impose different CIL rates for retail use dependent on the size of unit and the type of retail user but to be justified this requires evidence showing that the differences in size reflect different characteristics of retailing and relate to different markets. In a number of cases, such as Huntingdonshire and Wycombe, the examiner has accepted that the evidence did justify splitting retail use. With Poole the examiner did not. It will be interesting to see whether these differential rates for retail units are challenged as being ultra vires the CIL regime. The recent updated guidance on this point mentioned in para. 5.4.4.2.1 is relevant. With the change in reg. 13(1)(c) now taking effect allowing the scale of development to be a differentiating factor this is unlikely to be an issue. If there were a challenge the authority could revisit and review the CIL rates on the basis of the change in the 2014 Regulations.
5.4.4.2.3 Formulation of retail - the class may be formulated in a different manner altogether than just retail. For instance, the Broadlands charging schedule has a different rate for “large convenience goods based stores of 2000 square metres gross or more”. It then specifies that this is a store where more than 50% of the net intended floor area is intended for the sale of convenience goods. These are defined as covering food, alcoholic and non-alcoholic beverages, tobacco, periodicals and newspapers and non-durable household goods. This is an approach which has been adopted by some authorities whilst others have adopted differing definitions of the type of store covered. Wycombe set the limit on floor space at 280 sqm whilst Plymouth set the limit at 1000 sqm.
There may be problems ascertaining ahead of the commencement of the operation of the particular retail unit whether it is within the particular definition of store adopted by the authority. Reliance will have to be placed on the retailers’ proposals and projections. As mentioned above the amendment to reg. 13 (para. 5(2) 2014 Regulations) allows differential rates to be set by reference to the size of development which presumably means now that there is no need to prove an identifiable market.
5.4.4.3 Within use class - when differential charging rates are fixed by reference to particular use classes that will lead to issues as to whether particular developments fall within such use classes.
5.4.4.3.1 Class C3 - One example of this is CIL rates charged on residential developments by reference to class C3. Will this include houses built for holiday lets?
There are a series of planning cases on this point leading up to the Court of Appeal decision in Moore v SSCLG [2012] EWCA 1202. These say that a holiday home may or may not be within Use Class C3 depending on the circumstances. Major factors will be the type of building, number of bedrooms, number of people staying and the type of groups occupying. Ordinary dwellings with lettings to families should be within the class. In contrast a large building with large groups of 20 occupying is unlikely to be within the class. Those cases were concerned with whether there had been a material change of use. The big difference between those cases and those relating to CIL is that there was a history of use to be considered in the former cases whereas that will not be available when planning permission has just been granted.
5.4.4.3.2 Appeal on holiday home - This issue has been considered in a reg. 114 appeal (on the VAO website described as substitution of approved block of 5 No. holiday units into a single 9 no. bedroom holiday unit). The decision in the Sheila Moore case was applied. It was not enough that the building was going to be used exclusively for commercial holiday lets. Account was taken of the planning permission, the applicant’s planned use of the building and a number of enquiries for lettings. The conclusion was reached that it was likely that a significant number of future occupiers would not be occupiers living together as a family and thus it fell outside Class C 3. As a result no CIL was payable. There is no reason why the authority should not amend the charging schedules to put beyond doubt the matter. The uses specified in the charging schedule do not have to be by reference to use classes.
5.4.4.4 Location of developments – for developers with a choice as to where developments are carried out CIL will be a significant factor to be taken into account. The absence of a uniform approach means that the CIL rate set by some authorities for particular types of development will be more attractive that those set by other authorities. In particular this could be an important influence in the locating of retail and residential developments. Some authorities are seeking to introduce a different CIL rate applicable to student residential developments. Bristol has set a higher rate of £100 psm than with ordinary residential developments (£70 psm for Outer zone and £50 psm for Inner zone). In contrast Exeter has set a lower rate of £40 psm for student purpose built residential developments than the CIL rate of £80 psm for ordinary residential developments. Although not a proper justification one possible reason for the higher CIL rate with proposed developments to provide student accommodation is that such developments produce a greater profit margin. Ordinary residential developers will also be affected. For example, Wandsworth LBC has set a CIL rate for residential development at £575 psm in one zone. This is in contrast to, say, Shropshire which operates two rates of £40 psm and £80 psm dependent on the zone. Other authorities are drawing a distinction between high and low rise residential developments. Retailers will be similarly affected. Although Poole has had to reconsider its attempt to set different CIL rates by reference to the size of a retail development this has not deterred Exeter from setting a CIL rate of zero for supermarkets in the City centre and £125 psm outside the City centre. All such variations emphasise that the CIL rate applicable to a development will need to be considered and thought given as to whether a more favourable location can be found at a lower CIL cost.
5.4.4.5 Mixed user – as stated above the differential rates as regards types of development do not have to be formulated by reference to classes of planning use. However, if they are not then there could be a problem when permission is granted for a planning class which includes more than one type of development and they are chargeable at different rates. How is the CIL to be calculated? The same point arises if the planning permission granted authorises more than one class of use and different CIL rates are applicable. Reliance cannot be placed just on the terms of the planning permission. It will be necessary for the charging authority to investigate further as to the precise nature of the development to be carried out. A pragmatic solution will be for a liability notice to be issued on the basis of the information available at the time that the planning permission is granted and then once there is certainty as to the actual intended use a revised liability notice will need to be issued which will replace the earlier liability notice. This emphasises the importance of the charging authority being provided with full information at an early stage as it is in the interests of both sides that the amount of the CIL liability is established accurately as soon as possible. It suggests a degree of continuous engagement which may be hard to meet on the part of the authority. However, attempts to increase the CIL liability will receive a hostile reception.
5.4.4.6 State Aid – when setting different rates within its area the charging authority is responsible for ensuring that such differences are State Aid compliant. They must not provide a selective advantage. In consequence the charging authority must justify any differences by consistent evidence relating to economic viability
5.4.5 Local developers – for developers carrying on their business in a particular area consideration should be given to taking part in the consultation process and making representations. The CIL rate will be a permanent, continuing and important factor in the development costs of the business.
5.4.6 Subsequent change of use – there may be a trend to carrying out an initial development for a use which attracts a low CIL rate and then subsequently seeking to change to a different use which would have attracted a higher CIL had it been the initial use. If there is no increase in internal floor area and the building has been in lawful use for at least six months prior to the change of use there should be no CIL liability as a result of that change. Whether such a course of action will be feasible will depend on the CIL charging structure of the relevant charging authority and the local CIL rates applicable to the differing types of development. It will also depend on other practical factors such as whether the buildings constructed in the development are suitable for the alternative use or if it is economic to replace those buildings by new appropriate buildings. If such a trend were to begin it will be interesting to see how authorities react to future change of use applications. It has been raised in an online CIL forum and the response seemed fairly pragmatic. The view was that at present nothing could be done to stop but it may not be a problem as in practice it may rarely be possible to achieve.
5.4.7 Review – it is emphasised in the official guidance that charging authorities should keep their rates under review so that they remain appropriate. In particular account should be taken of changes in market conditions (para. 2.2.6.3 February 2014 Guidance). The worry is that this will result in the increase in CIL rates relating to residential developments. This is borne out by the increase by Kensington and Chelsea BC from £650 to £750 in the proposed rate for residential development. A review will be particularly appropriate if the authority is proposing to review its local plan. The requirement that an authority keep under review the CIL rates in a charging schedule was a factor in the Fox Strategic judicial review case. Expected increases in development costs three years ahead due to changes with regard to the building requirements could be coped with by a future review. The judgment emphasised that the charging authority did not have the power to set CIL rates for a fixed period. Once set the rates would continue unless and until revised or withdrawn.
5.4.8 Monitor authority’s CIL rates - As an authority’s CIL rates are not set in stone it is important to monitor the relevant authority’s website to ensure up to date rates are being used for costing purposes. There are no proposals to introduce controls or restrictions with regard to the process of review to be adopted. In the February 2014 Guidance it is stated that any revision of an authority’s charging schedule (in whole or in part) should follow the same process as the original process for establishing the charging schedule. Changes in the CIL regime such as the change as regards differential rates may themselves cause an authority to reconsider its charging schedule. It may, for example, encourage authorities to introduce different CIL rates for supermarkets.
5.5 Reg. 123 list of infrastructure projects – this is a vitally important element of the CIL regime and will need to borne in mind by developers.
5.5.1 Requirement for list - the CIL revenue has to be applied in the provision, improvement, replacement, operation or maintenance of infrastructure but there is no prescribed means of challenging the application of such funds by an authority or requiring particular infrastructure projects to be carried out. The only real control is that the authority cannot seek to impose a planning obligation with a view to funding a type of infrastructure or an infrastructure project which the authority is funding exclusively through the CIL regime (reg. 123(2)). In order to police this restriction the authority has to publish a list of infrastructure projects and types of infrastructure that the authority intends to be funded wholly or partly by CIL. This means that if the authority is to have a charging schedule setting rates but wishes to make use of section 106 agreements as an additional means of funding then it must also have a reg. 123 list. If it does not have such a list then all infrastructure must be funded by CIL and there will be no scope for section 106 funding (reg. 123(4)). Any project or type of infrastructure appearing on such a list will have to be funded by CIL and not by section 106 planning obligations. However, this will not prevent section 106 funds accruing before the introduction of the CIL regime from being applied in such a manner. The stated principal purpose for the list is to provide transparency on what the charging authority intends to fund in whole or part through the CIL regime and to assist in achieving this objective the draft list should in the future be provided as part of the consultation and examination process with authorities which had not published a draft charging schedule by 23rd April 2014 (see section 5.1 above). It means that care has to be taken by the charging authority over the content of the list and the manner in which the projects and types of infrastructure included are described. As part of the examination process when setting up the CIL charging schedule for the area the charging authority should have set out how its section 106 policy will be affected by the introduction of CIL for the area.
5.5.2 Examples –
5.5.2.1 Redbridge – this authority has opted in its reg. 123 list for specifying the generic type of facilities that CIL will be used to fund. It covers its education facilities without any exception as well as leisure, health care, community care and community facilities, provision of open space and transport improvements. However, originally this was not as simple as it appeared at first sight. For example, if consideration was being given to a large residential development within that area it cannot be said with certainty that no section 106 planning obligations will be required for matters such as schooling or community facilities. The reason for this was that at the bottom of the Redbridge list was an exclusion which stated that “Unless the need for the infrastructure arises directly from five or fewer developments, where section 106 arrangements may continue to apply if the infrastructure is required to make the development acceptable in planning terms.” This sought to comply with the restrictions imposed on section 106 planning obligations by regulations 122 and 123 of the 2010 Regulations (see para. 20.4 below) whilst at the same time seeking to reserve the ability to impose planning obligations which relate to any of the facilities listed in the reg. 123 list. It was seeking to continue the section 106 system for funding to the maximum extent whilst also applying the CIL regime.
5.5.2.2 Validity of exclusion - clearly at the time Redbridge LBC considered such an exclusion valid but in my view it is questionable. It appears to be a classic attempt by the authority to have its cake and at the same time eat it. In my view the facilities listed by Redbridge constitute relevant infrastructure for the purposes of reg. 123 because they are a description of a type of infrastructure (reg. 123(4)) rather than an infrastructure project. It is a type of infrastructure which it is intended is to be funded in whole or part by CIL. I anticipated that Redbridge would argue that the words at the bottom of the list had to be taken into account as part of the description of the type of infrastructure. However, it seems to me that there is nothing in reg. 123 which allows an authority to insert an exclusion from the description of the type of infrastructure in this manner. The exclusion is not seeking to exclude a more specific type of infrastructure within the wider type but to exclude that wider type of infrastructure when the need for it has arisen in a certain way. Reg. 123(2) provides that a planning obligation providing for the funding of relevant infrastructure cannot constitute a reason for granting planning permission. I do not consider that the wording at the bottom of the list will prevent this restriction operating. It will be interesting to see if the point is taken. Such a point could be taken after the grant of planning permission subject to planning obligations which include obligations related to a type of infrastructure included on the original Redbridge reg. 123 list. The original reg. 123 list has been replaced by a list which does not have this qualification at the bottom so may be it has been accepted that it was not valid. As regards transport projects it excludes site specific elements which will still be covered by highway agreements and section 106 planning agreements.
5.5.2.3 Portsmouth - in contrast Portsmouth City Council has focused on projects by including a number of specific highway projects, a couple of flood management projects and the improvement of Southsea Common and the Seafront. There is included in the list one generic type of infrastructure expenditure – school places (primary and secondary schools). There is no wording included seeking to undermine the reg. 123 list as considered above with the Redbridge list. This means that a developer considering a large residential development in the Portsmouth could be sure that there will be no attempt to impose a section 106 planning obligation relating to school capacity projects. In so far as the items on the list relate to highway infrastructure it will now not be possible to make them the subject of a highway agreement once the change in the 2014 Regulations come into force (see section 20.5) Huntingdonshire DC has adopted a similar approach to the formulation of its reg. 123 list in including a number of specific projects.
5.5.3 Consideration of reg. 123 list – it is sensible to consider such list for infrastructure for the area in which a development is to be located in order to ascertain whether any infrastructure issues relating to the site will be funded by CIL or will have to be negotiated as a planning obligation. For example, a residential development may result in a need for additional schooling facilities. If the authority’s published reg. 123 list includes education then that will be funded by the authority’s CIL receipts and there will be no section 106 issue unless there is included wording similar to that used in the Redbridge list discussed above. However, if it states education save for the local school then increased funded for that school will need to come from a section 106 planning obligation if the development will impact on that school.
5.5.4 Changes to the list – such lists are not set in stone. They can be simply changed without going through an elaborate procedure although the official guidance advocates that the changes should be clearly explained and be subject to appropriate local consultation (para. 2.6.2.3 February 2014 CIL Guidance). It was suggested in the April 2013 consultation that an appropriate consultation process be gone through but without specifying what that process should be. However, this suggestion was not taken up. This ability to vary the list means that an eye should be kept on the relevant authority’s website to ensure that there is no material change which could affect a proposed development. There has been concern that specific projects may be removed from the list so that section 106 obligations can be imposed with a view to providing funding for such project. In the official guidance it is stated that “Charging authorities should not remove an item from the regulation 123 list just so that they can fund this item through a new section 106 agreement.” (para. 90 DCLG Guidance – December 2012 and para. 2.6.2.3 February 2014 CIL Guidance). Despite a proposal that charging authorities undertake consultation before making changes there is no such obligation nor any prescribed method of control and so reliance would have to be placed by any aggrieved person on judicial review. If the change to the list would have a significant impact on the evidence as to viability which was presented during the examination process then it is suggested that there should be a review of the authority’s charging schedule. The inclusion of the draft reg. 123 list of infrastructure now in that process encourages such an approach.
5.6 Application of CIL –
5.6.1 Infrastructure –
5.6.1.1 Application - the principal obligation of the charging authority is to apply the CIL received in funding infrastructure (for meaning see para. 5.4.2 above). It permits the application of CIL for the maintenance of infrastructure as well as the provision of infrastructure. As stated above infrastructure does not include affordable housing which still has to be funded from other sources including section 106 agreements although changes may be introduced in the future which will allow such an application of CIL receipts. The only current qualification to this is that the portion of CIL receipts paid to neighbourhood funding can be applied for purposes not related to infrastructure and in particular can be expended on affordable housing (see para. 5.6.2.6 below). It cannot be used to pay interest on monies borrowed for the provision of infrastructure and charging authorities are not authorised to borrow against future CIL receipts. Further the CIL monies cannot be used to fund private companies. This precludes funding of water infrastructure owned by, say, a private water undertaker.
5.6.1.2 Outside the area – CIL receipts may be applied outside the authority’s area if for the benefit of the area. Examples of such permitted applications of CIL receipts given in the February 2014 CIL Guidance are payments to the Environment Agency to go towards flood defences and to County Councils for schools.
5.6.1.3 Pooling of receipts – an alternative approach is for a charging authority to pool some of the CIL receipts with another charging authority with regard to a large infrastructure project such as transport which will support development in their respective areas.
5.6.2 Local councils –
5.6.2.1 Amounts payable –
5.6.2.1.1 General - a relevant proportion of CIL receipts from a chargeable development (see section 5.6.2.3 below) should be paid to the local council in whose area the chargeable development is situated (reg. 59A). This does not apply to the Mayor of London’s CIL. Any surcharge paid by the developer of such development will not be treated as CIL for these purposes (reg. 88(3)). A local council can refuse such payments in which case the charging authority must retain them (reg. 59A(12)). In England the proportion is 25% if there is either a neighbourhood development plan in place or no such plan but the permission was conferred under a neighbourhood development order including a community right to build order. Where neither set of circumstances apply the proportion is 15%. It is open to charging authorities to transfer more than the 25% proportion if there is a neighbourhood plan or neighbourhood development order in place but any excess amount must be applied with regard to infrastructure.
5.6.2.1.2 Cap - in England for such payments when there is no neighbourhood development plan and in Wales in all cases there is a cap in each financial year on the total of such payments being an amount equal to £100 for each dwelling in the local council’s area multiplied by the index figure for that year. In Wales the proportion is 15% if all or part of the chargeable development is within the area of a community council. If the development crosses local council boundaries then the CIL is divided between the local councils proportionally (reg. 59A(8)). A similar division occurs when the development straddles other different types of areas (reg. 59A(9) and (10)).
5.6.2.2 Area with no local council – in the event that a chargeable development is not within a local council area then the Charging Authority may use so much of the CIL relating to such development as would have been paid to a local council had the area been a local council area as permitted by reg. 59C (see para. 5.6.2.6 below) (reg. 59F). In England an area with no parish council but a neighbourhood plan will receive the higher proportion of 25%. It will be necessary for the charging authority to consult with the local community. There is no prescribed procedure for such consultation.
5.6.2.3 Relevant proportion – If the development is within an area with a neighbourhood plan in England or a community council in Wales the proportion will relate to the full CIL for the chargeable development. If the permission for the chargeable development is in part only under a neighbourhood development order or a community right to build order then the 25% proportion will apply to the CIL relating to that part and the 15% proportion will apply to the rest. It has been queried whether when calculating the amount payable to a local council any deduction can be made in respect of the administration costs of the CIL regime. There is no basis for such a deduction. The calculation is by reference to the full relevant CIL receipts.
5.6.2.4 Land payments and infrastructure payment – the value of any land payment or infrastructure payment in discharge of a CIL liability will be used to calculate any payments under these regulations (reg. 59B) but the proportion paid to a local council or community council must be in the form of cash and cannot be land or infrastructure.
5.6.2.5 Payment periods – the charging authority and the local council may agree a timetable for payment and in the absence of such an agreement in any financial year the due proportion of any CIL received between 1st April and 30th September shall be paid by 28th October and between 1st October and 31st March by 28th April.
5.6.2.6 Application of such payments – the local council receiving such payments must apply the payments for the provision, improvement, replacement, operation or maintenance of infrastructure or “anything else that is concerned with addressing the demands that development places on an area” (reg. 59C). This is a wider range than with charging authorities and is not limited exclusively to infrastructure. For instance, such funds can be expended on affordable housing if it addresses the development needs of the area. Any amount received from the charging authority in excess of the relevant proportion must be applied in relation to infrastructure.
5.6.2.7 Recovery of payment to local council – if any payment to a local council is not applied within five years of receipt or is applied but not in accordance with reg. 59C (see para. 5.6.2.6 above) then the charging authority may seek to recover the payments (reg. 59E). To the extent that the local council does not have unapplied CIL payments with which to recoup the charging authority then the charging authority can withhold payments otherwise due to the local council. Monies recovered by this process must be applied for the benefit of the relevant area of the local council (reg. 59E(10)).
5.6.2.8 Transitional provision – no payment is due from a charging authority to a local council under these regulations nor will a charging authority be liable to apply CIL in accordance with para. 5.6.2.2 (area with no local council) above if a liability notice was issued in relation to the development before the 2013 Regulations came into effect (reg. 12 of the 2013 Regulations).
5.6.2.9 Concern over neighbourhood funds – I have seen comment on the web referring to this payment as a “bung”. The concern was based on the fact that to receive the 25% payment all that has to be in existence is a neighbourhood plan but that plan may not have substantive proposals and in particular may not have any plans for affordable housing. The inclusion of this payment from CIL receipts is a political decision which detracts from the basic principles of the tax.
5.6.3 Administrative costs –
5.6.3.1 Costs covered – the costs of establishing and running the CIL regime are recoverable subject to a cap (see section 5.6.3.2 below). This means that a charging authority can recoup the set-up costs from the future CIL receipts when received. Administration will include monitoring (which could be a burdensome task), negotiating agreements with regard to land or infrastructure payments in kind and enforcement. A collecting authority acting for a charging authority may retain up to 4% from the CIL receipts to fund its administrative costs.
5.6.3.2 Cap - a charging authority is permitted to expend up to 5% of the CIL received on the administrative costs of operating the CIL regime. The receipts include the value of any land payment or infrastructure payment (reg. 61 (7) and (7A) 2010 Regulations). This is a rolling cap for the financial year in which the CIL is set and the following three financial years. To the extent that the cap is not reached the balance must be applied on capital infrastructure projects. A collecting authority may retain up to 4% of the CIL receipts to meet costs leaving the charging authority with a cap of 1% on CL receipts. It means that each London Borough can retain up to 4% of the Mayoral CIL. The cap is calculated by reference to the amount of CIL collected and whether or not a proportion is then paid to a local council is immaterial to the amount that can be applied on administrative costs.
5.7 Annual reporting – the charging authority must pursuant to reg. 62 provide an annual report as to the CIL monies received land payments, infrastructure payments and the application of such monies as well as details of any recovery steps taken against local councils under reg. 59E. The information to be provided in the report has been expanded by reg. 62A. These reports should be published on the authority’s website by 31st December of each year for the previous financial year. There are similar reporting obligations on parish and community councils in receipt of CIL revenues.
C. Triggers for CIL charge
6. General – for such an important point there is a remarkable lack of clarity in the 2010 Regulations as to when a CIL charge arises. The objective is that the grant of planning permission will trigger the operation of the CIL regime and that the CIL liability thereby arising will only become payable as and when the development is commenced. For a CIL charge to arise the following conditions must be satisfied:-
6.1 Charging schedule in place – the charging authority for the area in which the site is located must have put in place a charging schedule (reg. 128). Until this step is taken no planning permission will cause the CIL regime to operate hence the increasing number of authorities implementing the procedure leading to the establishment of a charging schedule. It is not also essential that the authority publishes a reg. 123 list setting out the infrastructure which is to be funded exclusively by the authority from CIL receipts. That is optional because if no such list is published then the authority is to be treated as funding all infrastructure from CIL funding and not section 106 planning obligations (reg. 123(4)).
6.2 Grant of planning permission –
6.2.1 General rule – if the development has to be authorised by a grant of planning permission then CIL is only chargeable in relation to such development if the planning permissions is granted after the putting in place of the charging schedule for the area in which the site is located (reg. 128(1)). This includes a planning permission resulting from a successful appeal regardless of when the appeal was made. There are special rules which extend the scope of CIL to catch the carrying out of developments under other means of authorisation such as general consents (reg. 5(3)). In such circumstances the development must commence after the CIL charging schedule has been put in place. Certain developments are excluded from the operation of the regime (see section 10) and there are an increasing list of limited exemptions (see section. 11).
6.2.2 Distinction between grant and “first permits” - It is important to bear in mind that there is a difference in the CIL regime between the grant of planning permission and when a planning permission “first permits” a development. The former will be used to determine whether or not the development is chargeable to CIL whilst the later determines the set of CIL rates applicable for the purposes of the calculation in reg. 40 and is not relevant to whether CIL is chargeable. The date when the development is first permitted will also be material in determining the relevant period for the application of the vacancy test (see section 9.3.2 below).
The provisions of reg. 8 deferring when a permission first permits a development will not apply for the purpose of determining whether CIL is chargeable. For example, if an outline planning permission is granted subject to a condition requiring an approval before the development authorised by the permission can commence then the date of the grant of the permission will be the relevant date for determining whether or not this development is subject to the CIL regime. If the relevant charging authority does not establish its CIL rates until after the grant then commencing the development will not trigger a CIL liability even if the required approval under the grant was not obtained until after the establishing of the CIL rates for the area. If the grant of such planning permission was after the establishment of the CIL rates in the area then CIL will be chargeable. In those circumstances the date when the required approval is obtained will determine which set of CIL rates applies so that if different from those applicable at the date of the grant of the permission the newer set of CIL rates will be used to calculate the chargeable amount.
6.2.3 “first permits” – in determining when a development is first permitted the starting point is that it will be the date of the grant of planning permission (reg. 8(2)) but in practice this will not normally be the outcome because planning permissions are rarely granted with no conditions or reserved matters. That starting point has been heavily qualified. As a result of the 2014 Regulations there are now two sets of qualifications. One set applies in respect of chargeable developments authorised by a planning permission granted prior to 24th February 2014 and the other to such developments authorised by planning permissions granted on or after 24th February 2014 (reg.14(1) 2014 Regulations).
6.2.3.1 Pre-24th February 2014 planning permissions – the original provisions in reg. 8(3)-(6) 2010 Regulations provided that as regards:
6.2.3.1.1 outline planning permission – subject to outline permissions for phased developments (see para. 6.2.3.1.2 below) the date of the final approval of the last reserved matter associated with the permission will be when an outline planning permission first permits development (reg. 8(4);
6.2.3.1.2 phased outline permission – each phase will be treated as a separate chargeable development and so it is the date of the final approval of the last reserved matter associated with the particular phase (reg. 8(5)).
6.2.3.1.3 conditional planning permission other than outline – if the planning permission is subject to a condition which requires further approval to be obtained before the development can commence then the date when final approval is given will be when the permission first permits development (para. 8(6). Prior to the 2014 Regulations the special treatment for phased developments did not apply to planning permissions other than outline planning permissions.
6.2.3.2 Planning permissions granted on or after 24th February 2014 – the treatment of outline and full planning permissions authorising phased developments is now in principle the same and such treatment is not applicable only to outline planning permissions. Each phase of a development will be treated as a separate chargeable development for these purposes and not just those authorised by an outline planning permission (reg. 9(4)).
6.2.3.2.1 Phased planning permission – there is now a definition for the purposes of CIL which is a planning permission “which expressly provides for the development to be carried out in phases.” (reg. 2(1) 2010 Regulations inserted by reg. 3(1)(g) 2014 Regulations). This means that the planning permission must expressly authorise the development to be carried out in phases. It is not enough that it is implicit. In some cases it will be important to ensure that the wording includes an express authorisation for a phased development. It may have a significant effect on the cash flow or avoid disqualifying events affecting parts of a development unrelated to the event.
6.2.3.2.1.1 outline planning permission – for each phase of an outline phased planning permission the phase will first be permitted to be developed on the day of the final approval of the last reserved matter associated with that phase unless it has been agreed in writing with the collecting authority that it will be the day final approval is given under any pre-commencement condition associated with that phase (reg. 8(3A)(a)). Such a written agreement must be reached before the commencement of any development under that planning permission which would seem to refer to all the development authorised by the planning permission and not just the particular phase of development. If correct then that could be a trap for the unwary to fall in. The agreement will only operate if it is an earlier date than the day of the final approval of the last reserved matter.
6.2.3.2.1.2 phased permissions other than outline – a permission relating to a phase of development authorised by a phased planning permission other than an outline permission will first permit development on the day that final approval is given under a pre-commencement condition associated with that phase or if there is no such condition then on the day of the grant of the permission (reg. 8(3A)(b)).
6.2.3.2.2 outline planning permissions which not phased – such a permission first permits development on the day that final approval is given for the last reserved matter (reg. 8(4)).
6.2.3.2.3 planning permission which is neither phased nor outline – reg. 8(6) has been omitted and so the date it first permits development is the day of the grant of the planning permission rather than the later date at which any required approval is given.
6.2.3.3 pre-commencement condition - a definition of a pre-commencement condition has been introduced in reg. 8(3B) as being a condition “which requires further approval to be obtained before a phase can commence”. It would seem that whether or not a condition has this effect will be a matter of construction as it does not state that this has to be expressly provided in contrast with the definition of a phased planning permission. This issue has been considered by the courts in the context of disputes over the unlawful commencement of development (see section 6.3.4 below).
6.2.4 site clearance – it was also proposed prior to the 2014 Regulations that if there is a phase relating to site preparation this phase should be ignored for the purposes of CIL. This would have delayed a liability to pay CIL until the first phase in which construction work commenced but this proposal has not been taken up.
6.2.5 Planning permissions obtained by third parties - there is no requirement that the planning permission should have been obtained by or on behalf of the owner of the site or with the owner’s consent. The operation of the CIL regime can be triggered by a planning permission applied for by a third party without the consent or involvement of the landowner. Normally this would not be a problem because the grant of planning permission alone does not cause CIL to be payable. It is the commencement of the development which makes the CIL payable and this will usually not occur without the consent of the landowner. However, there are two respects in which it could have adverse CIL consequences. The first is that it could result in the authority registering a local land charge against the owner’s title which could lead to complications if the owner wishes to deal with the land. Second if the planning application relates to other land as well and development commences this could give rise to an obligation to pay a CIL liability by the landowner being triggered. For example, if there has been a successful planning application by a third party relating to a larger area which includes land not owned by that third party but by X when the development is commenced on a different part of the land covered by the planning permission then unless the third party has assumed liability for all the CIL X will be liable to pay the portion of CIL relating to X’s part of the land. This is so even though X was not involved in the obtaining of such permission. In such circumstances X must seek a suspension of the CIL liability (see para. 15.7 below). Even this may not be available if the third party has the right to enter X’s land and carry out works which comprise part of the chargeable development such as construction of an access road or the laying of services.
6.2.6. Planning permission granted before charging schedule in place –
6.2.6.1. General - no CIL liability will arise if a development is commenced after the charging schedule is put in place pursuant to a planning permission granted before the putting in place of the schedule. A planning permission pre-dating the charging schedule cannot by itself give rise to a CIL liability. A successful appeal after such a charging schedule is in place will be subject to CIL regardless of when the appeal was made. Further if there is an application to vary such a planning permission then there can be CIL complications as the varied planning permission will be a new planning permission (see section 8.4 as regards section 73 applications; section 8.5 as regards replacement planning permissions; and section 15.8 as regards subsequent free standing planning permissions triggering the abatement procedure).
6.2.6.2 Lapsed permissions - to avoid a CIL liability the planning permission prior to the putting in place of the charging schedule must be still be a valid permission. This point was raised in an appeal to an appointed person in relation to a planning permission for the erection of single storey self storage units (on VAO website with no further identifying information). A planning permission for such erections had been granted but on condition that the development be begun within three years which it was not. A fresh application was made but was not granted until after a charging schedule had been put in place. The owner disputed the CIL liability assessed by the authority. The appeal against the CIL assessment failed as the earlier planning permission was no longer valid. The grant of the new planning permission had been delayed by the need for a flood assessment and it was argued that reg. 65 had not been complied with which requires a liability notice to be issued as soon as practicable after the day on which a planning permission first permits development. The appointed person made the point that an appeal under reg. 114 can only be made on the ground that the chargeable amount has been calculated incorrectly. It was not part of the remit to determine whether the planning permission could have been granted earlier or whether reg. 65 had been complied with.
6.2.6.3 Delay in grant of planning permission – when it is known that a charging schedule is to be put in place it will encourage applications for planning permission to be made with a view to obtaining a grant which does not trigger a CIL liability. In the appeal mentioned in section 6.2.6.2 above the suggestion was that the grant had been delayed which had resulted in a CIL liability that could have been avoided with a speedier grant. Although reg. 65 was relied on that is not really material in my view because the operation of that regulation is only triggered by the grant and does not apply to the position prior to the grant. It is really a matter for planning law. Most planning applications should be decided by the planning authority within 8 weeks and if the appropriate time limit for the application is not complied with then the applicant can appeal to the Secretary of State as if the application had been refused (section 78(2) TCCP 1990).
6.2.6.4 Timing planning applications before CIL established – in areas in which the authority has started the process of establishing CIL developers may bring forward their development plans to avoid being subject to a CIL charge. In such situations nice judgments as to timing may be required. However, it is not automatically the case that there will be a financial advantage to be gained in obtaining planning permission ahead of the establishment of the CIL regime. The financial burden can be less under the CIL regime. If the developer waits the particular CIL rate applicable to the development may be low or zero. The cost of complying with section 106 planning obligations may be significantly reduced. Again nice judgments may be needed to be made in order to assess the final financial outcome and whether it is better to press ahead or wait for the CIL regime to be established.
6.3 Commencement of development –
6.3.1 General - no CIL will be payable even though planning permission has been granted after the establishment of the CIL rates for the area unless and until the development authorised is commenced. An unimplemented planning permission will not result in any payment of CIL. Redbridge Council estimates that a fifth of planning permissions granted by it are not implemented. The danger with such a planning permission is that as the commencement of a development does not require a great deal of work the development may be unwittingly commenced by the carrying out of a small amount of work, including demolition, thereby causing the CIL to be payable and a surcharge to be claimed due to the failure to serve a commencement notice. The grant of a planning permission will also probably result in the registering of a local land charge.
6.3.2 What constitutes commencement – what constitutes the commencement of a development is governed by planning law. Section 56 of the 1990 Act provides that a development begins on the earliest date on which any material operation comprised in the development begins to be carried out. The threshold is low. It is specifically provided that this includes:-
6.3.2.1 any construction work in the course of the erection of a building;
6.3.2.2 any demolition work of a building;
6.3.2.3 any digging of trenches to provide a foundation or part of a foundation. This is true even if the trenches once dug are then filled in (High Peak BC v Secretary of State (1981) JPL 366). However, these must be trenches which are required for the development and not merely dug so as to be able to argue that a start has been made on the planning permission being implemented.
6.3.2.4 the laying of any underground main or pipe to the foundations or part of the foundations of a building or to any trench within 6.3.2.3 above;
6.3.2.5 any operation in the course of laying out or constructing a road or part of a road. For example, the pegging out of the width of the road will be sufficient.
6.3.2.6 any change in the use of any land which constitutes material development but if there has already been a material operation then the first in time will constitute the commencement.
6.3.3 Earnest of intent – in the 1990’s it was considered that the operation relied on to constitute the commencement of a development required it to be an earnest of an intention to develop. Following Stafford CC v Riley [2002] PLCR 75 it is now accepted that there is no issue of intent and all that is required is that (i) the particular operation is carried out pursuant to a planning permission or similar authorisation; and (ii) it is material and not de minimis.
6.3.4 Operation contravenes planning condition – the position use to be that any operation contravening any condition attached to a planning permission could not constitute the commencement of planning permission (FG Whiteley & Sons Limited v CC for Wales [1992] 3 PLR 72). The issue has often arisen in the context of disputes as to whether a planning permission has lapsed due to the expiry of time. It is possible that in the context of CIL this point could now be an issue in disputes as to whether or not CIL has become payable. This earlier strict approach has been relaxed so that a development can in some circumstances commence even though there has not been full compliance with all the conditions (Agecrest Limited v Gwynedd CC [1998] JPL 325). If the developer has done all that can be done to comply or there has been substantial compliance then the development may commence. Similarly if the local planning authority has agreed that it can start or enforcement action could not succeed. To reflect this a distinction has been drawn in R (Hart Aggregates Limited) v Hartlepool BC [2005] EWHC 480 between such planning conditions which prohibit a development from taking place before certain action has been taken and act as a true condition precedent and those which require certain matters to be agreed before the commencement of development. Mr. Stuart Isaacs Q.C., sitting as deputy judge of the High Court, in Glenmere plc v F Stokes & Sons Limited [2008] All ER (D) 92 at paragraph 23 stated that “the effect of Hart Aggregates is to suggest a more flexible approach which requires consideration on a case-by-case basis whether a condition is in truth a condition precedent and if so whether a failure to comply with it does indeed have the effect of engaging the Whitley principle”. This dicta and distinction appears to have been followed by the introduction in the 2014 Regulations of the new definition for a “pre-commencement condition” (see section 6.2.3.3 above). In practice this is not an easy distinction to be drawn and there is still scope for argument as to whether a development has truly commenced if not all the conditions attached to the planning permission have been satisfied. The oddity is that it could be the developer rather than the charging authority relying on this point to avoid the crystallisation of a CIL liability.
7. Who charges CIL – a charging authority is one which grants planning permission and puts in place the charging schedule. The CIL does not have to be collected by the charging authority but can be collected by a separate collecting authority although normally the charging authority and the collecting authority will be the same authority (see para. 5.2 above). The Mayor of London’s charge will be collected by the relevant local London Borough Council or MDC if set up by the Mayor (see para. 19.7 below). Care has to be taken if there is a separate collecting authority so that notices required to be given to the collecting authority are not by mistake given to the charging authority.
8. Planning Permission – as set out in section 6 above the operation of the CIL regime is triggered by a development being authorised. Normally this will be by the grant of a planning permission. However, it extends beyond such grants to general consents (reg. 5 and see sections 8.2.3 and 8.3 below). This includes permitted developments under the Town & Country Planning (General Permitted Development) Order 1995 (SI 1995/418) and the subsequent amending orders. As a means of authorising developments this has taken on increasing importance with more changes in use being permitted without the need for the grant of a fresh planning permission. A prior application to the local planning authority may still be required relating to matters such as impact on highways; contamination risk and noise impact. Developments authorised by a neighbourhood development order (section 61E 1990 Act) will now be covered by the CIL regime.
The CIL regime will operate differently dependent on whether there is a grant or a general consent. With a grant it will trigger a liability notice from the charging authority (see para. 12 below for a summary of a possible sequence of events) but with a general authorisation the first main step should be the service of a notice of chargeable development by the developer or landowner (see para. 8.3.2 below) which in turn will result in a liability notice. Developments commenced before 6th April 2013 and authorised by a general consent (being a development order under section 59 1990 Act or a local development order or an enterprise zone scheme) will not be within the CIL regime (reg. 128(2) 2010 Regulations).
8.1 Pre-CIL permission – the implementation of a planning permission which was granted before the setting of the CIL rates in the relevant area (“pre-CIL permission”) will not give rise to a CIL charge even if the commencement of the development is after the setting of the CIL rate subject to one qualification (section 73 permissions – see para. 8.4 below). This is true even if the development is phased or conditional upon an approval which is obtained after the setting of the CIL rates (see para. 6.2.2 above). The pre-CIL permission will most probably be subject to section 106 planning obligations which will not have been subject to the restrictions introduced with the CIL rate setting (see para. 20 below).
8.2 What constitutes planning permission for CIL – there is an expanded definition of planning permission in reg. 5 which includes
8.2.1 ordinary grants of planning permission granted by the local planning authority and the Secretary of State;
8.2.2 modifications to or replacements of existing planning permissions pursuant to sections 73, 97, 100, or 177 1990 Act;
8.2.3 general consents which term covers permissions under development orders, local development orders, neighbourhood development orders (which include Community Right to Build orders), developments under government authorisation and arising under a simplified planning zone scheme and an enterprise zone scheme. In the case of development authorised by a development order, local development order or by an enterprise zone scheme CIL will apply to developments commenced on or after 6th April 2013.
It is pointed out in the February 2014 Guidance (para. 2.1.5) that a grant of a Lawful Development Certificate issued pursuant to section 191 or 192 TCPA 1990 is not relevant to the operation of the CIL regime. Such a certificate will confirm the application of permitted development and that no further planning permission is required to carry out the development but it will not trigger a CIL liability or payment. It is not a planning permission for the purposes of CIL. The development to which the certificate relates will require the giving of a notice of chargeable development in the normal manner see section 8.3.2 below).
8.3 General consents –
8.3.1 Care needed - many developments under the general consents will be minor developments which do not equal or exceed the 100 square metre limit thereby benefiting from the minor works exemption (see para. 10.3 below). When they do exceed that limit or they are below that limit but relate to a new dwelling then particular care will need to be taken to ensure compliance with the requirements of the CIL regime because there will be no formal planning permission which will have alerted both the charging authority to serve a liability notice and the householder to the CIL charge. It will be up to the developer and landowner between them to alert the charging authority by the giving of a notice of chargeable development and to ensure compliance with the CIL regime.
8.3.2. Notice of chargeable development - Care must be taken to ensure that prior to commencement of such a development a notice of chargeable development is given to the collecting authority unless it is a minor development or one in relation to which the CIL chargeable amount is zero or one in respect of which an exemption for residential extension has been granted (reg. 64(2)). This notice must be in the prescribed form or a form “to substantially the same effect” (reg. 64(3)(a)). Accompanying the notice must be a plan which identifies (a) the land to which the notice relates; (b) the development; (c) any buildings relevant for the purpose of calculating Kr or E when calculating the CIL liability in accordance with the formulae in regulation 40 (see 9.3.2.1.2, 14.2.3 and 14.2.7.2 below) (reg. 64(4)). There is a continuing obligation to inform the collecting authority of any changes which are made prior to commencement of the development. The collecting authority has power to request further information, documents or materials from the person giving such a notice (reg. 64(8)). Although it is not provided for I assume that the intended response to the service of a notice of chargeable development is that the collecting authority should issue a liability notice but so far as I am aware there is no provision to this effect. This is in contrast to the case where due to default by the developer it is the collecting authority that serves the notice of chargeable development as then the collecting authority is required to serve a liability notice as well (reg. 64A(3)).
8.3.3 Default in serving notice of chargeable development – in the event of a failure to serve such a notice of chargeable development the collecting authority must prepare such a notice and plan if it believes that development has been commenced and the charity exemption does not apply (reg. 64A)). The requirement to identify the buildings relevant for the purposes of Kr and E is qualified to applying “where the collecting authority has sufficient information to do so.” This should be served on every person known to have a material interest in the land. The authority may be short of information. If it does not have the necessary information relating to the existing buildings which are to be retained or demolished then it can treat those as zero for the purposes of calculating the CIL liability. At the same time as serving the notice and plan it should also serve a liability notice as the development has commenced and such a notice must be served as soon as practicable after the date on which development is first permitted (see para. 12.2.2 below). It would also seem sensible to serve the demand notice as well at the same time although there is no obligation requiring the authority to do so (see para. 15.6 below as regards demand notices). There is a right to appeal against such a deemed commencement date if a demand notice is served (see para. 18.6 below).
8.4 Section 73 permissions – section 73 TCPA 1990 confers a power to remove or change a condition attached to an earlier planning permission. If an application under this section is successful it results in a new planning permission. Such an application may involve a substantial change with, for example, additional floors or be relatively minor such as an alteration to the external appearance of the building. One will increase the floor space whilst the second has no impact at all on area. However, as the section 73 permission is a new planning permission it will cause the CIL regime to operate again. In consequence there is a need to consider the CIL consequences which flow from this second permission particularly as prior to the 2012 Regulations those consequences could be extremely unwelcome. This can arise in two different CIL contexts. The earlier planning permission which is being varied may have occurred either before the setting of CIL rates in the area or after the setting. Each set of circumstances will need to be considered separately. In neither case under the CIL regime in force before the 2012 Regulations would the CIL charge arising from the section 73 permission be limited only to any increase in the gross internal floor area brought about by the second 73 permission. This meant that the financial consequences with a large development could be huge. With a proposed redevelopment in Victoria Street by Land Securities the prospective CIL bill due to the section 73 application was said to be millions of pounds and was stopping the proposed development. This was avoided by the amendments in the 2012 Regulations in the process saving 2,500 new jobs. It can mean the difference between a proposed development going ahead and being shelved. Such a prospect encouraged the Government to act and remove by the 2012 Regulations both of the CIL problems arising in relation to successful section 73 applications.
8.4.1 Earlier pre-CIL permission -
8.4.1.1 Position before 2012 Regulations in force - If between the grant of the pre-CIL permission and the grant of the section 73 permission a CIL charging schedule has been put in place for the area then the section 73 permission but not the earlier permission will trigger the operation of the CIL regime. In many cases if the proposed development involves a vacant site this will mean that the charge to CIL is levied on the full development. In a very few cases there may be a deduction from the gross internal space of the development if it had already commenced before the section 73 application and one or more buildings or parts had been constructed and already been in continuous lawful use for the required six months or more. In all cases the site will already be subject to a section 106 agreement as a result of the earlier permission. No relief is given as against the CIL charge for the burden arising from that section 106 agreement. The burden of the section 106 agreement will have been anticipated by the developer but not the additional CIL charge. This is a very harsh outcome bearing in mind that it occurs whether or not the section 73 permission has resulted in an increase in gross internal floor area.
8.4.1.2 Position after 2012 Regulations in force – with effect from 29th November 2012 on the grant of the section 73 permission the amount of CIL payable shall be the amount by which the CIL chargeable by reason of the section 73 permission exceeds what would have been the CIL charge if CIL had been chargeable on the occasion of the earlier grant of planning permission. The earlier deemed charge is calculated at the same CIL rate as applies on the second occasion (new regulation 128A inserted in 2010 CIL regulations by reg. 9 2012 Regulations). No CIL is payable as a result of the section 73 permission if the CIL otherwise chargeable is the same or less than it would have been if there had been a CIL charge on the occasion of the earlier permission. Thus a change, for example, in a planning condition relating to the opening hours of a retail unit will not have CIL consequences. On the other hand if the change adds a floor thereby increasing the gross internal area of the development CIL will be charged by reference to that increase only and not the gross internal area of the whole development. It is stated in the revised June 2014 Planning Practice in para. 7 that the provisions in reg. 128A should apply to all subsequent section 73 permissions in relation to a development regarding which the original planning permission was prior to the introduction of CIL. I take this to mean there can be more than one section 73 planning permission and the CIL position arising from the second or later section 73 permission will be determined by reference to absence of CIL arising from the original planning permission.
8.4.2 Earlier CIL permission – if the earlier planning permission was after the setting of the CIL rates for the relevant area so that it was chargeable to CIL then
8.4.2.1 Position before 2012 Regulations in force - prior to the coming into force of the 2012 Regulations there was a similar unwelcome CIL outcome if the earlier planning permission was granted after the introduction for the area of such a CIL charging schedule. The earlier planning permission will have been subject to the CIL regime. For instance assume a planning permission is granted for a development on a vacant site and the development is commenced giving rise to a liability to pay the CIL charge. A section 73 application is made to change a condition attached to the earlier permission and a new section 73 permission is granted. The development is still substantially the same but with a modification. Until the 2012 Regulations came into force there is nothing to mitigate in such circumstances the second charge arising on the occurrence of the successful section 73 application. The second CIL charge is not restricted in scope to the modification. It will be chargeable on the full amount of the gross internal area of the development save that if any building has been constructed in accordance with the earlier permission then its internal floor area will be taken into account as a deduction but only if it has been in lawful use for a continuous period of six months or more during the relevant period prior to the successful section 73 application.
8.4.2.2 Position after 2012 Regulations in force - in cases where the CIL regime applied to the earlier permission then there is an abatement so that on the occasion of the second permission only any increase in CIL is payable. The amount of CIL payable due to the earlier permission is deducted from the CIL payable as a result of the section 73 permission (new regulation 74A inserted in 2010 regulations by reg. 8 2012 Regulations). In order to obtain the benefit of this relief the person liable to pay the CIL arising from the section 73 permission must request it and provide proof of the payment of CIL on the first permission.
8.4.2.3 Social housing relief – in the event that social housing relief (see section 11.3 below) has been granted in relation to a development and then there is a section 73 permission in respect of that development but the amount of the social housing relief has not changed as a result then all the acts done with regard to the relief under reg. 51 in relation to the first permission will be treated as done for the section 73 permission (reg. 40(7). This applies in relation to developments regarding which a liability notice is issued on or after 24th February 2014 (reg. 14(3) 2014 Regulations).
8.4.3 Chargeable development - additionally reg. 3(2) of the 2012 Regulations (amending reg. 9 of the 2010 Regulations) changes the definition of chargeable development to ensure that it is the actual development carried out by the developer which is charged. The definition now is in terms which show how hard it will be to achieve the objective of simplicity with this levy. The effect is that the chargeable development may be the development authorised by the original planning permission or a subsequent varied permission and that it will be possible to revert back from one to the other even when one or more has already been commenced.
8.4.4 Procedure - it is not spelt out whether the CIL charge relating to the section 73 permission replaces the earlier charge or remains separate and there is a need to revise the CIL liability with regard to the earlier permission. The regulations talk of a “new or revised liability notice” in relation to the development under the section 73 permission which leaves the point open. The CIL guidance given by the DCLG (April 2013) states that “the most recently commenced scheme is the liable scheme” (para. 95).
8.4.5 Overpayments –
8.4.5.1 Whether overpayment? - if the CIL charge relating to the earlier permission exceeds the CIL charge following the grant of the section 73 permission then it seems that it is expected that there will be a repayment of the difference as an overpayment because it is provided that in those circumstances no interest is payable by the collecting authority pursuant to reg. 75(3) 2010 Regulations (new reg. 75(4) added by reg. 8(4) 2012 Regulations). This is consistent with there being one chargeable development. It is material that with the new abatement procedure introduced by the 2014 Regulations in relation to free-standing planning permissions it is expressly provided that no repayment will be made if the CIL liability relating to the subsequent planning permission is less than that arising from the earlier permission. This effectively confirms that such repayment will occur with subsequent section 73 permissions but not subsequent free-standing permissions. The possibility of such repayments will increase the administrative burden for authorities and make more uncertain the authority’s budgets regarding CIL receipts. It could particularly be a problem if the subsequent section 73 permission causes the development to be exempt as a minor development when previously it was not and CIL was paid.
8.4.5.2 Changes in ownership – it seems that this overpayment is to be achieved by a revised liability notice in relation to the earlier permission resulting from the change in the chargeable development. In cases in which there has been a change in the person liable for the CIL the repayment should go to the person who paid the CIL arising from the first permission. The revision of the liability notice for the earlier permission may secure that outcome. However, prudence may dictate that as a back up this outcome should be expressly covered by the terms by which any change in ownership or liability occurs.
8.4.6 Warning - the provisions in the 2012 regulations came into operation on 29th November 2012 and are not retrospective. Any section 73 permissions granted before these regulations came into force will still bear the adverse CIL consequences discussed above without the benefit of the mitigating provisions in the 2012 Regulations. In those circumstances two courses of action could have been considered.
8.4.6.1 Fresh section 73 application – first it could be considered whether it is possible to make a further section 73 application after the coming into force of the new 2012 regulations? If so then that could be the permission which is implemented thereby obtaining the benefit of the relief conferred by those regulations. Alternatively
8.4.6.2 Implement earlier permission - can the original proposed development be carried out rather than the varied development? In this respect it is relevant to note that the new definition of chargeable development expressly covers the possibility in reg. 9(8) of the 2010 Regulations that a development may start under an earlier permission, be halted, work then start on a different development under the section 73 permission, be halted and then the earlier development be restarted. This is to ensure that the “recommenced” development is the chargeable development.
8.4.7 Section 106 agreements - Separately when the first permission is a pre-CIL permission it may be necessary to re-visit the section 106 agreement in order to ascertain whether the burden can be mitigated by varying the terms of that agreement.
8.5 Replacement permission –
8.5.1 Relief - similar unwelcome CIL consequences arose with permissions granted pursuant to reg. 18(1)(b) or (c) Town and Country Planning (Development Management Procedure) (England) Order 2010. This procedure allows the replacement of permissions which are extant but have not been implemented provided that they were granted before 1st October 2010. It is not possible to use the power in section 73 to change a time limit when a planning permission is due to lapse (sub-section (5)) so this procedure is available for such purposes but only for older planning permissions (pre-1st October 2010). If the replacement permission is granted after a charging schedule has been put in place in the area it will result in a CIL charge even though no such CIL liability would have arisen in relation to the permission replaced. The new reg. 128B (added to the 2010 regulations by reg. 9(2) of the 2012 Regulations) removes from the CIL regime the development carried out in accordance with such a replacement permission when there was no charging schedule in place at the date of the first permission. This amendment operates in England but was not needed in Wales as this had always been the position in Wales.
8.5.2 Warning - As with the new provisions relating to section 73 permissions a warning has to be given that this relief applies only to replacement permissions granted after the new reg. 128B came into force on 29th November 2012 (reg. 10(5) 2012 Regulations). Any granted before that date will remain subject to a CIL charge.
8.6 Stand alone permissions – the special CIL treatment relating to subsequent section 73 permissions has been applied by the 2014 Regulations to subsequent free-standing planning permissions which are granted after the commencement of a development but before its completion. It does not operate in precisely the same manner. It allows the earlier CIL liability to be set off against the later CIL liability but only to the extent that there are uncompleted buildings. It is not possible to obtain a repayment by this route if the earlier CIL liability is greater. There are a number of restrictions and limitations and details are contained in section 15.8 below.
8.7 Building for limited period – a building for which permission has only been granted for a limited period will not be a building for the purposes of the CIL regime.
8.8 Section 96A permission – the statutory power conferred by section 96A TCPA 1990 allows changes to be made to planning permission if the authority is satisfied that they are not material. The power allows conditions attached to a planning permission to be removed or varied or new conditions to be added. The applicant must have an interest in the land subject to the permission. The outcome of such an application is unlikely to result in any appreciable change to the internal floor space and this is not treated as a new planning permission for either CIL or the Crossrail contribution.
D. Chargeable development
9.1 General – For a planning permission to trigger the operation of the CIL regime it must authorise a chargeable development. The CIL regime is not limited to permissions authorising a commercial development or the development of commercial property. Further an important basic feature of the CIL regime is that the development must relate to a building and not just structures such as pylons or wind turbines. The definition of building ensures that it covers any building in, under or over the land (reg. 1(4)(c)). The currently popular basement developments (subject to the exemption for residential exemptions) will be caught just as will be developments over railways. Excluded developments (see para. 10 below) will not be caught. In particular it will not include the addition of mezzanine floors in existing buildings unless there has been a change of use which triggers the operation of the CIL regime (see para. 10.4 below). Subject to one qualification the focus is on whether there is an increase in the gross internal area of a building or buildings as a result of the development. The qualification is important and is a possible trap. It concerns permissions which change the use of an existing building and arises from the regulation governing the determination of the gross internal area of buildings (see para. 9.3 below).
9.2 Building –
9.2.1 General - what constitutes a building is crucial to CIL as the authorised development must relate to a building for a CIL charge to arise and the CIL charge is then calculated by reference to the gross internal floor area of the building. Oddly there is no special definition of building for the purposes of CIL. It cannot just follow the definition applicable for planning law because that definition includes any structures and erections (s. 336(1) 1990 Act) and in consequence is far too wide for CIL purposes. For the purposes of the Planning Act 2008 building has the meaning in section 336(1) of the 1990 Act save as regards Part 11 of the 2008 Act which relates to CIL (section 235(1)). The absence of such a definition or guidance on the topic is unhelpful. In the majority of cases there will be no doubt and it will be clear whether the particular construction falls one side or the other of the line. However, there will be cases in which there is real doubt.
9.2.2 Question of degree - in Moir v Williams [1892] 1 QB 264 it was stated that it is a question of degree and circumstances whether a construction is a building and that the usual meaning is a block of brick or stonework covered by a roof. This chimes with what has been suggested by Bristol planning department as the test which is to ask whether the structure is weather tight so that if it rains any one in it will remain dry. This is workable and practical but is it correct? It would exclude lean tos, verandahs and covered walkways. If applied to stadia Bristol considers that it would include changing rooms, executive suites, office, bars and conference facilities but exclude terraces and seats which are open to the elements.
9.2.3 Rating purposes - in Cardiff Rating Authority and Cardiff Assessment Committee v Guest Keen and Baldwin’s Iron and Steel Co [1949] 1 KB 385 the test for the purpose of rating legislation as to whether a construction is a building was set out as relying on three factors – size, permanence and degree of physical attachment. This test has been applied with regard to planning legislation (Barvis Limited v Secretary of State for the Environment [1971] 22 P & CR 710) and it is to be anticipated that it will be utilised for the purposes of the CIL regime.
9.2.4 Planning purposes - However, for planning purposes a steel and concrete frame clad with corrugated sheeting is a building even though it had no roof (R v Ealing LBC ex parte Zaimuddain [1994] 3 PLR 1 which concerned an uncompleted mosque which was used for the purposes of a religious gathering). A tunnel under a public highway linking two adjoining plots of land was a building for the purposes of the statutory right of a gas undertaker to open up land in order to carry out work (Schweder v Worthing Gaslight Co. [1912] 1 CH. 83). This last authority had applied Thomson v Sunderland Gas Co. (1877) 2 Ex 429 which held that underground arches supporting a road which were used as storage cellars constituted a building. The specific decisions are not significant but they are an indication of the type of construction that can be treated as a building for planning purposes but which one would not expect to be a building for the purposes of CIL. It suggests that arguably covered walkways or a complete stadium could be regarded as buildings.
9.2.5 Polytunnels - An illustration of both the test in operation for planning purposes and a possible area where this could be a real issue with the application of the CIL regime is R (on application of Hall Hunter Partnership) v Waverley BC and Others [2006] EWHC 3482 (Admin). This was a contest over the validity of an enforcement notice issued with regard to polytunnels erected without planning permission. In this case the tunnels were found to be substantial in bulk and volume. Their height varied from 3.2m to just under 4m. Their width was up to 8m and their lengths varied from 50m to 400m. Machines and a considerable number of man hours were involved in their installation. The legs attaching them to the land went into a depth of up to 1m. The tunnels covered up to 99 acres. They were erected for periods from three months to seven. On the facts such a project was regarded as having the characteristic of permanence which did not require it to be everlasting but more than temporary. The appeal upheld the findings that these were buildings for the purposes of the planning legislation because they were substantial, firmly attached to the land and permanent. That definition is not the same as for CIL. With the increased use of polytunnels in farming to protect crops one can see plenty of scope for battles with local authorities.
At present the likelihood is that such use will be either zero-rated (as currently in Huntingdonshire and Shropshire) or at a low rate for CIL. Some authorities have proposed applying a higher CIL rate to agricultural buildings but so far they have been knocked back in the face of determined opposition. For example, the proposal by Leeds to charge a CIL rate of £5 psm for agricultural use was withdrawn in the face of vigorous opposition from the NFU and Country Landowners Association. However, what a tempting target for cash strapped local authorities. With the introduction of the new permitted development rights for redundant agricultural buildings this may be looked at again. Agricultural buildings can be converted without the need for planning permission to residential use or for use as a state-funded school or nursery. Such developments will be subject to the relevant CIL rate for such types of development but it may draw attention to agricultural land and the possibility of raising revenues.
The case also indicates another point. It involved the use of an enforcement notice seeking to bring under the control of the local authority such activities. With the introduction of CIL there is an added reason for issuing such notices in appropriate cases. It can be a means of protecting the authority’s revenue. Presently farm land should not give rise to real CIL problems due to a combination of low rates and excluded developments if it either relates to less than 100 square metres (provided it does not concern a new dwelling) or involves buildings into which people do not normally go or only for the purpose of inspecting or maintaining plant. However, with other types of land enforcement notices may be a further option for authorities seeking to protect CIL receipts.
9.2.6 Marquee – the Hall Hunter partnership decision applied Skerrits of Nottingham Limited v Secretary of State and Harrow LBC (No. 2) [2002] 2 PRL 102 which had held for planning purposes that a marquee was a building.
9.2.7 Caravans - one area which could throw up issues is caravans. For the purposes of planning law a wooden self build chalet/shed resting on pillars and not forming part of the land has been held by the Court of Appeal to be a building (R v Swansea City Council ex parte Elitstone [1993] 2 EGLR 212). One reason for this decision was that it had a prospect of permanence. There would seem no good reason why such a chalet should not be a building for the purposes of CIL. In contrast in Tewksbury BC v Keeley [2004] EWHC 2594 it was held that a wooden caravan mounted on a steel chassis with wheels which could be moved round the site was not a building for planning purposes. The unit was manufactured off site in two parts and transported to the site to be erected and a roof placed on it. The crucial factor appeared to be from para. 34 of Jack J’s judgment that “in none of the cases has a structure been held to be building which is mobile to the extent of having wheels so that it can be freely moved around the site”.
If so will this apply equally to caravans? Such a home is a structure for the purposes of the Caravan Sites Act 1968 (section 13) and the Caravan Sites and Control of Development Act 1960 (section 29) and this includes structures composed in two sections. These Acts impose a separate regime from the planning regime by which to control caravans. However, for planning purposes a caravan is not a building and the placing of a caravan on land does not constitute operational development (Wealden DC v Secretary of State for the Environment [1988] 1 EGLR 187 following cases such as Guildford RDC v Fortescue [1959] 2 QB 112) as has been noted in the Mayor of London’s Guidance (para. 5.7). Jack J. considered the regime applicable to caravans in para. 36 of his judgment in the Tewksbury BC case supra and concluded it did not help with the issue he had to decide because “the law has put “caravans” in a special category of their own.”
Some local authorities such as Waveney take the firm view that as mobile homes are not a building for the purposes of the planning regime the CIL regime will not apply. As regards ordinary mobile caravans that should be correct. Clearly such caravans are capable of being moved freely round the site. With static caravans there is more doubt. Other authorities are uncertain. Requests for official guidance have not so far as I am aware resulted in guidance. Normally such static homes will have an air of permanence. They may even be combined with a brick construction. How will the grant of planning permission for a site comprising such static mobile homes be dealt with under the CIL regime? Will it depend on whether the static caravan rests on pillars or some similar means of support or whether it will continue to have wheels attached to it? For the purposes of the CIL regime I can see no real distinction between such a park and a park comprising log chalets. There is certainly none as regards demands on the local infrastructure. It seems that the definition of building for the purposes of planning law is not intended to automatically apply for the purposes of the CIL regime. If that is so then will the decision in ex parte Elitstone supra or Tewksbury BC supra govern the outcome? Although some consider the matter to be clear it seems to me as regards static caravans to be uncertain.
It has to be borne in mind that it will only be relevant when there is a need to obtain afresh planning permission which will be when there is a material change of use in relation to the site. In such circumstances if for the purpose of CIL a static caravan is a building then how will CIL be chargeable? What will be the gross internal area for the purposes of the CIL calculation? Should it be based on the maximum internal area of the static caravans with the possibility of a revision if some of the static caravans are smaller? My understanding is that official guidance has been sought on this issue but no answer has yet been provided.
9.2.8 Mobility – apart from with regard to caravans mobility may be an important factor in other cases in determining whether something is a building for the purposes of CIL. In the Tewksbury BC case (see section 9.2.7 above) the ability to move the caravan/shed round the site was crucial. Similarly in Cheshire CC v Woodward [1962] 2 QB 126 a large mobile coal hopper and conveyor was held for planning purposes not to be a building but it was accepted in the judgment of Lord Parker CJ that the ability to move a thing was not conclusive. In contrast in Barvis v Secretary of State (1971) 22 P & CR 710 a mobile crane 89 feet in height which ran on tracks fixed in concrete and could be dismantled to move to the next site was held notwithstanding the limited degree of mobility to be a structure or erection requiring planning permission. The facts of neither case are likely to be relevant to CIL which is focused on the internal area of a building. However, they do highlight that the facts of each case will need to be investigated to ascertain quite how mobile the subject matter of the issue actually is.
9.2.9 Designs - The introduction of CIL may have an affect on designs. It may encourage attempts at reducing the gross internal area of a building by converting what would have been parts of the building for the purposes of CIL to areas which are not. Instead of providing access between buildings by a wholly enclosed link a covered walkway may be used. Instead of an internal or detached garage a carport could be included in the design. This is an area which is likely to give rise to a number of appeals. There have been two already in relation to areas not fully enclosed – one a garage with an open front and the other loading bays which were not fully enclosed (see section 14.2.1.3 below).
9.3 Change of use – A material change in the use of a building can be a development for the purposes of planning and therefore require a fresh planning permission (section 55(1) 1990 Act). Such a change of use will give rise to a charge under the CIL regime save in one case. When a single dwelling house is changed to two or more separate dwelling houses that inevitably will be a development for planning purposes due to section 55(3)(a) 1990 Act but not for the purposes of CIL (reg. 6(1)(d)). For the reason explained in para. 9.3.1 it is unlikely that it will give rise to a CIL charge.
There is considerable scope for changing use under the authorisation of a general consent such as the Town and Country Planning (General Permitted Development) Order 1995. For example, Class E of Part 3 Schedule 2 permits a change of use to any other use which would have been originally authorised by the planning permission. This is consistent with the general exclusion from developments for the purposes of planning conferred by section 55(2)(f) 1990 Act and article 3(1) TCP (Use Classes) Order 1987 which provides that a change of use does not involve development if the change if use for any other purpose of the same class. There are fifteen use classes as well as those which are sui generis.
This means that it will be important to determine whether a change in use constitutes a material change of use which in turn constitutes a development thus giving rise both to the need for a new planning permission and a possible CIL charge. In planning law this is a matter of fact and degree (Birmingham Corp. v Habib Ullah [1964] 1 QB 178 applied in Panayi v DDE (1985) 50 P & C R 109) taking into account the whole site and not just the area of change (Bendles Motors Limited v Bristol Corp. [1963] 1 WLR 247). Account has to be taken not just of the impact of the change on amenities and the environment but wider planning considerations such as the impact on services and the character of the area (Westminster CC v Great Portland Estates plc [1985] AC 661).
One especially uncertain area is intensification of user and whether this constitutes a material change for planning purposes (see Peake v Secretary of State for Wales (1971) 22 P&CR 889 and Kensington & Chelsea v Secretary of State for the Environment (1981) JPL 50). Another will be when there is a resumption of a planning user which had been previously abandoned. The abandonment will not be a material change of use but the resumption will be (Hartley v Ministry of Housing and Local Government [1970] 1 QB 413).
A further particularly difficult issue can be whether a proposed conversion of a number of residential units into one single dwelling will be a material change of use requiring a fresh planning permission. The argument that a reduction in the number of residential units and no significant change to the external appearance of the building will not constitute a material change of use was rejected in Richmond upon Thames BC v SSETR [2000] 2 PLR 115. The conversion of seven one bedroom flats and studios in a two storey semi into a single dwelling was held to be a material change justifying the refusal of a certificate of lawful user. It was accepted that the loss of a certain type of residential unit in the area was a factor which should be taken into account when determining the issue.
CIL will have been charged on the actual use adopted by the original planning permission (assuming that the CIL regime applies to it) rather than on the basis of any use which is authorised by the planning permission and then when there is a change the CIL position needs to be reconsidered afresh. If the change constitutes a development for the purposes of planning law then a new CIL charge will arise. If it does not then it would seem that the change can go ahead without a further CIL charge.
9.3.1 Unusual for CIL charge to arise - Such a change will normally not by itself give rise to a CIL liability. This will be because the gross internal area of the building which is subject to the change of use permission will be a deduction when calculating the CIL liability arising from the permission and so after that deduction there will remain no area to be charged to CIL (see section 14 below). However, in some cases a change of use when combined with either prior non-use of the building preventing it satisfying the vacancy test or prior unlawful use can give rise to a CIL liability because the gross internal area of the relevant building will not be available as a deduction and in consequence the whole of the gross internal area of that building will be chargeable to CIL.
9.3.2 Effect of non-use –
9.3.2.1 General – when calculating the chargeable amount of CIL pursuant to reg. 40 there is in certain specified circumstances a deduction from the gross internal area in relation to existing buildings which are to be retained or demolished. Getting the formula right to allow for the appropriate deductions has proved difficult. There have been a number of amendments (see section 14.2.3 below). The rules as regards what is deductible have been relaxed by the 2014 Regulations.
9.3.2.1.1 Original exclusion from CIL - prior to the coming into force of the 2014 Regulations if the relevant building comprised in a development had not been used for a continuous period of six months or more during the twelve month period preceding the day that the planning permission first permits the development then the gross internal area of that building would be subject to charge under the CIL regime (original reg.40(10)). If it had been in use for a continuous period of six months during that twelve month period then it was excluded from the charge to CIL. It is not the date of the grant of the planning permission which is material but the day when the development is first permitted. This especially needs to be borne in mind when dealing with phased developments. As a result of reg. 6 2014 Regulations this now only applies to developments in respect of which a liability notice has been issued prior to 24th February 2014.
9.3.2.1.2 New 2014 rules - These apply to any development in respect of which the liability notice is issued on or after 24th February 2014. The changes were made because the time limits in the original exclusion were found to be tight particularly in the context of sites regarding which the planning application was a lengthy process or the site has been vacant whilst a phased development is carried out. The site could be vacant pending the outcome of the planning application and as a result the benefit of the exclusion was lost.
(1) Relaxation of period of use - the original vacancy test has been relaxed by allowing a deduction from the gross internal area if the relevant building has been in continuous use for six months in the three year period ending on the day when the relevant planning permission first permits development or if appropriate the relevant phase of the development. This will allow the deduction to be made in a greater number of cases. It should allow for the building remaining vacant whilst planning permission is being sought or for a long term development with a number of phases to be carried out. The relaxation has been achieved by replacing the original reg. 40(10) by the inclusion of a new definition for “in-use building” in the amended reg. 40(11). The original proposal for change was that the time limits should be removed all together and that the deduction would include any unused building unless the planning use had been abandoned.
(2) No change in permitted use - In addition to this definition relaxing the period during which the relevant building must be in continuous use for six months there is also an expansion of the wording as to what constitutes the deduction represented by Kr in the formula for calculating the chargeable internal floor area. This adds a further deduction. The new Kr in reg. 40(7) allows the internal floor area of a retained part of a relevant building to be deducted from the gross internal area of the chargeable development if the intended use of that part once the development has been completed is one which could have been lawfully and permanently carried on in that part on the day immediately before the day development is first permitted without the need for a further planning permission. This addition to Kr covers a part of a relevant building which has not been in use or not for the necessary six month period of continuous use provided that it could have been used in the same manner as intended under the development project without any need to apply for a further planning permission. If there is no need to obtain a new planning permission in respect of the use of the part once the development is completed then it can be deducted from the area chargeable to CIL.
The effect of this is that if the last permitted use of the relevant part is the same as the intended use after completion of the development then the internal area of the building will from the internal area unless that last use has been abandoned. It may be that the relevant part would have been excluded from the planning permission if there is no need to authorise a change of use in which case it would not comprise part of the chargeable development. Now the relevant part can be included in the area covered by the planning permission without increasing the CIL liability unless the use has been abandoned for the purposes of planning law (as to which see (3) below).
(3) Abandonment of use - this will introduce into the CIL regime a planning test which is uncertain. It has been held that the mere interruption of a use will not necessarily constitute abandonment (Fyson v Buckinghamshire CC [1958] 1 WLR 634). Changes of use or the cessation of one use in a mixture of uses can constitute abandonment (Hartley v Min of Housing and Local Government [1970] 1 QB 413). In deciding whether a use has been abandoned account will be taken of (i) the condition of the property; (ii) the period of non-use; (iii) whether there is an intervening use; and (iv) any evidence regarding the owner’s intention (Trustees of the Castlellyn-Mynach Estate v Secretary of State for the Environment [1985] JPL 40). These factors have been repeated in para. 2.3.12 of the revised February 2014 Guidance which emphasises that each “case is a matter for the collecting authority to judge.”
(4) Review existing sites – Now that the 2014 Regulations have been brought into force it may be worthwhile reviewing sites where the application of the vacancy test had previously caused an increase in CIL. If the development has not been finished and a fresh application is possible under section 73 TCPA 1990 then it may be possible to reduce the CIL liability and obtain an overpayment. This objective will not be achieved if the subsequent planning permission s a free-standing permission as there is no ability to obtain a repayment and it the abatement relates only to buildings which have not been completed.
9.3.2.2 Example - A owns an empty property in Mayfair originally built as a house but used for a number of years as an office until three years ago since when it has been unused. It has a gross internal area of 300 square metres. A successfully applies for planning permission to use it as a residence. CIL will be payable because there is no deduction as during the whole of the three years prior to development first being permitted following the grant of the permission it has not been in use.
9.3.2.3 Conversion of office to house - If during the last three years part of the building had been continuously used as an office and the rest of the building had been vacant then the whole of the gross internal area would be available as a deduction (reg. 40(10)). This is because use of part suffices to allow the deduction in full. It would seem this would still be the case if the building comprised a number of flats and only one was occupied prior to the permission first permitting the change from residential to office use. Although the flats are separate dwellings they each comprise part of the building.
9.3.2.4 Part of building - there are no limits as to the size of what constitutes a part of a building for these purposes. With regard to business rates it has been held in R (Makro Properties Limited) v Nuneaton & Bedworth BC [2012] EWHC 2250 that the occupation of 0.2% of the floor space of a large retail warehouse comprising 140,000 square feet for the purposes of storing documents on pallets constituted rateable occupation. When this user stopped it triggered a second period of grace from unoccupied property rates. On appeal it was held that the storage of the documents was not a trifling user and the de minimis principle did not apply. Although concerned with different statutory regulations albeit both are concerned with raising revenue for local authorities from property the decision indicates that the courts should be slow to find that such a set of circumstances is outside the wording used.
9.3.2.5 Conversion of house to flats - on the other hand if the Mayfair building had been used as a house throughout the life of the building until it ceased to be used three years ago then on a successful application to convert it to three flats there would be no charge to CIL due to the specific exclusion in reg. 6(1)(d) (see para. 10.2 below).
9.3.2.6 Extension of unused building – if it is intended to extend a building which has been unused for three years by say 70 square metres there will be no CIL charge if the planning permission relates only to the extension. The new build will be within the 100 square metres limit (see section 10.3 below). Even if the extension exceeds 100 square metres the CIL will be charged only on the area of the extension unless it is now exempt from CIL due to the application of the exemption for residential extensions (see section 11.6 below). The position would be different if there has been an abandonment of the planning permission so that a fresh planning permission for the whole building is needed.
9.3.3 What constitutes use of a building? – this is an issue which is causing problems for authorities operating a CIL regime. There is no definition or guidance as to when a building is in use. In Arbuckle, Smith & Co. v Greenock Corp [1960] AC 813 Lords Radcliffe stated “”Use” is not a word of precise meaning, but in general it conveys the idea of enjoyment derived by the user from the corpus of the object enjoyed.” The nature of the building and its function will be major factors in determining whether it is being used. For assistance an analogy may be drawn with the concept of occupation in the context of rating law.
For the purposes of rating it is well established that “occupation” comprises four elements following the Court of Appeal decision in Laing (John) and Son Limited v Kingswood Assessment Area Assessment Committee [1049] 1 KB 344 (recognised by the House of Lords in LCC v Wilkins [1937] AC 362). These four ingredients are:-
(i) actual occupation or possession;
(ii) exclusive for the particular purpose;
(iii) the possession must be of some value or benefit to the possessor;
(iv) the possession must not be transient.
Possession by itself is not conclusive as to whether there is occupation for the purposes of rating or use for the purposes of CIL. Mere intention to occupy will not by itself be sufficient for either purpose (see Du Parque LJ in Associated Cinemas Properties Limited v Hampstead BC [1944] KB 412 at page 415). Equally an intention to let is a strong intention not to occupy (Collins MR in R v Melladew [1907] 1 KB 192 at page 202). However, for rating purposes combine intention with a slight use and that is sufficient for rating purposes. Merely keeping the premises maintained or cleaned will not by itself be sufficient. Advertising premises for letting has been held to be insufficient for rating purposes (Crowther-Smith v New Forest Union (Ryders Rat. App. (1886-90) 311)) but if the advertisement relates to facilities in a warehouse this may constitute occupation (Borwick v Southwark Corpn [1909] 1 KB 78). There will be borderline cases. A vacant building available for letting will be unused. An office block with facilities and staff ready for short term serviced lets could be regarded as in use. Shropshire has stated on its website that if part of the building is used for the purposes of storage then that will be treated as use.
This is illustrated by the rating case R (on the application of Makro Properties Limited) v Nuneaton & Bedworth BC [2012] EWHC 2250. In that case the lessee had occupied the warehouse for the purposes of a cash and carry business until it was cleared in June 2009. The lease was surrendered in December 2009 to the freeholder which was part of the same group of companies. Between 25th November 2009 and 12th January 2010 sixteen pallets of paperwork were stored occupying about 0.2% of the floor space. Between 12th January 2010 and 23rd July 2010 the premises were empty again and then 40 palletts of paperwork were delivered occupying roughly the same space as before. The battle was over whether rates were payable for the period from January to July 2010. An attempt to rely on Furniss v Dawson was rejected. The judge held that such occupation was not de minimis and could not be regarded as trifling. The placing of the palletts constituted actual occupation which was beneficial to the occupant and so effectively interrupted the separate periods of non-occupation for the purposes of avoiding a rates liability by relying on the rules concerning rate free periods.
This is further illustrated by the decision in Sunderland CC v Stirling Investment Properties LLP [2013] EWHC 1413 (Admin). This is another case which concerned the installation of transmitters to broadcast Bluetooth marketing and advertising messages. This time the issue was not whether the premises were in use wholly or mainly for charitable purposes but whether this constituted occupation of the premises. Wilkie J. concluded that it did stating at para. 72 that in his “judgment the fact that the nature of their undertaking was such that, once they had identified the optimum location for their equipment, they did not need to “use” more than a minute fraction of the area encompassed within the premises did not prevent their occupation being rateable occupation.”
There has to be a risk that for the purposes of CIL a token use of a building with the intention of avoiding a CIL charge will be disregarded.
9.3.4 Unlawful use –
9.3.4.1 General - a similar position arises when there has been user of the building in the three years (or twelve months if the liability notice relating to the development was issued prior to 24th February 2014) prior to the day that the planning permission first permits the development but it is unlawful use. Again the gross internal area of the existing building will not be deductible when determining the area to be charged to CIL. The deduction is only available if there has been lawful user of the building or a part continuously for at least six months within the three years (or twelve months if the development is prior to the operation of the 2014 Regulations) immediately prior to the development first being permitted. This means that a grant of retrospective permission or a deemed grant on the quashing of an enforcement notice on appeal will give rise to a possible CIL liability. In addition there will be a possible surcharge due to the failure to serve a proper commencement notice (see para. 17.1.4 below).
9.3.4.2 Unlawful change of use - When changing the use of a building a failure to obtain the appropriate planning permission before acting will have the potential to increase the CIL liability when the position is finally legitimised. It may create a CIL liability when one should not have arisen. This could be a substantial penalty.
9.3.4.3 Mixed lawful and unlawful use - The position is unclear if there is a mixed user of a building in the sense that there is lawful user of part and an unlawful user of another part. The definition of “in-use building” in the new reg. 40(11) (previously covered by reg. 40(10)) appears to be intended to apply to a building which is only partly in use. It would not seem to apply if the building is wholly in use but only part is lawful. Even if that is the case what happens if part is not used part is used lawfully and the final part is used unlawfully. One argument is that so long as part of the building is used lawfully that is sufficient and it does not matter for these purposes what happens with the remainder of the building. On the strict wording that would appear to be correct. The alternative would be to apportion so that the area of the part lawfully used will be a deduction but not the remaining area of the building including the part in unlawful use. There seems to be no justification for this in the regulations.
9.3.5 Not qualify for minor development exemption – when a change of use triggers the operation of the CIL regime it will be chargeable to CIL regardless of the area of the development. Even if it is less than 100 sq. m CIL will be chargeable because the development relates to an existing building and not to a “new build” and so the exemption in reg. 42 relating to minor developments will not apply. a “new build” requires the development to involve either a new building or the enlargement of an existing building. A mere change of use of a building which does not change the size of the building will not be a new build and so the CIL liability will be greater than normal.
9.4 Unlawful development –
9.4.1 Options - there will be no charge to CIL arising from the commencement of an unlawful development as there will be no actual or deemed planning permission authorising the works. As has been pointed out in the guidance prepared by PAS the matter would be dealt with by the authority’s planning enforcement team with four possible outcomes:-
9.4.1.1 Demolition – no CIL liability;
9.4.1.2 No action – this is only likely with small infringements and there would not be likely to be a CIL liability in any event;
9.4.1.3 Retrospective planning permission – CIL becomes due as a result of the planning permission;
9.4.1.4 Enforcement notice quashed on appeal – deemed planning permission as a result triggers CIL liability.
9.4.2 Surcharges on unlawful development - surcharges will be due if CIL becomes due in these circumstances as no commencement notice will have been given. CIL could be due even though the development commenced before a charging schedule was in place for the area if a deemed or retrospective planning permission occurred after the charging schedule is in place.
9.4.3 Proceeds of crime – the powers in the PoCA 2002 have been invoked for an infringement of planning law (see, for example, R v del Basso [2010] EWCA Crim 1119). If a planning department is going to adopt such an approach then it will not be concerned to authorise the development so as to raise the CIL.
9.5 Subject matter of the chargeable development – the CIL is charged on the area which is the subject matter of the chargeable development. The ascertainment of this area, therefore, has an important role to play in determining the amount of CIL payable.
9.5.1 Starting point – the chargeable development is the development for which planning permission is granted (reg. 9(1)).
9.5.2 Development under general consent – where there is no actual planning permission granted but the development is under a general consent then the development will be that identified in the notice of chargeable development given to the collecting authority or in default prepared by the collecting authority (reg.9(3)).
9.5.3 Phased planning permission development (reg. 9(4))–
9.5.3.1 Prior to 24th February 2014 - each phase of a development pursuant to an outline planning permission was treated as a separate chargeable development and so the subject matter of each phase comprised a separate chargeable development. The CIL regime was applied separately to each phase of the development. This had obvious advantages for arranging the cash flow of the development expenditure but was limited only to outline planning permissions and not full or hybrid planning permission. However, the phasing of the development could give rise to problems when computing the CIL liability. One problem could be with regard to the demolition of buildings and the deduction of the area when operating the reg. 40 formula. Another was if there was a long period between the grant of planning permission and the commencement of a phase preventing a retained building being in lawful use for a period of six months in the twelve month period prior to the commencement for the particular phase. There could also be complications where different parts of the development have different uses. A number of these issues have been addressed by the 2014 Regulations by amending the formulae in reg. 40.
9.5.3.2 Post 23rd February 2014 - The treatment of each phase of a development as a separate chargeable development for the purposes of CIL now applies not just to outline planning permission but to all planning permission (reg. 4(2) 2014 Regulations). It now applies to all phased planning permissions which expressly provide for development to be carried out in phases and so it does not matter whether it is an outline, full or hybrid planning permission. This applies from 24th February 2014. There is nothing in the transitional provisions in reg. 14 of the 2014 Regulations which prevents the change applying to phased planning permissions granted before the coming into force of the 2014 Regulations. In the case of outline planning permissions granted before 24th February 2014 there is no change but as regards full or hybrid planning permissions it will be interesting to see whether this phased treatment will be accepted by authorities as applying.
The 2014 Regulations have made a number of amendments to the formulae in reg. 40 with a view to addressing such issues (see section 14.2.3 below). In particular the deduction available for the purposes of CIL in respect of the internal area of a demolished building can be carried forward to later phases of the development to the extent not used in an earlier phase.
9.5.4 Section 73 planning permission – this section confers a statutory power to remove or modify the conditions attaching to a planning permission. The exercise of this statutory power will result in a new planning permission. Reg. 9(5) provides that if this statutory power is used to extend the time limits for the commencement of development then the chargeable development will be determined by reference to the development for which the earlier planning permission was granted. This applies only to changes in that time limit. Section 73 has been amended so that it is no longer possible to exercise this statutory power to change time limits (sub-section (5)). In consequence this provision can only apply to section 73 permissions changing time limits before 24th August 2005. Other exercises of the section 73 power can give rise to CIL complications (see para. 8.4 above).
10. Excluded developments – it will be important to know which developments are outside the scope of the CIL regime and which are not. The obvious reason is so that clients can be told at the start of their consideration of a proposed development the good news if it is not caught. The other is so that the client can be told that a proposal devised to avoid the operation of the CIL regime does not work and is caught. There is plenty of scope for confusion with such proposals when clients do not have a detailed grasp of the CIL regime. For this reason I am including in this section the exemption for minor developments.
10.1 building into which people do not normally go or only for purpose of inspecting or maintaining fixed plant or machinery (reg.6) – any works relating to the construction, repair or improvement of such a building are not treated as development for the purposes of CIL. This covers buildings such as substations or pumping stations. The Mayor of London has been advised that this only applies to separate buildings and does not apply to parts only of a building. It is possible to envisage tricky issues arising in respect of large sites such as railway stations, airports and power stations. Three separate issues will arise. First, what on the site is actually a building? For instance how are extendible walkways, tunnels, luggage ducts or platforms with a partial cover to be treated? Second, if a building will it be excluded by either limb of reg. 6(2)? This could raise the third issue as to whether the area is part of a bigger building or constitutes a separate building (see para. 14.2.1.6 below)? Once these issues are dealt with there then may a fourth difficult issue. How will the various parts of the large site be categorised as regards use.
10.2 Change of use from single dwelling to two or more dwellings (reg. 6(1)(d)) –
10.2.1 General – there is a specific exemption when converting one dwelling into two or more. This means that a conversion to flats of a house which had not been in lawful use for six months or longer in the three years prior to the date the planning permission first permits the conversion will not be subject to CIL. This exclusion covers any works relating to the change of use of a single dwelling house to two or more separate dwelling houses. It has been suggested that this exclusion is limited to conversion to two separate houses as opposed to flats but in my view notwithstanding the continuing problems over the construction of “dwellings” in tax legislation this limitation is not correct. Support for this is gained from an appeal relating to the conversion of existing property to two self-contained flats the appointed person found that CIL was not due although the authority put in no representations (decision on VAO website).
10.2.2 Extension included - It is not immediately apparent what is to happen if there is an extension of the building. Will this increase in the internal space be excluded or be used to calculate a CIL charge or could the whole gross internal area be caught? It seems to me that it is the increase in area which will be caught but there is a risk that the need for such works will take it wholly outside the exclusion and so the question will be what deduction if any is available with regard to the existing building. This is a matter which will need to be explored before works start.
10.2.2.3 Conversion of flats to single dwelling house - in contrast a conversion of flats to a single dwelling in such circumstances will give rise to a CIL even if there is no increase in the internal space subject to the availability of any deduction in relation to retained buildings (see section 9.3.2 above).
10.3 New build less than 100 square metres (reg. 42) –
10.3.1 General - if the development involves works rather than a change of use and does not result in 100 square metres or more of new build then it will be outside the CIL regime unless the development comprises one or more new dwellings. For these purposes new build comprises either a new building or an enlargement of an existing building. In calculating the area it does not allow for the internal area of the new or enlarged building to be reduced by the internal area of any building demolished as part of the development. It is focused on the internal area of the new building that is constructed in place of the demolished building. If there is no increase in internal floor area then this will not be a new build and this exemption will not apply if there is otherwise a CIL liability due to a mere change of use (see para. 9.2.3 above). The whole of an extension exceeding the 100 square metres limit will be chargeable to CIL and not just the amount by which it exceeds 100 square metres. This has been confirmed by a decision on an appeal dated 21st June 2013 (to be found on the VAO website) that reg. 42 does not provide an exemption for the first 100 square metres of new build in any development.
10.3.2 Appeals – an appeal involving a dispute over the application of this exemption is possible under reg. 114. In an appeal concerning the use of premises as a place of worship (on VAO website but no further identifying information) there had been temporary permission to use premises for worship (use class D 1) and then a full unconditional planning permission was granted for use as a place of worship and to carry out minor works. The authority assessed CIL on the gross internal area of the building notwithstanding that the building was found to have been in lawful use due to the temporary permission. This was set aside on appeal. It was held that there was no new build on the basis that the appeal papers showed that the style and size of the church was largely the same before and after the grant of planning permission. In consequence the reg. 42 exemption was applied.
10.3.3 New build with dwelling - If any part of the development comprises a new dwelling then that would appear to be sufficient to prevent the benefit of this exemption being gained. The exemption will not only be lost if the whole of the development is one or more new dwellings. This is subject to the application of the new exemptions for self-build housing, residential annexes and residential extensions (sections 11.5 and 11.6 below). The term “dwelling” has always caused problems in both fiscal and non-fiscal legislation. An extension to a school or college dormitory with an increase in internal floor area of less than 100 square metres should not give rise to a CIL charge whereas prior to the introduction of the new exemption for residential extensions the same extension to a house would.
10.3.4 Extensions/annexes – the significance of this exemption for minor developments has been reduced in its most contentious area which is with regard to extensions to a home or the construction of an annexe within the curtilege of a home. The new exemptions (sections 11.6 below) will remove from the CIL regime the majority of extensions to residential property. It may even encourage larger extensions which otherwise would have been smaller to avoid CIL. The minor developments exemption will still be material with houses where the work has started before 24th February 2014 because the new exemptions will not apply and so if the extension exceeds 100 square metres CIL will be charged. It seems harsh in cases in which the extension had not been completed by that date. Issues will still arise in relation to extensions of buildings other than dwellings. One issue may be whether the extension relates to an area which is already treated as part of the GIA of the building or whether it is caused to become part of the GIA as a result of the works. There have been two appeals already on such issues (see section 14.2.1.3 below).
10.3.5 Staged developments - In attempting to come within this exemption clients may make mistakes and carry out schemes which raise interesting legal issues. One obvious route for developers to consider is to design a development in separate parts with the objective that each part is within this exemption. Such staging will be harder with new dwellings as the minor works exemption does not apply so the internal area cannot be disregarded if below the limit of 100 sqm when determining whether the development is chargeable to CIL. To defer say a garage to a second application may not be successful if the garage is viewed as a matter of law as part of a dwelling but as it will not by then be a new dwelling that point should not succeed. Now there will also be the question whether the construction of the garage would qualify for the residential extension exemption. A development will not face the same problems or issues if instead of a dwelling it concerns say an office. If the internal area of the office is 95 square metres and the garage 45 square metres then dealing with the development in two stages could result in a CIL advantage. There is as yet no provision which allows the two developments to be aggregated. Such provisions are to be found in property taxes such as stamp duty land tax and may be inserted into the CIL regime if this were to become a problem for charging authorities. At present the principal hurdle, therefore, is the practical one whether the planning authority will grant permission for the first stage without the second or be difficult with the second application.
10.4 Mezzanine floors – This is a topic which has thrown up a significant amount of uncertainty. An improvement or alteration of the interior of a building which does not materially affect the external appearance of a building will not be a development for the purposes of the TCPA 1990 (section 55(2)(a)). This will exclude works which only add a mezzanine floor from the CIL regime. However, there is one special case involving mezzanine floors which is brought within the planning regime. The increase of the gross floor space of a building by more than 200 squares metres will be a development if the building is used for the retail sale of goods other than hot food and such a building will include a retail warehouse club (Article 3 of the Town & Country Planning (Development Management Procedure) (England) 2010/2184 pursuant to section 55(2A) TCPA 1990). A mezzanine floor within that article 3 will, however, not be a development for the purposes of CIL (reg. 6(1)((c)). Oddly the February 2014 CIL Guidance states that mezzanine floors “of less than 200 square metres inserted into an existing building are not liable for the levy unless they form part of a wider planning permission that seeks to provide other works as well” (para. 2.1.2). This appears to leave open the possibility of mezzanine floors exceeding 200 square metres being a chargeable development which is not correct. Any other mezzanine floors will not be a development for the purposes of CIL because it is not a development for the purposes of the TCPA 1990. The new build limit of 100 square metres will not apply. Thus the addition of mezzanines should not give rise to a charge to CIL. However, it should be noted that mezzanine floors in a new development will be taken into account for the purposes of CIL. Similarly additional floor space created by an underground development will be caught for CIL unless the residential extension exemption applies.
E. Exemptions
11. Exemptions – there are limited exemptions and with some the charging authority has the discretion as to whether or not they will be applicable. Even if such discretionary exemptions are applied by an authority the operation of the discretion will be limited. There are no exemptions for bodies such as local authorities (including the charging authority) or the emergency services. However, it may be that developments relating to such bodies will be zero rated in the charging schedule. There are two principal exemptions – charities and social housing.
11.1 Charitable exemption – there is a compulsory exemption available in all areas and an additional discretionary exemption which the charging authority can elect to offer. It should be noted that there is no specific exemption for buildings for purposes such as education, defence or emergency services. To qualify for these charitable exemptions an owner with a material interest in the building has to be a charity. This exemption may be available, for example, to academies or free schools.
11.1.1 Compulsory charitable exemption - Subject to three qualifications (see para. 11.1.5 below) a charity which owns a material interest in a development site will be wholly exempt from CIL if the chargeable development will be used wholly or mainly for charitable purposes whether by that charity alone or with other charities (reg. 43).
11.1.2 Treble Warning - a charity qualifying for the benefit of the charitable exemption may easily lose it. There are three steps that must be taken before the commencement of the relevant development. These are:-
11.1.2.1 Claim – the benefit of the exemption must be claimed (see para. 11.1.8 below) and this claim must be made before the commencement of the development (reg. 47(2)(a)).
11.1.2.2 Notification of decision - then there must be a wait before starting the development to receive notification of the decision on the claim from the collecting authority. If the development is commenced before that notification the claim will lapse (reg. 47(3)). The collecting authority is obliged to respond as soon as practical (reg. 47(5)). There is a right to appeal against the decision (see para. 18.4 below).
11.1.2.3 Commencement notice – having got this far the benefit of the exemption will be lost if a commencement notice is not submitted to the collecting authority before the date the chargeable development is commenced (reg. 47(7) – prior to 24th February 2014 submission on the date of commencement would have been sufficient but after 23rd February 2014 it is not (reg. 7(3) 2014 Regulations)). Failure to give such a notice will cause the exemption to be lost and a surcharge to be payable.
11.1.3 Protection - care must, therefore be taken to ensure that the development does not start before the claim has been properly made, the collecting authority’s decision has been notified and a commencement notice has been submitted before the commencement of the development. Contractual provisions to impose responsibility for taking such steps at the right time should be considered between the charity and the developer and possibly the inclusion of an indemnity to protect against any failure resulting in the development commencing before these steps have been completed.
11.1.4 Extent of exemption - this exemption will not cover any part of the actual CIL liability attributable to the development which is not exempt because part of the development is not to be used for charitable purposes. In consequence if the charity becomes responsible for that part of the CIL liability it will have to pay it and cannot rely on the charitable exemption. This can occur if a person has assumed such liability then defaulted in payment and the outstanding CIL is transferred back to the charity as an owner.
11.1.5 Limitations on availability of charity exemption – the application of the charitable exemption will be excluded in three sets of circumstances:-
11.1.5.1 No control or occupation by charity – it is not enough that the chargeable development is to be used for charitable purposes but it must also be either occupied by a charity or under the control of a charity (reg. 43(2)(a)). It need not be the charity which is the owner but can be any charity. It would seem from the wording and in particular the use of the words “will not be” that whether this requirement has been satisfied is to be tested by the circumstances prevailing at the time the development has been completed and the site is to be used. In consequence a liability notice is likely to be issued on the basis that this limitation will not apply but if it is found that it does then a revised liability notice can be issued. This may come as shock to any person who has assumed liability and finds the liability unexpectedly increased. It is something which the person assuming liability may want to protect against and take an indemnity from the charity so that the risk lies with the charity.
11.1.5.2 Joint ownership of material interest with non-charity – if the material interest owned by the charity is jointly owned with a person who is not a charity then the exemption will not apply (reg. 43(2)(b)). However, if there is more than one material interest and the charity is the sole owner of a material interest then the exemption will apply to the charity but not to the owners of any other material interests in the site. For example, if a charity develops a site that it leases from L then the charity will be exempt from the CIL liability apportioned to the charity’s leasehold interest but L will be liable to pay the CIL portion apportioned to the owner of the freehold reversion.
11.1.5.3 State Aid – no charitable exemption is available if it would constitute State Aid (reg. 43(2)(c)). The guidance from the Mayor of London raises the query whether an indemnity should be sought by the collecting/charging authority from a charity against the possibility that the relief is State Aid. It is hard to understand the basis on which such an indemnity could be compelled. Either the claimant qualifies for the relief or not and if it does then it should be given without negotiation.
11.1.6 Meaning of “charitable” – whether or not a body qualifies as a charity will be determined under the general law. For the purposes of CIL a “charitable institution” is defined by reg. 41 as
(i) a charity which is any person or trust established for charitable purposes only. Charitable purposes is defined by section Charities Act 2011. These will comprise charities registered as such with the Charity Commission; exempt charities listed in Schedule 3 of the Charities Act 2011 which cannot register; and excepted charities which do not need to register but are supervised by the Charity Commission.
(ii) a trust of which all the beneficiaries are charities;
(iii) a unit trust scheme in which all the unit holders are charities.
Registration with HMRC as a charity will be a strong indicator but will not be conclusive. The regulations do not require such registration and there will be bodies which qualify as a charity but are not registered with HMRC.
11.1.7 “Wholly or mainly” – to qualify for the exemption the development must be used “wholly or mainly” for charitable purposes. There is no definition or test for this phrase in the regulations and it is one the application of which has given rise to problems in the context of rating matters. It has been indicated that it means that more than half the development will be used for such purpose. I take this to mean more than half of the area of the development. The test is similar to that which arises in respect of business rates which particularly in the context of attempts to avoid rates on vacant commercial premises has resulted in a number of cases.
With a view to the owner avoiding paying rates on vacant premises leases have been granted to a charity on a peppercorn rent with a break clause on a short notice allowing the charity to instal a transmitter to broadcast messages on crime prevention and public safety. Such arrangements have been successfully challenged on the ground that the hereditament was not “wholly or mainly used for charitable purposes.” (Public Safety Charitable Trust v Milton Keynes [2013] EWHC 1237 (Admin)). In that case Sales J. stated at para. 34 that in “the context of this legislation [section 43(6) Local Government Finance Act 1988] and having regard to the language used, it is reasonable to infer that Parliament intended that the substantial mandatory exemption from rates for a charity in occupation of a building should depend upon the charity actually making exclusive use of the premises for charitable purposes (i.e. use of the building which is substantially and in real terms for the public benefit, so as to justify exemption from ordinary tax in the form of non-domestic rates), rather than leaving them mainly unused.” This would apply equally to the mandatory exemption from CIL. It applies the Court of Session decision in English Speaking Union Scottish Branches v Edinburgh City Council [2009] SLT 1051 which held that premises were not wholly or mainly in use for charitable purposes when a charity occupied one of eight floors in a building. The purpose of the use was wholly charitable but that was not sufficient as the whole building was not used for such purpose. It was possible to look not just at the purpose of the use but also at the extent or amount of the use. There is an important distinction between occupation and use in this context. A charity as in the English Speaking Union case may be in occupation of the whole building but that does not mean that the building is wholly or mainly in use for charitable purposes.
However, in reaching a decision on this requirement account is not to be taken as to whether the charity is making the most efficient use of the building nor whether it really needs to occupy all the space occupied (Kenya Aid Programme v Sheffield CC [2013] EWHC 54 (Admin). Issues of necessity or efficiency are not material. In that case two units were leased by a registered charity to use as a store for furniture which was to be shipped to Kenya. The charity was funded by donations from the landlord and as a result of the arrangement the landlord did not have to pay non-domestic rates on the vacant building. When rejecting the claim for charitable relief on the grounds that the units were not used wholly or mainly for charitable purposes the District Judge took into account that only one unit would have been sufficient and that the furniture was spread out through the units making poor use of the space. The Divisional Court held that these factors should not have been taken into account and remitted the case to be reheard.
The development will not be eligible for this exemption if the property is to be let out to achieve an income for the charity. However, it is expressly provided that using a chargeable development includes leaving it unoccupied (reg. 41(3)).
11.1.8 Claim – the charity must make a written claim for the application of the charitable exemption to the collecting authority (reg. 47). As warned above the claim must be made before the commencement of the development. The claim must be in, or substantially similar to, the prescribed form and contain the particulars required by the form. The first port of call for such a form will be the relevant authority’s website. A link should be present to enable the form to be downloaded. Care has to be taken to ensure that the claim is accompanied by an apportionment assessment when there is a material interest in the development site owned by a person other than the charity (reg. 47(2)(d)). The collecting authority may substitute its own apportionment assessment. As highlighted above in para. 11.1.2.2 as well as making the claim before the commencement of the development it is essential that notification of the authority’s decision is received before such commencement and a commencement notice is submitted before commencement.
11.1.9 Clawback – the benefit of the charitable exemption can be lost during the seven year period beginning with the commencement of the chargeable development and the CIL previously exempted clawed back if one of the following occurs:-
11.1.9.1 Cessation of qualification for charitable exemption (reg. 48(1)(a)) – the initial satisfaction of the requirements set out above (see in particular 11.1.5) may cease. For example, charity may lose its charitable status or the development may no longer be used wholly or mainly for charitable purposes. If this occurs during the seven year period there will be a charge to CIL.
11.1.9.2 Transfer of charity’s material interest (reg. 48(1)(b)) – a transfer of all the charity’s material interest in the development to a non-charity during the seven year period will trigger a claw back of CIL. A transfer to another charity will not lose the benefit of the exemption. It would seem that a transfer of part will not trigger this provision but it has to be borne in mind that one of the pre-conditions to be satisfied if the exemption is to apply is that the material interest must not be jointly owned by the charity and a non-charity (see para. 11.1.5.2 above). To effect a transfer which causes a non-charity to become joint owner of the material interest with a non-charity will cause the clawback provisions to be triggered.
11.1.9.3 Termination of charity’s lease (reg. 48(1)(c)) – when the charity’s material interest was a lease which expires, or is forfeited, broken or otherwise terminated during the seven year period and then reverts to a non-charity landlord that will trigger a clawback.
11.1.9.4 Liability for clawback – the amount of CIL relieved by the operation of the charitable exemption will be the amount clawed back and it must be paid by the person who owns the material interest immediately before the event triggering the clawback (reg. 48(2)).
11.1.9.5 Notification and surcharge - the person liable to pay the CIL on the withdrawal of the exemption is obliged to notify the collecting authority within 14 days of the occurrence of the event (reg. 48(3)) and if there is failure to do so then the collecting authority can impose a surcharge equal to 20% of the CIL liability triggered by the disqualifying event or £2500 (whichever is the smaller) (reg. 84). The surcharge is payable immediately if the development has started but if it has not started then on the commencement day. It is apportioned between the owners of material interests in the relevant land in respect of which charitable relief was granted (reg. 84(6)). This provision does not make clear for these purposes at what time the material interest must be owned. It presumably is the same time as applies regarding the determination of liability for the clawed back CIL which is immediately before the disqualifying event. Further it does not limit the liability to pay the CIL to the person failing to give notice of the disqualifying event. This is in contrast to reg. 48 regarding liability for the clawed back CIL. It appears to apportion this surcharge liability amongst all the owners of material interests in the development regardless of whether or not they have received the benefit of the charitable exemption.
11.1.9.6 Protection – the ability to clawback CIL due to a disqualifying event means that if a charity which has claimed the benefit of this exemption from CIL transfers its material interest there will be a need to consider what contractual provisions should be included to cover the CIL thereby clawed back if the transfer is to a non-charity or which might in the future be clawed back if the transfer is to another charity. The provisions will need to be more elaborate if they are to protect an unexpected surcharge liability due to a failure to give notice of a disqualifying event. Similar provisions may be needed by other owners of material interest in the development who have not had the benefit of the charitable exemption. These will probably have to be obtained at an earlier stage when the arrangements regarding the proposed development are being negotiated. It is at that stage that such owners will have a say. Once the development is completed it is unlikely that the other owners will be in a position to require indemnities or other such protection.
11.2 Discretionary charitable relief –
11.2.1 Availability - a charging authority may elect to offer a discretionary charitable relief. To do this it must issue an appropriate document; publish this document on the authority’s website; and make it available for inspection at its principal office and other appropriate places in its area (reg. 46). In the absence of such document or publication the discretionary relief is not available in the area. It is open to the authority to revise its policy (reg. 46(2)) or revoke it (reg. 46(3)). Similar publicity must be given to the revision or revocation as when the relief was made available although in the case of revision the authority can change the places at which such documents are available for inspection (reg. 46(2)(c)). If the relief is to be revoked then the authority must state when is the last day that the collecting authority will accept claims for such relief and the revocation can be no earlier than 14 days from the publishing on the website of the statement relating to the revocation. Newark and Sherwood DC have elected not to offer it. In contrast Shropshire has elected to offer it. It is stated in the draft notification of relief notice on the Shropshire website that it is available “where the chargeable development delivers facilities, services or infrastructure that have been identified as a requirement in the LDF Implementation Plan or Place Plans. The amount of relief granted will be in direct proportion to the proposed development’s benefit to the community, as assessed by Shropshire Council in consultation with the Parish or Town Council.”
11.2.2 Discretionary relief – provided that this relief is available in the relevant area and subject to the satisfaction of certain specified statutory limitations (see para. 11.2.3 below) and any additional limitation imposed by the charging authority (see Shropshire’s limitation quoted in para. 11.2.1 above) there is an additional charitable exemption. This applies if a charity or charities hold the whole or the greater part of the chargeable development as an investment from which the proceeds will be applied for charitable purposes whether of the holding charities or any other charities. For these purposes it has been stated that a greater part is 51% or more (see para. 2.7.2.6 February 2014 CIL Guidance). It is open to the charging authority to impose its own additional criteria as to eligibility (reg. 46(1)(a)(iii)). Examples of such criteria given by the DCLG are the extent of the benefit provided by the charity to the local community; the annual income of the charity; and the annual rent payable on the charity’s investment.
11.2.3 Limitations – this exemption is not available if one of the three following limitations applies.
11.2.3.1 Occupation for an ineligible trade – a charity will not be entitled to the benefit of the exemption if it is going to occupy that part of the development and use it for a trade other than a trade which is the sale of donated goods and from which the proceeds less any expenditure are applied for the charity’s charitable purposes (reg. 44(3)(a) and (4)). It is not enough that the net proceeds are applied for charitable purposes not involving this charity.
11.2.3.2 Joint ownership with non-charity – as with the mandatory exemption the charity must own the material interest in the development alone or jointly with other charities but not with a non-charity (reg. 44(3)(b)). Ownership of a different material interest in the development by a non-charity will not cause the benefit of the discretionary charitable exemption to be lost.
11.2.3.3 State Aid – a collecting authority cannot grant such exemption if satisfied that it would constitute State Aid which must be notified to and approved by the European Commission (reg. 44(5)). However, if the CIL relief constitutes State Aid but the collecting authority is satisfied that it does not need to be notified to and approved by the European Commission then the CIL relief will be available if the charity otherwise qualifies (reg. 45). This particular relief must be specified in the document and publication making such discretionary exemption available in the area. It is not enough that relief under reg. 44 is made available by such method.
11.2.4 CIL rate – it is for the relevant Charging Authority to decide what rate is to be applicable.
11.2.5 Claim and warnings – the provisions relating to claims for mandatory charitable exemption (see para. 11.1.8 above) will also apply to this discretionary exemption. In consequence the same warnings (see para. 11.1.2 above) will apply.
11.2.6 Clawback – when available this relief can be withdrawn and the CIL clawed back in the same manner as the mandatory charitable relief (see para. 11.1.9 above). The disqualifying event will be similar but ceasing to hold or apply the profits as specified in para. 11.2.2 will be disqualifying events.
11.3 Social Housing - a development which includes social housing or a communal area for more than one occupier of such housing will be eligible for relief from CIL to the extent that the development is intended to be used for social housing. It will cover most lettings for social rent, affordable rent and intermediate rent provided by a local authority or private registered provider and shared ownership dwellings. It has been indicated that the relief may in the future be extended to charities providing affordable housing but which are not registered providers.
The qualifying amount of the relief is set against the whole of the potential CIL liability (reg. 49(10)) as it must be claimed by the person who has assumed liability for the CIL even though not necessarily the owner of the land to be used for social housing. As well as the mandatory social housing relief the 2014 Regulations have also introduced a discretionary social housing relief (new reg. 49A) which a charging authority may make available in its area in relation to discounted market sales. The discretionary relief is to be given in the same manner as the mandatory relief.
11.3.1 Qualifying dwellings – to be entitled to this relief the development must include “qualifying dwellings” either wholly or in part (reg. 49). To constitute such a dwelling one of the four prescribed conditions must be satisfied (reg. 49(2))
11.3.1.1 Condition 1 (social rented housing by local authority) reg. 49(3) – to satisfy this condition two requirements must be met being one as to the type of landlord and one as to the type of letting.
(i) Landlord – the landlord of the dwelling must be a local housing authority.
(ii) Lettings – in addition the letting of the dwelling must be any one of the following specified types of tenancy being a demoted tenancy; an introductory tenancy; a secure tenancy; or an arrangement which would be such a tenancy but for para. 4ZA or 12 Sch. 1 Housing Act 1985.
11.3.1.2 Condition 2 (shared ownership arrangements) reg. 49(4) – covers a shared ownership arrangement which complies with all the following requirements
(i) the dwelling is occupied in accordance with shared ownership arrangement within section 70(4) Housing and Regeneration Act 2008;
(ii) not more than 75% of the market value of the dwelling (being the price which would reasonably expect to receive on sale on open market) is paid by way of premium on the day that a lease is granted under the arrangement;
(iii) at the date of the grant of the lease the annual rent is not more than 3% of the value of the unsold interest (being the freehold or leasehold interest owned by the person providing the dwelling);
(iv) the annual rent cannot increase by more than the increase in RPI for the year to the September immediately preceding the anniversary of the lease plus 0.5%.
11.3.1.3 Condition 3 (social housing letting by registered social landlord) reg. 49(5) – covers lettings satisfying the following requirements:-
11.3.1.3.1 Landlord – must be private registered provider of social housing;
11.3.1.3.2 Lettings – must be one of following, namely:-
(i) assured tenancy including assured shorthold tenancy;
(ii) assured agricultural occupancy;
(iii) arrangement that would be assured tenancy or assured agricultural occupancy but for paragraph 12(1)(h) or 12ZA of Schedule 1 to the Housing Act 1988;
(iv) demoted tenancy.
11.3.1.3.3 Prescribed criteria – the rent must satisfy one of the following three sets of circumstances:-
(i) the rent is subject to the national rent regime and regulated under a standard controlling rents set by the Regulator of Social Housing under section 194 of the Housing and Regulation Act 2008;
(ii) the rent is neither subject to the national rent regime nor regulated under a standard controlling rents set by the Regulator of Social Housing but is less than 80% of market rent;
(iii) the rent is not subject to the national rent regime but is regulated under the standard controlling rents set by the Regulator of Social Housing which requires the initial rent to be no more than 80 per cent of the market rent (including service charges).
The national rent regime is the rent influencing regime set out in the Social Rent Guidance within the Rent Standard Guidance as published by the Regulator of Social Housing in March 2012.
11.3.1.4 Condition 4 (letting in Wales by registered social landlord) reg.49(7) – covers:
(i) a letting in Wales by a registered social landlord;
(ii) which is an assured tenancy or an assured agricultural occupancy or a demoted tenancy or an arrangement that would be an assured tenancy or assured agricultural occupancy but for paragraph 12(1)(h) or 12ZA of Schedule 1 to the Housing Act 1988; and
(iii) the rent is no more than 80% of market rent.
11.3.2 Qualifying communal development - the relief was extended by the 2014 Regulations to cover qualifying communal development such as stairs, corridors and car parking as well as qualifying dwellings (reg. 49C added by reg. 7(5) 2014 regulations). This applies to developments in relation to which a liability notice is issued on or after 24th February 2014 because the changes to reg. 50 including qualifying communal development (reg. 7(6) 2014 Regulations) take effect in such a manner (reg. 14(3) 2014 Regulations).
11.3.2.1 Qualifying area - subject to the exclusions in reg. 49C(3) the qualifying communal development is so much of the development as is for the communal benefit of the occupants of more than one qualifying dwelling whether or not also used by others (reg.49C(1) and (2)). This is to ensure that the relief applies to the whole area used for social housing and not just the internal area of the dwellings. The exclusions in reg. 49C(3) are any parts of the development:-
(i) comprising one or more dwellings;
(ii) used wholly or mainly by the public;
(iii) used wholly or mainly for the benefit of occupants of development which is not relevant development (being that part of the development which is authorised by the same planning permission as the qualifying dwellings but which does not include such dwellings or communal area (reg. 49C(5));
(iv) used wholly or mainly for commercial purposes.
11.3.2.2 Area of qualifying communal development – a formula is provided in reg. 49C(4) to calculate the area of the qualifying communal development. It is
X x A
B
Where—
X = the gross internal area of the communal development;
A = the gross internal area of the qualifying dwellings to which the communal development relates; and
B = the gross internal area of the qualifying dwellings and the relevant development, provided that the communal development is for the benefit of those dwellings and that relevant development. The relevant development is the development under the planning permission authorising the qualifying dwellings but excluding the parts which are not such dwellings or communal development.
11.3.2.3 Claim for relief for qualifying communal development – the claim must be made at the same time as the claim for social housing relief in relation to the qualifying dwellings to which the communal area relates or if a phased development in relation to any phase of that development (reg. 49(8)). This applies in relation to discretionary social housing relief as well as to such mandatory relief.
11.3.3 Discretionary social housing relief reg. 49A – this was introduced by reg. 7(5) 2014 Regulations. It extends the relief to sales at a discounted market price the circumstances in which the qualifying amount can be set against the chargeable amount of CIL for the particular chargeable development. As regards discounted rents the similar change has been introduced to the mandatory social housing relief through condition 3 (see section 11.3.1.3 above). It is for each authority to decide whether to make this relief available. The amount of the relief will be the same as with the mandatory social housing relief and will be give in the same manner (reg. 49A(4)). The intention is that such relief should meet EU requirements which are that:
(a) there is an obligation that the house is used in a certain way;
(b) the house is for persons who needs are not met by the market which is stated to be “disadvantaged citizens or socially less advantaged groups who due to solvency constraints are unable to obtain housing at market conditions”;
(c) the total aid must not exceed the cost of providing the social housing
11.3.3.1 Availability – the charging authority must decide that it wishes to make the discretionary relief available. To achieve this it must comply with reg. 49B(1) by issuing a document giving notice that relief available in area; giving the date when claims will begin to be accepted; setting out the authority’s policy on how housing to be granted relief is to be allocated in the area to extent that the authority is responsible. This document must be published on the authority’s website and be available for inspection at its principal office and such other places as it considers appropriate. A copy must be sent to the collecting authority if different to the charging authority. Any revision of the charging authority’s policy of allocation of such housing in the area must be set out in a document giving notice of the revision; stating the date it is to take effect; and setting out the revised policy (reg. 49B(2)). That document must be published on the website and made available for inspection. A similar process must be gone through if the availability of the discretionary relief is to be withdrawn (reg. 49B(3)) but the last date on which the authority will accept a claim for this relief must be not less than 14 days after the day on which the withdrawal is published on the website (reg. 49B(4)). Any claim form for discretionary relief received by the collecting authority on or before that day must be considered by the authority (reg.51(10)).
11.3.3.2 Qualifying dwelling for discretionary relief – this relief is intended to meet the needs of those whose needs are not met by the market taking into account local income levels and local house rent/prices. To qualify for the discretionary relief all the following criteria in reg. 49A(2) must be satisfied:-
(i) the dwelling is sold for no more than 80% of its market value;
(ii) the dwelling is sold in accordance with the authority’s published policy;
(iii) the CIL liability in relation to the dwelling remains with the person claiming the relief.
11.3.4 Qualifying amount – as with the calculation of the CIL liability the sensible way to calculate the qualifying amount is to use a special calculator designed for the specific purpose. Such a calculator may be available on the relevant authority’s website. It seems to be a feature of CIL that the formulae are complicated and off putting to an unusual degree. It is unfortunately a further feature that they are regularly amended which adds to the complications. As with the formulae in regulation 40 for the calculation of CIL these have been changed by both the 2012 Regulations and 2014 Regulations in part to correct errors in the formulae.
11.3.4.1 Applicable set of formulae - The changes in the 2012 Regulations to the formulae (para. 6) took effect with regard to planning permissions granted on or after 29th November 2012 as the transitional provisions in para. 9 exclude cases in which the permission was granted before the coming into force of the 2012 Regulations. The changes in the 2014 Regulations to the formulae take effect with regard to developments if a liability notice is issued in relation to it on or after 24th February 2014 as they do not apply to developments if a liability notice has been issued in relation to it before 24th February 2014 (para. 14(3) 2014 Regulations). It means that so far there are three different sets of formulae that have applied for the purposes of calculating the qualifying amount.
(i) developments under planning permissions granted before 29th November 2012 unless liability notice issued on or after 24th February 2014 – three formulae contained in original reg. 50 2010 Regulations (see original reg. 50 2010 Regulations);
(ii) developments not within (i) above but in relation to which development a liability notice has been issued prior to 24th February 2014 – two formulae resulting from amendment by par. 6 2012 Regulations (see section 11.3.4.4);
(iii) developments in relation to which a liability notice is issued on or after 24th February 2014 – two formulae resulting from amendments by para. 7(6) 2014 Regulations (see section 11.3.4.3 below).
The discussion in sections 14.1 and 14.2 below with regard to the calculation of CIL pursuant to reg. 40 of the 2010 Regulations will be relevant also to the operation of these formulae. There use to be one significant difference as between the calculation of the CIL liability under reg. 40 and the calculation of the qualifying amount for the purposes of social housing relief. The relevant areas were determined in a different manner. For the CIL liability the formulae used the gross internal area of the relevant building or buildings whereas the formulae for social housing relief used the gross internal area of the relevant dwellings which left out of the calculation the common parts of a building in which the dwellings were situate and any ancillary areas such as car parking. That could result in a significant difference (see para. 11.3.4.5 below). With the extension of the relief to qualifying communal areas (reg. 49C and see section 11.3.2 above) this is no longer the case.
11.3.4.2 First formula – this is the governing formulae for calculating the qualifying amount but in order to determine the amount representing A (previously referred to as NR and originally N) in the formula it is necessary to apply the second formula (current second formula in section 11.3.4.3 below and its predecessor in section 11.3.4.4). This first formula has remained the same throughout the changes save that the symbol A has been substituted for NR.
Currently R x A x Ip previously R x NR x Ip
Ic Ic
Where-
R = the relevant CIL rate
A (previously NR) = the deemed net area chargeable at rate R;
IP = the index figure for the year in which planning permission was granted; and
IC = the index figure for the year in which the charging schedule containing rate R took effect.
The indexation is to be in accordance with reg. 40(6) (reg. 50(5) as to which see section 14.2.6).
11.3.4.3 Formula to determine A – instead of setting out a complete formula as was previously the case this formula is now based on the formula contained in reg. 40 for calculating A (see section 14.2.3.1 below) with amendments by substituting Qr for Gr and Kqr for Kr. Using the new reg. 40 formula as the basis is a means of incorporating the changes in that formula made to more accurately reflect the allowances for retained buildings and buildings that are demolished and their treatment in the context of phased developments. It also allows for the extension of this relief to qualifying communal development. The formula is:
Qr - Kqr - (Qr x E)
G
Where -
Qr = the gross internal areas of the part of the chargeable development which will
comprise the qualifying dwellings or qualifying communal development, and in
respect of which, but for social housing relief, CIL would be chargeable at rate R;
and
Kqr = the aggregate of the gross internal areas of the following—
(i) relevant retained parts of in-use buildings; and
(ii) for other relevant buildings, relevant retained parts where the intended use following completion of the chargeable development is a use that is able to be carried on lawfully and permanently without further planning permission in that part on the day before planning permission first permits the chargeable development.
G = the gross internal area of the chargeable development (see section 9.3.1 above as regards measuring the area);
E = the aggregate of the following—
(i) the gross internal areas of parts of in-use buildings that are to be demolished before completion of the chargeable development, and
(ii) for the second and subsequent phases of a phased planning permission, the value Ex (as determined under reg. 40(8) (see immediately below), unless Ex is negative,
provided that no part of any building may be taken into account under both of paragraphs (i) and (ii) above.
(as regards effect of demolition see section 14.2.7 below)
Ex - There is yet another formula (reg. 40(8)) to enable the value Ex to be calculated for the purposes of determining the treatment of demolished buildings when the development is phased. The following formula is used for this purpose-
Ep - (Gp – Kpr)
where—
Ep = the value of E for the previously commenced phase of the planning permission;
Gp = the value of G for the previously commenced phase of the planning permission; and
Kpr = the total of the values of KR for the previously commenced phase of the planning permission.
The phrases used in the formula will have the same meanings as in reg. 40 save as modified by reg. 50(8) to allow for their adaption to retained buildings which qualify for social housing relief.
11.3.4.4 Formula to determine NR – this applies to developments in relation to which a liability notice has been issued before 24th February 2014 save for those dealt with in accordance with the original formula in reg. 50.
The value of NR in the first formula must be calculated by applying the following
formula—
Qr – Kqr – (Qr x E)
G
Where—
Qr = the gross internal area of the part of the chargeable development which will
comprise the qualifying dwellings, and in respect of which, but for social housing
relief, CIL would be chargeable at rate R;
Kqr = an amount equal to the gross internal area of all buildings (excluding any new
build) on completion of the chargeable development which—
(a) on the day planning permission first permits the chargeable development, are
situated on the relevant land and in lawful use;
(b) will be part of the chargeable development upon completion; and
(c) will be chargeable at rate R but for social housing relief;
E = an amount equal to the aggregate of the gross internal area of all buildings which—
(a) on the day planning permission first permits the chargeable development, are
situated on the relevant land and in lawful use; and
(b) are to be demolished before completion of the chargeable development; and
G = the gross internal area of the chargeable development.
The two deductions were to reduce the internal area attributable to social housing by that which existed already and is either to be retained or demolished but required more refinement which lead on to some of the changes in the formula introduced by the 2014 Regulations and set out in section 11.3.4.3 above.
11.3.4.5 Internal area of qualifying dwellings – Prior to the extension of the relief to qualifying communal development (addition of reg. 49C) the amount of social housing relief granted was not as great as would have been expected. The calculation of the gross internal area of such dwellings could be significantly less than the gross internal area of the building comprising such dwellings. The area of the dwelling will be the area let (original reg. 49) and thus this was likely to exclude parts of the building. For example, the aggregate internal space of the flats in a block of flats would be less than the gross internal area of the block. Common parts and other spaces not included within the flats were included in the block’s gross internal area but not in the aggregate area of the flats. For example, stairways, corridors, reception areas and internal car parks were not included. This meant that the CIL relief applied to an area which was less than expected and in turn the CIL liability greater. The extension of the relief to communal areas by the addition of 49C has rectified this and the relief will be applied to a wider area and not just the aggregate of the internal area of the qualifying dwellings.
11.3.5 Claim –
11.3.5.1 Claim form - this relief must be claimed in the prescribed form for the relief submitted to the collecting authority and be accompanied by a relief assessment (which must identify where the qualifying dwellings and qualifying communal development will be constructed and their gross internal area and include a calculation of the qualifying amount) together with evidence to establish that the development qualifies for the relief.
11.3.5.2 Claimant - the claimant must have assumed liability for the CIL arising from the development and also be the owner of the relevant land (reg. 51(2)). A developer who does not own a material interest in the site cannot if assuming liability for the CIL claims the benefit of this relief.
11.3.5.3 Prior to Commencement of development – before starting the development the claimant must (i) make the claim (reg.51(3)(b)); (ii) receive notification of the authority’s decision (reg. 51(4)); and (iii) give a commencement notice. The claimant will cease to be entitled to this relief if liability for the CIL is transferred or the assumption of liability is withdrawn prior to commencement of the development. Until the 2014 Regulations these restrictions precluded any change to the amount of social housing relief if there was a change in the provision of qualifying dwellings after the development had commenced. The restrictions will still apply to the original claim for relief but as regards a subsequent change in the provision of qualifying dwellings and qualifying communal development neither the claim nor notification of the decision need occur before commencement of the development (reg. 51(4A) as regards development which have not completed by 24th February 2014). This means that there is now an ability to revise the CIL liability even after the development has commenced.
11.3.5.4 Subsequent section 73 planning permission – if social housing relief has been granted in relation to a development and then there is a section 73 permission granted but the relief does not change then all that has been done under regulation 51 with regard to the social housing relief will be treated as done with regard to the development under the second permission (reg. 50(7)).
11.3.5.5 Subsequent change in provision of affordable housing – an ability to recalculate the CIL liability has been added by reg. 51(4A) in the event that there is a change in the provision of affordable housing or qualifying communal area after the start but prior to completion of the development. This applies as from 24th February 2014. It would appear to apply to a development which had commenced before that date but not been completed by then. This amendment had particularly in mind a transfer to a body such as a housing association after the commencement of the development and then a change in the number of qualifying dwellings.
11.3.5.6 Warnings – the warnings given with regard to the charitable exemption set out in para. 11.1.2 will apply equally to this relief but with the addition that the claimant must have also assumed liability.
11.3.6 Disposal of land before available for occupation – any disposal of a material interest in land on which any qualifying dwelling or qualifying communal development will be situate before the dwelling is available for occupation or the communal area available for use will result in the transfer of the benefit of the social housing relief to the transferee (reg. 52). Once the dwellings are available for occupation or the communal area available for use the benefit of the relief will not pass on to any subsequent transferees. The transferor is obliged to inform the collecting authority of the disposal with a copy to the transferee and any previous beneficiary of the relief. After a disposal made before the dwellings or communal area are available for occupation or use (as appropriate) a new revised liability notice will be issued adding the transferee as a beneficiary and stating the amount of the transferee’s relief and the transferor’s revised relief.
11.3.7 Withdrawal of relief –
11.3.7.1. Disqualifying event - as with charitable relief the social housing relief can be clawed back if a disqualifying event occurs in the seven year period from the commencement of the development. A disqualifying event will occur when the dwelling or communal area ceases to be a qualifying dwelling or qualifying communal development (reg. 53(2)). For example, with a dwelling that is a social letting if the landlord ceases to be one of the types specified in Condition 1 this will be a disqualifying event. This is subject to the exception within para. 11.3.7.2 below.
11.3.7.2 Application of proceeds to purchase new qualifying dwelling or qualifying communal development - a sale of a qualifying dwelling or qualifying communal area will not be a disqualifying event if the proceeds are applied in the purchase of a new qualifying dwelling or qualifying communal development or the proceeds are transferred to one of the Secretary of State, Welsh Ministers, a local housing authority, the Greater London Authority, or the Home and Communities Agency. Similarly a disposal of a qualifying dwelling or qualifying communal development will not be a disqualifying event if the disposal is to the Welsh Ministers or the Regulator of Social Housing under the statutory provisions specified in reg. 53(3). In a case in which the discretionary social housing relief has been granted in relation to a qualifying dwelling or qualifying communal development then it will not be a disqualifying event if disposed of at a market discount in accordance with the criteria set out in reg. 40A(2) (see section 11.3.3.2 above). In the case of a new qualifying dwelling there is no provision which expressly states that the new qualifying dwelling will be treated and have the CIL regime apply to it as if it were the original qualifying dwelling. In consequence it is not clear whether a sale of that new qualifying dwelling will be a disqualifying event.
11.3.7.3 Liability for repayment - The beneficiary of the relief will be liable to make the repayment. This will be the person who owned the land on which the dwelling is situated immediately prior to the dwelling becoming available for occupation. Such person is obliged to notify the collecting authority within 14 days of the disqualifying event giving details of the gross internal area of the dwelling or communal area which has ceased to be a qualifying dwelling or qualifying communal development and this must be accompanied by a plan identifying the dwelling or communal area (reg. 53(7)). An explanation must be given as to how the dwelling or communal area ceased to be a qualifying dwelling or qualifying communal development. Failure to comply with this obligation may result in the imposition of a surcharge of 20% of the CIL or £2,500 (whichever is the lower).
11.3.7.4 Collection of withdrawn relief – the amount to be paid by reason of the withdrawal of the relief will be calculated by the collecting authority by redoing the social housing relief calculations in reg. 50. This must be notified to the beneficiary of the relief and a new liability notice and demand notice be served.
11.3.7.5 Protection – it will be necessary to consider on the disposal of a qualifying dwelling or qualifying communal area what implications the disposal will have for the social housing relief applicable to it and whether any contractual provisions need to be included to deal with the possibility of future disqualifying events. Should a transferor disposing of a qualifying dwelling or qualifying communal development after it has become available for occupation seek to include an indemnity to cover against having on the occurrence of a disqualifying event to repay CIL? Whether such a disqualifying event may occur will be outside the control of the transferor once the disposal has completed unless a right of pre-emption is reserved.
11.4 Exceptional circumstances – the third type of relief from CIL may be available if the particular development is not financially viable because of the CIL charge. It is discretionary. Some authorities have elected for it to be available but many have not. Brent and Barnet are examples of authorities which have. Even if made available in the relevant area it would only have been in rare cases that it applied in its original form due to the need to satisfy the viability condition (the costs of complying with the relevant planning obligations must exceed the CIL charge). This resulted in concern that the conditions were too strict. Proposals were put forward in the 2013 Consultation that it could be removed or limits be introduced as to the proportion of the costs of the planning obligations to the CIL. As a consequence the viability condition was removed altogether with the intention that this relief could be available with regard to “sites with specific and exceptional costs burdens.” (para. 75 April 2013 Consultation Document). Application of this relief will allow such projects relating to sites to be financially viable.
11.4.1 Qualification – there are a number of conditions which must be satisfied before this relief, namely:-.
11.4.1.1 Availability (reg. 55(3)(a)) – many authorities will not make this relief available within their area. In consequence the first step that needs to be taken is to check the website of the relevant authority to find out whether it has made the relief available. If it has not then the relief cannot be claimed. To make it available the authority must publish on the authority’s website a statement complying with reg. 56. Portsmouth City Council has stated that the relief will be available within its area as have Shropshire and Plymouth. In contrast the Mayor of London has stated that it is not available. The authority can revoke this by issuing a fresh statement but this cannot take effect earlier than 14 days from the revocation statement appearing on the authority’s website. It emphasises the importance of keeping an eye on the websites of any authorities relevant to particular developments. Any application for this relief received on or before the last day announced for receiving such applications must be considered by the charging authority (reg.57(15)).
11.4.1.2 Planning obligation (reg.55(3)(b) – there is a planning obligation in existence relating to the permission for the development but no additional requirement as to the level of the costs of complying with such planning obligation.
11.4.1.3 No longer need for viability – reg. 7(11) 2014 Regulations removes the need to satisfy an additional viability condition. Prior to 24th February 2014 to qualify for the relief the charging authority must consider that the cost of complying with the planning obligation exceeds the CIL arising from the development and that the requirement to pay that CIL “would have an unacceptable impact on the economic viability” of the development (reg. 55(3)(c)(ii) which is now removed). There is still a requirement that there is a planning obligation in relation to the development but there is no stated requirement as regards the cost of complying with the planning obligation.
Although the viability condition has been removed the charging authority will still need to judge that the CIL charge “would have an unacceptable impact on the economic viability of a development” and that it is expedient to grant relief (para. 2.7.4.2 of the revised February 2014 Guidance). This will require the circumstances of each individual case to be considered.
11.4.1.4 State Aid - the charging authority must also be satisfied that the relief will not constitute State Aid which has to be notified to and approved by the European Commission.
11.4.1.5 Expedient – the satisfaction of the three (previously four) earlier conditions does not necessarily entitled the claimant to the relief as there is also a requirement that the charging authority considers that it is expedient to allow the relief (reg. 55(1)(b)). There has been debate in the context of this point as to whether an authority should set out criteria to be satisfied and if so what they should be. Transparency is commendable but it will tie the authority down when it may prefer flexibility. Suggestions that the proposed developments must provide community benefits may be seen as varying the terms of the relief.
The relief may be applied to a phase of the development if authorised by a phased planning permission.
11.4.2 Claim - the relief must be claimed by a person who has a material interest in the land subject to the development and must be made before the commencement of the development.
11.4.3 Form of claim – a written claim in the prescribed form must be made in accordance with reg.55(4) giving the required particulars and accompanied by
(i) assessments carried out by an independent person as to the economic viability of the chargeable development. It is not longer necessary to provide an assessment as to the cost of complying with the planning obligation;
(ii) an explanation as to why in the claimant’s opinion the CIL payment will have an unacceptable impact on the economic viability of the development;
(iii) an apportionment assessment if there is more than one material interest;
(iv) a declaration that the completed claim form has been served on the other owners of material interests in the land.
The independent person needs to have been appointed by the claimant with the agreement of the charging authority and have appropriate qualifications and experience. There is no statement of what constitutes appropriate qualifications and experience so it is left to the authority to consider each person put forward by the claimant. One authority has been asked to authorise an individual for these purposes but this is not possible as there is no procedure or authority for this. An authority would be ill-advised to adopt such a course. It would have to set up a register and to monitor any persons so authorised to ensure that they retained the appropriate qualifications and experience.
A copy of the completed claim form needs to be sent to all owners of material interests in the relevant land (reg.57(6)) together with notice that the accompanying documents required by reg.55(4) are available and if requested are to be sent.
There are special rules for developments in London (reg. 58 2010 Regulations) but as the relief is not currently available in respect of the Mayoral CIL these are not material.
11.4.4 Notification of decision – the charging authority must notify its decision as soon as practical after receipt of the claim. No development must commence before notification otherwise the relief will be lost.
11.4.5 Disqualifying event – the relief will be lost if prior to commencement of the development charitable or social housing or self build housing or residential annexes or extensions relief is granted (reg. 57(11)(a(i)) or an owner of a material interest in the site makes a material disposal of the interest (reg. 57(11)(a)(ii)). Further the relief is lost if the development is not commenced within twelve months of the issue of the decision (reg. 57(11)(b)). An owner of a material interest in the land is obliged to notify the charging authority within 14 days from the occurrence of the disqualifying event and send a copy to all owners of material interests in the relevant land (reg. 57(12)). Failure to do so will result in a surcharge of the lesser of 20% of the chargeable amount or £2,500. A copy of the notice must be sent by the charging authority to the collecting authority, if different, and the person who is responsible for enforcing the section 106 planning obligation (reg. 57(13)).
11.5 Self-build – there has been considerable pressure to remove the CIL burden from individuals building their own homes. The view has been put that commercial developers can pass on the cost to the house purchasers but that self builders have to bear that costs themselves and this deters self-builds from going ahead. The government has stated that it is keen to support and encourage self builders and is seeking to encourage the increase of the self build market. The problem is that the impact on the local infrastructure is the same whether the new house is occupied by a self builder or a purchaser from a residential developer. The beneficial treatment under the CIL regime of the self builder has been questioned and there is no obvious equitable answer. It is a political decision which distorts the underlying justification for the levy. As a result of the introduction of the exemption it is anticipated that over 5,000 self build homes will be constructed.
11.5.1 Exemption - the exemption from CIL arises in respect of any chargeable development comprising self-build housing or self-build communal development. The relevant planning permission does not need to relate exclusively to the self-build housing and communal area (if any). It can cover other developments as well. There is a two staged approach. The first stage is the making of a claim for exemption which will involve self-certification that the proposed development is a self-build project and the requirements applicable to the exemption will be satisfied. Upon completion of the development the second stage will involve the production of the documents to corroborate the claim.
11.5.1. Self-build housing exemption – the basic concept is simple. A person who builds a dwelling to live in it as his or her sole or main residence is a self builder. There may be issues as to whether the dwelling is the sole or main residence which will be similar to those that arise in relation to the capital gains tax exemption in relation to residences. Subject to that issue the concept is readily understandable. What is not so easily understood is the extension of the exemption to dwelling “where built following a commission by P” (reg. 54A(2) the 2010 Regulations). In the revised February 2014 Guidance it is stated that the exemption covers “anybody who is building their own home or has commissioned a home from a contractor, house builder or sub-contractor.” (para. 2.7.5.1). This clearly does not extend to a purchaser of a completed house from a residential developer. But does it extend to a purchaser off plan? To be eligible for the exemption does P have to be the owner of the land prior to work starting? To qualify does the contract relating to the development have to be exclusively a building contract? Does the dwelling to be constructed have to be in accordance with plans drawn up in accordance with instructions given by P or is it enough that there is a choice of plans and P selects the particular plan? Must the planning permission be applied for by P or can P take the benefit of a planning permission granted to a developer? Must the planning permission be limited to the one site or could it involve more than one site? What is involved in commissioning the construction of a dwelling for the purposes of this exemption is very far from clear and it is important.
This could impact on the manner in which dwellings are constructed and sold. A developer could obtain a grant of planning permission for the construction of a dwelling and then complete the sale of the land whilst entering into a separate contract with the purchaser of the land to build the dwelling. The claim in such circumstances would be even stronger if the planning permission was obtained in the name of the purchaser.
11.5.2 Self-build communal development exemption –
11.5.2.1 Exemption - the inclusion of self-build communal developments extends the exemption to communal areas for the benefit of a number of self-build housing. This is to cover areas such as shared facilities or guest accommodation It attributes such qualifying area between the self builders in accordance with the formula in reg. 54A(6). The communal area will still qualify if enjoyed not just by self builders but also by persons who are occupants of the same development authorised by the planning permission as the relevant self-build housing (reg. 54A(4)).
11.5.2.2 Disqualified area - the area will not qualify as self-build communal development due to reg. 54A(5) if it is:-
wholly or partly made up of one or more dwellings; wholly or mainly for use by the general public; wholly or mainly for the benefit of occupants of a development which is not authorised by the planning permission permitting the self-build housing; to be used wholly or mainly for commercial purposes.
11.5.2.3 Additional qualification – in order for the self builder to claim the exemption in relation to the self-build communal development the self builder must have assumed liability to pay CIL in respect of the development which it can do jointly (reg.54A(8)). As there will be a number of self builders a joint assumption of liability will be required if all are to claim the benefit of the exemption. The claim by the self-builder must be made at the same time as the claim in respect of self-build housing or if the planning permission is a phased permission then in relation to any phase of that permission. The second opportunity does not expressly link the claim to the phase involving the self builders dwelling but that is probably the intention.
11.5.2.4 Exempt amount of self-build communal development – in order to determine the amount of the communal area to be attributed to each self builder the following formula set out in reg.54A(6) is to be applied.
X × A
B
where—
X = the gross internal area of the self-build communal development;
A = the gross internal area of the dwelling in relation to which P is claiming the
exemption for self-build housing; and
B = the gross internal area of the self-build housing and relevant development, provided that the self-build communal development is for the benefit of that housing and that relevant development.
11.5.3 Residential annexes and extensions – in addition there is a separate exemption for extensions and annexes to dwellings (reg. 42A - see section 11.6 below).
11.5.4 State aid – a self-build housing exemption cannot be granted to the extent that the collecting authority considers that it would constitute State aid which would be required to be notified to and approved by the European Commission but the exemption will be granted to the extent that the amount does not constitute State aid (reg. 54A(10) and (11)).
11.5.5 Taking effect of exemption – surprisingly there is no provision in the 2014 Regulations stating how it is to take effect with the coming into force of those regulations on 24th February 2014. If a development has commenced on or before that date then the exemption cannot apply as it is excluded by reg. 54A(3) (see section 11.5.6.1 below). It is made clear in the revised 2014 Guidance that no CIL will be repaid as a result of the introduction of this exemption (para. 2.7.5.2) In cases in which planning permission has already been granted by that date but the development has not been commenced then the exemption should be capable of being claimed provided that the necessary steps can be taken before the development commences.
11.5.6 Claim Procedure –
11.5.6.1 Timing - a claim for the exemption must be made before the commencement of the chargeable development (reg. 54A(2)(b)) and also the collecting authority’s decision on the claim must have been received before the development has commenced (reg.54B(3)). Subject to any State aid issue the authority is required as soon as practicable to grant the exemption and notify the claimant if there is a valid claim (reg.54B(4)). Failure to submit a commencement notice prior to the commencement of the chargeable development will cause the exemption to be lost even if the authority has granted it (reg. 54B(6)). In cases involving more than one dwelling it is suggested that a phased planning permission is obtained so as to avoid the commencement of the development in relation to the first unit triggering a charge in relation to all the units (para. 2.7.5.7 revised February 2014 Guidance).
11.5.6.2 Claimant’s qualifications - the person making the claim must in accordance with reg.54A(2):
(i) intend to build or commission the building of a new dwelling;
(ii) intend to occupy the dwelling as their sole or main residence for the clawback period which is three years starting with the date of the completion certificate
(iii) have assumed liability to pay CIL in respect of the new dwelling whether or not liability has been assumed in respect of any other development.
11.5.6.3 Form – the claim must
(i) be in a form published by the Secretary of State which is Form SB1-1: Self Build Exemption Claim Form Part 1 which will be found on the relevant authority’s website to be downloaded or at www.planningportal.gov.uk
(ii) include the particulars required by the form. This will require the claimant to certify:-
(a) the name and address of the claimant;
(b) that the project is a self-build project; that the claimant will occupy the dwelling as their principal residence for three years from completion;
(c) that the claimant will provide the required supporting documentation on the completion of the project to confirm that it qualifies for relief;
(d) the amount of de minimis State aid received by the claimant in the last three years prior to the submission of the claim.
(iii) if liability has been assumed jointly then it must clearly indentify the area that is subject to the claim;
(iv) be submitted to the collecting authority complying with the time requirements set out in 11.6.5.1 above.
11.5.6.4 Effect of exemption applying – to the extent that the exemption applies to a development the CIL will not be payable on the commencement of the development. The charging authority will register a local land charge to secure the payment of CIL if it should become payable during the clawback period of three years.
11.5.7 Second stage additional evidence – within six months of the date of the compliance certificate (given under either reg. 17 of Building Regulations 2010 or section 51 Building Act 1984) relating to the development subject to the self-build housing exemption additional evidence must be supplied to confirm that the project is self build (reg. 54C). Failure to comply within the prescribed time will result in the CIL previously exempt becoming payable but the consequences of this failure can be avoided (see section 11.5.8.4). Compliance involves the submission of a form SB1-2 Self-Build Exemption Claim Form – Part 2 and the provision of the following documentation:-
(i) copy of building completion or compliance certificate for the dwelling providing proof of date of completion;
(ii) copy of title deeds to prove ownership;
(iii) proof of occupation as claimant’s principal residence by supplying Council Tax certificates and two further proofs of such occupation (such as utility bills, bank statements or confirmation that claimant is on local electoral roll);
(iv) approved claim from HMRC under “VAT431C:VAT refunds for DIY housebuilders” or specialised self build warranty (latent defects insurance policy accompanied by certified stage completion certificates issued to the owner/occupier) or self build mortgage (approved mortgage to finance purchase of land or cost of building or both and provide funds to be paid in stages as work progresses) from a bank or building society.
11.5.8 Withdrawal of exemption – the amount of CIL exempted by the self-build housing exemption will be clawed back if a disqualifying event occurs within three years of the date of the compliance certificate relating to the relevant development (reg. 54D).
11.5.8.1 Disqualifying event - for these purposes a disqualifying event is any one of the following:-
(i) any change causing the self-build housing or self-build communal development to cease to satisfy the specified requirements. For instance if the self builder ceases to occupy the dwelling as the main or sole residence.
(ii) a failure to comply with reg. 54C requiring additional evidence confirming self build project (see section 11.5.6 above);
(iii) the letting out of a whole dwelling building comprised in the self-build housing or self-build communal development;
(iv) sale of the self-build housing or self-build communal development.
11.5.8.2 Phasing – when the self build project involves more than one unit the revised February 2014 Guidance (para. 2.7.5.7) recommends that a phased planning permission is obtained with each unit being a separate phase of the development. One reason for this is so that the occurrence of a disqualifying event only affects one unit and does not trigger the payment of CIL in relation to all the units.
11.5.8.3 Notification of disqualifying event – the person losing the benefit of the self build housing exemption due to a disqualifying event (“the relevant person”) must notify in writing the collecting authority within 14 days beginning with the date of the disqualifying event. Failure to do so may result in a surcharge of the lesser of 20% of the chargeable amount or £2,500. Copies of this notice must also be sent to all owners of material interests in the land. Subject to 11.5.8.4 below as soon as practical after notification the collecting authority must notify the relevant person of the amount of VCIL payable as a result of the revocation of the self build housing exemption (reg. 54D(4)).
11.5.8.4 Failure to provide additional evidence required by reg. 54C – if the self builder fails to submit the prescribed form and supporting documentation in accordance with reg. 54C then before taking any action the collecting authority must first give at least 28 days notice (reg. 54D(5). This notice must state the date at which the collecting authority intends to take any action. Additionally on the expiry of the period specified in reg. 54C the collecting authority must notify the relevant person of the amount of CIL due regardless of receiving notice from the relevant person. This will be another matter for the authority to monitor. The threatened action by the collecting authority can be pre-empted by the submission to the collecting authority of the form and documents required to comply with reg. 54C before the date stated in the collecting authority’s notice (reg. 54D(6)).
11.5.9 Appeals – an appeal to the appointed person against a refusal of an application for self build housing exemption can be made within 28 days of the decision by the collecting authority (reg. 116B). If the appellant commences the development before a decision is made on the appeal then the appeal will lapse.
11.6 Residential annexes and extensions – having exempted self builds it was logical to also exempt extensions of dwellings and the construction of annexes in the grounds of homes provided that they satisfy similar requirements to those applying to self builds. Prior to this an extension which was less than 100 square metres would be exempt under the minor development exemption. The charging of CIL on such works gave rise to considerable complaint and so this exemption removes this thorn from the side of many houseowners.
11.6.1 Exemption (reg. 42A) – the exemption applies in favour of a person who has a material interest in a dwelling which that person occupies as their sole or main residence. It covers a residential extension or residential annexe.
11.6.2 Residential annexes (reg.42A(2)) – this is a new dwelling which is wholly within the curtilage of the main dwelling. The concept of curtilage is an ancient one which the judges have steered clear of defining. It has been used with regard to the law applied to planning permission, listed buildings and the transfer of sewers and lateral drains. There is scope for disputes but the likelihood is that in this context few will arise.
11.6.3 Residential extensions (reg.42A(3)) – this is an enlargement of the dwelling which is the main or sole residence which does not comprise a new dwelling. This will apply to basement extensions. It could throw up practical issues. Is a detached garage an extension? If not when is a garage detached and when is it an extension of the main dwelling?
11.6.4 State aid (reg.42A(5) and (6)) – as with the self-build housing exemption this exemption cannot be granted to the extent that the collecting authority considers that it would constitute State aid which would be required to be notified to and approved by the European Commission but the exemption will be granted to the extent that the amount does not constitute State aid.
11.6.5 Taking effect of exemption – surprisingly there is no provision in the 2014 Regulations stating how it is to take effect with the coming into force of those regulations on 24th February 2014. If a development has commenced on or before that date then the exemption cannot apply as it is excluded by reg. 42B(3) (see section 11.6.6.1 below). In such circumstances an extension will be still be exempt under the minor development exemption if less than 100 square metres. In cases in which planning permission has already been granted by that date but the development has not been commenced then the exemption should be capable of being claimed provided that the necessary steps can be taken before the development commences.
11.6.6 Claim procedure – this is very similar to that relating to the self build housing exemption.
11.6.6.1 Timing – it is important to comply with the usual CIL timing requirement that steps must be taken before the commencement of the development (reg.42B(2)(a)). The claim must go in and the authority’s decision notified before the start of the development (reg.42B(3)). In addition a commencement notice must be served before the start of the development and if it is not then the benefit of the exemption will be lost (reg.42B(6)).
11.6.6.2 Form – the claim must be in the prescribed form which is form SB2 Self Build Annex or Extension Claim Form which will be found at either the website of the relevant authority or www.planningportal.gov.uk. It must be submitted to the collecting authority. The particulars specified in that form must be given. These include the name and address of the applicant;
(i) the planning application reference;
(ii) identification of the main dwelling; election for residential annex or extension exemption;
(iii) applicant’s declaration that
(a) intends to occupy main dwelling as sole or main residence for three years following completion of annex or extension;
(b) received de minimis State aid in last three years less than 200,000 Euros;
(c) appreciates that benefit of exemption will lapse if commence development before receive authority’s decision or if no commencement notice is submitted before developments starts; and
(d) understands what meant by disqualifying event for the purposes of residential annex exemption and required to give notice to collecting authority within 14 days if occurs.
The form makes no mention of any accompanying documents in contrast with an application for self build housing exemption.
11.6.6.3 Collecting authority’s response – as soon as practicable upon the receipt of a valid claim the collecting authority must grant the exemption subject to any issue concerning State aid and notify in writing the claimant (reg.42B(4)).
11.6.7 Withdrawal of residential annex exemption (reg.42C) –
11.6.7.1 Withdrawal - as with self-build housing exemption it is possible for the residential annex exemption to be lost on the occurrence of a disqualifying event but not the residential extension exemption. This will happen if the disqualifying event occurs during the clawback period which is a period of three years from the issue of the compliance certificate (pursuant to reg. 17 Building Regulations 2010 or section 51 Buildings Act 1984) relating to the annex.
11.6.7.2 Disqualifying event – for the purposes of residential annex exemption such an event is:-
(i) use of main dwelling for any purpose other than as a single dwelling;
(ii) letting of residential annex;
(iii) sale of main dwelling or residential annex unless both sold at same time to same person.
This means that the exemption will not be withdrawn if the main dwelling ceases to be occupied by the claimant as the claimant’s sole or main residence provided that it is still used as a single residence and not let.
11.6.7.3 Notification of disqualifying event – the person benefitting from the residential annex exemption (“the relevant person”) must notify the collecting authority in writing within 14 days of the occurrence of a disqualifying event (reg.42A(4)). This 14 day period begins with the day on which the disqualifying event occurs. Failure to do so may result in a surcharge of the lesser of 20% of the chargeable amount or £2,500. Upon receipt of this notice the collecting authority must as soon as practical notify the relevant person of the amount of CIL due as a result of the withdrawal (reg.42A(5)).
11.6.7.4 No withdrawal of residential extension exemption - This does not apply to the residential extension exemption. With that exemption there has to be a declaration that the claimant intends to occupy the dwelling to be extended for three years from completion of the extension as the main or sole residence. That declaration has to be honest and if it is not then the claimant has committed a criminal offence and the claim is invalid so that the CIL liability avoided could be recovered. However, if the declaration is honestly made then the CIL liability will not be subsequently triggered if the extended house is sold or let during the three year period running from the completion of the extension.
11.6.8 Appeal (reg. 116A) – an appeal can be made to an appointed person in relation to the failure to grant an exemption for residential annexes. The appeal is limited to cases in which the ground of appeal is that the collecting authority’s determination that the annex development is not wholly within the curtilage of the main dwelling is incorrect. Such an appeal must be made within 28 days of the decision of the collecting authority. This is tight time limit when the issue is one which could give rise to a need for considerable factual investigation and be legally difficult. Oddly there is no appeal in respect of the exemption for residential extensions which is confirmed by para. 2.7.6 of the revised February 2014 Guidance.
F. Procedure
12. Procedural sequence - the operation of the CIL regime involves the giving of a number of notices. Many for the forms needed will be found on the relevant charging authority’s website. Another useful source for forms relating to CIL can be found at the government’s planning portal website at
http://www.planningportal.gov.uk/planning/applications/howtoapply/whattosubmit/cil
12.1 The anticipated sequence – dependent on the circumstances it is likely to take the following course:-
12.1.1 Information sharing between charging authority and collecting authority in cases in which they are not the same. This may involve a request for information by collecting authority (reg. 78).
12.1.2 Additional information from applicant – when an application is made for planning permission the authority will request additional information in order to be able to determine the CIL liability. Forms have been prepared for this purpose. Each authority may have a link to a Planning Application Additional Information Form.
Failure to provide the additional information may prevent the planning application proceeding until it is supplied. When the charging authority and the collecting authority are different the additional information must be passed to the collecting authority on the grant of planning permission.
12.1.3 Notice of chargeable development in case where no grant of planning permission but reliance on general authority (see section 8.3.2 above);
12.1.4 Assumption of liability notice expected to be given to collecting authority (see section 15.2 below regarding assumption of liability);
12.1.5 Liability notice from collecting authority containing CIL charge and payment details (see section 12.2 below);
12.1.6 Commencement of development notice informing collecting authority when development will start (see section 13 below);
12.1.7 Demand notice from collecting authority setting out payment dates (see section 15.6 below);
12.1.8 Request for suspension if appropriate (see section 15.7 below)
12.2Liability notice-
12.2.1Objective - it is for the collecting authority to issue a liability notice which sets
out the CIL liability arising as a result of a proposed chargeable development. This should take account of any applicable reliefs. My understanding is that the notice is a statement of what will be payable when the development commences. The issue of the notice is not expressed to be a pre-condition of the CIL liability. However, a demand notice has to identify the relevant liability notice so unless there is a liability notice issued there can be no demand notice. Reg. 65 does refer to the liability notice having effect and this may be a reference to it being prima facie evidence of a continuing CIL liability or to it justifying a demand notice. This point may be particularly relevant to the issue as to when a local land charge can be registered (see para. 15.9 below). I suspect that there will be an automatic reflex action that when a liability notice is issued a local land charge is also registered. As discussed in that section there is a doubt that this is strictly authorised by reg. 66 and it could in some cases pose problems when attempting to deal with the land.
12.2.2 Timing – the collecting authority is required to issue the liability notice “as soon as practicable after the day on which a planning permission first permits development” (reg. 65(1)). This is a mandatory duty. In the majority of cases this will not be the date of the granting of planning permission particularly if the permission is outline or a phased development (see para. 6.2.2 above regarding the operation of reg. 8). For example, an outline planning permission may be subject to reserved matters and it is only on the final approval of the last reserved matter that it will first permit development for the purposes of CIL. This may be some time after the original grant of the planning permission. Should the collecting authority wait until then? It is unlikely that authorities will.
12.2.2.3 Failure to issue in time – the failure to issue a liability notice as soon as practical cannot be the subject of or a ground for a reg. 114 appeal (see para. 6.2.6.2 above).
12.2.3 Monitoring of planning permissions - To wait until all necessary approvals have been given will require the authority to monitor the compliance with such conditions and do authorities have the resources to undertake this? A pragmatic answer that has been suggested is that a liability notice or draft liability notice should be given when planning permission is granted and then a fresh or revised liability notice when the development is “first permitted”. The second “go” at setting out the CIL liability may be needed in any event if there has been a change in the local CIL rate between the grant of the planning permission and the development becoming “first permitted”. It should be noted that this timing issue will not affect the impact of indexation as that is related to the date of the grant of the planning permission and not when the development if first permitted.
12.2.4 Required form – there is a prescribed form for this notice and the notice issued must be in that form or to “substantially the same effect”. It must include
12.2.4.1 a description of the chargeable development;
12.2.4.2 the date of issue;
12.2.4.3 the chargeable amount; whether capable of being payable by instalments (including a copy of the authority’s policy);
12.2.4.4 the amount of any charitable relief or relief for exceptional circumstances or exemption for residential annexes or extensions granted in respect of the chargeable development;
12.2.4.5 where social housing relief or an exemption for self-build housing exemption has been granted then the persons to whom it has been granted and the amount of relief each benefits from;
12.2.4.6 the other information required by the prescribed form.
12.2.5 Service – the liability notice must be served by the collecting authority on
12.2.5.1 any person who has assumed liability;
12.2.5.2. all owners of material interests in the site;
12.2.5.3 any person who has submitted a notice of chargeable development; any person applying for approval of any matter the subject of a condition required before the development can be commenced; in any other case the person who has applied for the planning permission.
12.2.6 Revised liability notices – a collecting authority has the power at any time to issue a revised liability notice (reg. 65(5)). There are no pre-conditions to be satisfied. It means that this is an easy means by which to correct any errors as well as accommodating any change. The collecting authority is obliged to issue a revised liability notice if there is a change in the chargeable amount or the availability of a relief or a change in the charging authority’s instalment policy (reg. 65(4)). Any revised liability notice must be served in accordance with para. 12.2.5 above. It will replace any previous liability notice in respect of the chargeable development which will be automatically cancelled (reg. 65(8). Currently a section 73 permission may result in the need for a revised liability notice (see para. 8.4 below). With the new abatement procedure for subsequent stand alone planning permissions (discussed in section 15.8 below) there will not be a need for the service of revised liability notices. The CIL liability arising from the earlier planning permission will stand but be capable of being set off in part against the subsequent CIL liability. This should not require the authority to revise the earlier CIL liability.
12.2.7 Ceasing to have effect – a collecting authority may at any time withdraw a liability notice as opposed to issuing a revised liability notice (reg. 65(7)). This is carried out by giving notice of the withdrawal to all those persons on whom the liability notice was served. In addition to withdrawal a liability notice ceases to have effect once all CIL has been paid or on the expiry of a clawback period in relation to charitable or social housing relief or an exemption for residential annexes or self-build housing (if applicable) without the occurrence of a disqualifying event or a failure to comply with reg. 54D(2)(b) (provision of additional evidence for purposes of self-build housing relief) regarding which the collecting authority cannot take further action (see section 11.5.8.4). One consequence of it ceasing to have effect is that the local land charge registered in relation to the chargeable development must be cancelled (see section 15.9 below).
12.2.8 Response to liability notice - understandably liability notices are taking some developers by surprise. This is likely to be the case for some time as CIL continues to be introduced into new areas. Some points to be borne in mind on receipt of such a liability notice are:-
(i) The time limit for appeal runs from that notice and not the review decision. It is 60 days and there is no power to extend it.
(ii) It is not possible to appeal once the development has started. However, the 2014 Regulations have relaxed this stringent limitation in the case of planning permissions granted after the commencement of development (see section 18.14 below).
(iii) No appeal can be made unless a request for a review has been made.
(iv) The appeal must be made even if the review decision has not been received within the 60 day time limit.
(v) Once an appeal is made if the development is started before a decision the appeal will lapse.
(vi) The liability notice does not trigger the liability to pay CIL. The start of the development does that.
(vii) Notice of intended commencement of development must be given prior to the start.
(viii) Failure to give that notice and/or late payment may result in stiff surcharges.
Important point – service of a liability notice triggers the running of a very tight timetable for appeals and developers need to take advice promptly.
13. Commencement notice –
13.1 Commencement – a crucial event in the context of the operation of the CIL regime is the commencement of development (as to what constitutes commencement see para. 6.3.2 above). It is this event which causes the CIL to become payable whether immediately or by instalments with payment dates determined from the commencement.
13.2 Giving a commencement notice - before commencing the development authorised by a planning permission a commencement notice must be served on the collecting authority no later than the day before the commencement (reg. 67)). There is no need to serve such a notice if the development is a minor development within reg. 42 or the chargeable amount is zero or no CIL is payable because it is subject to the exemption for residential extensions. This notice is to inform the collecting authority that the CIL liability is about to fall due. Not only is this to be served on that authority but also on every other owner of a material interest in the land. Such notices can be withdrawn by written notice before commencement of the development. A fresh commencement notice will replace any such earlier notice. The collecting authority must acknowledge receipt of such a notice.
13.3 Failure to give commencement notice – if no such notice is given or it is given late and the chargeable development commences without a notice having been properly given then the collecting authority may determine the date on which the development was commenced (reg. 68 and see section 8.3.3 above). The failure to serve a commencement notice properly will give rise to a surcharge and the ability to pay the CIL by instalments will be lost.
13.4 Authority does not accept commencement notice – a collecting authority may determine that the commencement date is different from that stated in a commencement notice if it has reason to believe that the development commenced earlier than that date (reg. 68(b)).
G. Computation of CIL
14. Calculation of CIL charge – as state above the focus is on the extent to which the development has resulted in an increased internal area. Care has to be taken over this and how this area is determined is considered more fully in para. 14.2. The basic formula is set out in para. 14.1 below. To assist with the calculation some authorities have helpfully provided CIL calculators which can be downloaded from their websites. These will operate with the CIL rates applicable to that particular authority and so cannot be used for developments in other areas. One such authority is Waveney DC and the calculator to be used for developments in that area can be found at http://www.waveney.gov.uk/site/scripts/download_info.php?fileID=3632. It must be borne in mind that it is sensible to check that these calculators take into account any recent changes particularly when matters such as social housing exemption are involved.
14.1 Formula - the basic formula for calculating the CIL liability, which has not changed despite the constant amendments, reflects the objective of applying the relevant CIL rate to the increase in the internal floor area subject to indexation. The formula is:
R x A x Ip
Ic
Where:
R is the CIL rate in £/m2.
A is the net increase in gross internal floor area (see section 14.2 – the formula is contained in 14.2.3 below).
Ip is the All-in Tender Price Index for the year in which planning permission was granted.
Ic is the All-in Tender Price Index for the year in which the charging schedule started operation.
14.2 Increase in gross internal area – A is the crucial figure because the charge is (subject to cases involving change of use as to which see para. 9.3 above) on the amount by which the gross internal area of the building has been increased bearing in mind that this can in certain circumstances include areas already in existence at the date of the grant of planning permission. The formula to be used to determine this figure is set out in section 14.2.3 below. When dealing with a development which is only subject to one rate of CIL the calculation will be straightforward and this aspect of the regime will involve the consideration of two features. The calculation is less straightforward when dealing with a mixed user development which is subject to different rates of CIL. Although some authorities (such as Redbridge) have opted for the simplicity of a single CIL rate so far it is almost the norm to have quite complicated differential rates. A crucial element in the operation of the formula will be the measurement of the internal area.
14.2.1 Measuring the internal area –
14.2.1.1 General test - in measuring the internal area all internal parts will be included regardless of use subject to the special position applicable to social housing relief (see para. 11.3.2.3 above). GIA is not defined in the CIL regulations and there is no guidance in the regulations aimed at assisting in determining what space is to be included in the calculation of the internal floor space. The measuring will be in accordance with the RICS Code of Measuring Practice (currently 6th Edition) and in a CIL appeal decision concerning extensions and erection of detached part open fronted double garage the appointed person stated that “the definition of GIA in the RICS Code is the generally accepted method of calculation and I have therefore applied this definition in considering the extent of the net additional floor space” (para.14).
14.2.1.2 Specific inclusions – in the RICS Code there is a list of items which is set out as included and excluded from the core definition of Gross internal Area. Amongst the items included are communal and service areas and accommodation used for such matters as providing heating or air-conditioning. Fuel rooms will be included even if situate on the roof. Areas such as lifts (both wells and room), stair wells, toilets, showers, changing rooms and underground parking will be included. Also included will be any internal walls or partitions, chimney breasts, columns or piers (whether freestanding or projecting inwards from an external wall). Mezzanine floors with permanent access are included (see section 10.4 above). Voids over stairwells and lift shafts on upper floors are also included as are pavement vaults. Garages, loading bays and conservatories are expressly included. In the CIL guidance provided by Shropshire CC it states that it will include in the GIA the internal area of attic rooms if there is access by a permanent stairway but not if by means of a pull down ladder.
14.2.1.3 Area not wholly enclosed - areas which are not wholly enclosed may give rise to issues. The RICS Code includes “internal open-sided balconies, walkways, and the like”. It excludes external open-sided balconies, covered ways and fire escapes. In the appeal mentioned in section 14.2.1.1 above one of the issues raised was whether the internal floor area of a garage described as a car port should be taken into account. This garage was enclosed by three walls but with a wholly open front. The appointed person determined that the “car port accommodation” fell within the definition of GIA. The opening to the car port was bounded to either side by a small structural wall which provided a surface up to which the GIA could be assessed. The decision is really a determination that the building constitutes a garage. In that case the GIA exceeded 100 square metres and so did not qualify for the minor works exemption. If carried out now it would probably qualify for the residential extension exemption (see section 11.6 above).
A similar issue arose with regard to an appeal concerning a development raising the height to the section of an existing building. There was a roadway with covered loading bays which was enclosed on two sides. This area was to be developed with more enclosure and the rerouting of the roadway to the north of the building. The appointed person considered both the RICS Code and the VAO Code as regards open sided areas and reached the decision that the original layout of the combined roadway and loading bays was included in the GIA of the building. It was noted in particular that the RICS Code included internal open-sided walkways and the like and also loading bays both of which applied. The RICS code was followed rather than the VAO guide. In consequence the development did not increase the GIA save for a new covered loading bay added to the building but which was within the minor works exemption.
14.2.1.4 Specific exclusions - the width of the exterior wall will be excluded as will any external open-sided balconies and fire escapes. In addition the RICS Code excludes canopies, voids over or under structural, raked or stepped floors. Greenhouses, garden stores, fuel stores and the like in residential properties are also excluded.
There is a difference with the Code of Measuring Guide provided by the Valuation Office Agency for rating purposes which excludes from GIA open balconies, open fire escapes, open-sided covered ways, open vehicle parking areas, terraces and the like, minor canopies, any area with ceiling height of less than 1.5m (except under stairways), and any area under the control of service or other external authorities. The RICS Code in contrast includes any area under the control of service or other external authorities and any area with a headroom of less than 1.5 metres. In the appeal mentioned in section 14.2.1.1 this was remarked on by the appointed person who followed the RICS Code noting that the VAO guide was for the purposes of rating. This is supported by an appeal concerning a two storey/part single storey extension incorporating a new garage with accommodation over. The only ground for the appeal was that the charging authority had included second floor space which had less than 1.5 metres headroom within the computation of GIA. The appointed person applied the RICS guide which expressly includes such areas.
14.2.1.5 The Mayor of London’s Guidance – this states that open-sided covered ways will be excluded but in contrast open-sided covered areas will be included. To be taken into account the area must be comprised in the interior of a building. This would not normally be regarded as, therefore, including, for example, an all weather sports pitch with an overhead cover of tarpaulin. The Mayor of London’s guidance also specifically refers to the exclusion of areas with a ceiling height under 1.5 metres except under a stairway and any area under the control of service or other external authority.
14.2.1.6 Separate buildings – a material point when determining the gross internal area is to ascertain what constitutes a separate building. External walls are excluded from the internal area but not internal walls. If the structure is not in a uniform type of construction then it should be regarded as a separate building. But if there are contiguous elements and of a similar type of construction then the structure should be treated as a single building providing that more than 50% of the party wall has been removed.
14.2.1.7 Verification – the issue has been aired as to whether authorities should accept the figures for gross internal area provided by the developer or landowner or whether a system should be put in place by which to verify the figures. I have not seen any answer as to how this is to be tackled. It sounds expensive and if such expenditure is incurred then it is to be expected that there will be a move to shift the incidence across to the payer of CIL.
14.2.2 Deduction of area – there are certain areas which can be deducted from the gross internal area of the building resulting from the development. This will have a significant impact on the amount on which CIL is charged. As indicated above (see para. 9.3.2 above) it will be influenced by whether the building has been used or was empty prior to the grant of permission and if used whether it was lawful or unlawful user. Prior to the 2014 Regulations two deductions were possible but now there are three:-
(i) retained building satisfying vacancy test - the aggregate gross internal area of the buildings to be in existence at the completion of the development which existed when the development was first permitted and in lawful use. There is a vacancy test which has to be satisfied (see section 9.2.3.1.2(1)). The building has to be in use for a continuous period of at least six months in the three year period ending on the date that the permission first permits the chargeable development (previously twelve months) (reg. 6(10)). It suffices that it is a use of part only. In addition it must be a lawful use.
(ii) continuing permitted user of retained building – the internal area of a retained building which does not satisfy the vacancy test the internal area will still be deductible if the permitted user immediately prior to the date when the development is first permitted continues after that date and is the permitted user for that building within the development not requiring ant fresh planning permission (see section 9.3.2.1.2(2)).
(iii) demolished buildings - the aggregate gross internal area of buildings on the land when the permission first permits the development but which are demolished before the completion of the development (see section 9.3.2.1.2(3)). Such buildings have to satisfy the vacancy test.
14.2.3 Formula for internal area – the formula originally in reg. 40(6) and now after the 2014 Regulations in reg. 40(7) for calculating A has been replaced twice - once by reg. 5 of the 2012 Regulations and then again by reg. 6 of the 2014 Regulations. These changes have been in order to correct an error which could result in the overcharging of CIL first when there was both retention and demolition of existing buildings and then in respect of demolished buildings. Coping with existing buildings which are to be retained or demolished and the phasing of developments has been a real headache. The present replacement formula is set out immediately below in para. 14.2.3.1. This replacement formula does not apply in all cases and so both the first replacement formula and the original formula are set out in para. 14.2.3.3 and para. 14.2.3.5 below respectively. The final form of the present replacement formula is as a result of amendment after the original draft set of regulations had been issued because the original form of words did not solve the problem in all circumstances with mixed user development schemes and that even with the introduction of the amendment in the original form there could be an unintended CIL bill larger than it should be when there are differential CIL rates ( see the article headed “New CIL Regulations Don’t Add up” in Barney’s Blog by Barney Stringer).
14.2.3.1 Current formula – the operation of the formula looks complicated and appearances do not deceive. When there is a single CIL rate applying to the chargeable development it is greatly simplified because GR and G will be the same. This formula seeks to allow not only for the retained and demolished buildings and parts of buildings but also apportioning the deduction for demolished buildings and parts of buildings between different phases of development.
Where—
G = the gross internal area of the chargeable development (see section 9.3.1 above as regards measuring the area);
GR = the gross internal area of the part of the chargeable development chargeable
at rate R;
KR = the aggregate of the gross internal areas of the following—
(i) retained parts of in-use buildings (which are those retained buildings which satisfy the vacancy test – see section 14.2.2(i) above); and
(ii) for other relevant buildings, retained parts where the intended use following completion of the chargeable development is a use that is able to be carried on lawfully and permanently without further planning permission in that part on the day before planning permission first permits the chargeable development (see section 14.2.2(ii) above);
(as regards Kr see section 9.3.2 above)
E = the aggregate of the following—
(i) the gross internal areas of parts of in-use buildings that are to be demolished
before completion of the chargeable development (see section 14.2.2(iii)), and
(ii) for the second and subsequent phases of a phased planning permission, the
value Ex (as determined under reg. 40(8)), unless Ex is negative,
provided that no part of any building may be taken into account under both of
paragraphs (i) and (ii) above.
(as regards effect of demolition see section 14.2.7 below)
Ex - There is yet another formula in reg. 40(8) to enable the value Ex to be calculated which is the following formula—
Ep - (Gp – Kpr)
where—
Ep = the value of E for the previously commenced phase of the planning
permission;
Gp = the value of G for the previously commenced phase of the planning
permission; and
Kpr = the total of the values of KR for the previously commenced phase of the
planning permission.
R is the relevant CIL rate. If the Charging Authority only has one rate or the development only involves one type of use then there will be a single calculation
14.2.3.2 When do the current formulae apply – the formulae in 14.2.3.1 above apply to all developments save those for which a liability notice has been issued before 24th February 2014. It is not intended to upset any calculations by the authority before the 2014 regulations took effect but will apply no matter when the planning permission was granted authorising the development if the liability notice is issued on or after 24th February 2014.
14.2.3.3 First Replacement formula – This formula is not quite so complicated but that is because it does not work in all circumstances. It will only be effective in cases in which a liability notice has been issued prior to 24th February 2014 and then it will have been applied unless the circumstances are such that the original formula applies (see section 14.2.3.5 below). The formula is:
Where—
G = the gross internal area of the chargeable development;
GR = the gross internal area of the part of the development chargeable at rate R;
E = an amount equal to the aggregate of the gross internal areas of all buildings which—
(a) on the day planning permission first permits the chargeable development, are situated on the relevant land and in lawful use; and
(b) are to be demolished before completion of the chargeable development; and
KR = an amount equal to the aggregate of the gross internal area of all buildings (excluding any new build) on completion of the chargeable development which—
(a) on the day planning permission first permits the chargeable development, are situated on the relevant land and in lawful use;
(b) will be part of the chargeable development upon completion; and
(c) will be chargeable at rate R.
R is the relevant CIL rate
14.2.3.4 Example – a developer obtains a planning permission to convert an occupied office building with an internal area of 500 square metres to residential user as a house and to build a second house on land at the side which will require the demolition of a garage with office space over it. The garage has an internal area comprising 35 square metres and the internal area of the new house will be 425 square metres. The site is within an area with one single CIL rate of £80 per square metre.
G = 925 sq m
Gr = 925 sq m
E = 35 sq m
Kr = 500 sq m
A = 925 – 500 – (925 x 35)
925
= 925 – 500 – 35
= 390 sq m
The CIL liability will be 390 x £80 plus any increase due to indexation = £31,200 plus increase due to indexation.
14.2.3.5 Original formula – the original formula will be applied if either there was a grant of planning permission before 29th November 2012 or the development is authorised by a general consent and a notice of chargeable development (including one given by the collecting authority under reg. 64A) was given before 29th November 2012 (reg. 9 2012 Regulations). It is
(CR × (C - E)) / C
Where—
CR = the gross internal area of the part of the chargeable development chargeable at rate R, less an amount equal to the aggregate of the gross internal area of all buildings (excluding any new build) on completion of the chargeable development which—
(a) on the day planning permission first permits the chargeable development, are situated on the relevant land and in lawful use;
(b) will be part of the chargeable development upon completion; and
(c) will be chargeable at rate R.
C= the gross internal area of the chargeable development; and
E= an amount equal to the aggregate of the gross internal areas of all buildings which—
(a) on the day planning permission first permits the chargeable development, are situated on the relevant land and in lawful use; and
(b) are to be demolished before completion of the chargeable development.
14.2.4 Mixed user developments – the simplicity is lost and more than one calculation is required if the development involves more than one use and the relevant charging authority has put in place differential rates dependent on the type of use. With such mixed use developments the formula has to be applied separately in relation to each CIL rate applicable to the development. The extent of the gross internal area of the chargeable development for the use which the relevant CIL rate applies to and the extent of the existing buildings retained for such use will be determined by an apportionment based on the actual user of the development. They will constitute GR and KR in the formula. The internal area of any demolished buildings will be apportioned between the CIL rates by reference to the proportions of the development attributable to the different uses in order to arrive at E.
14.2.5 Internal areas deemed to be zero – the onus is placed on the person liable to CIL to provide to the collecting authority sufficient evidence of sufficient quality as to the use, history or internal areas of retained or demolished buildings for which a deduction is claimed when calculating the net chargeable area of the development (reg. 40(9) and (10)). If the collecting authority has insufficient information or the information is not of sufficient quality then it may deem the relevant gross internal area to be zero (reg. 40(10)) which will result in an unnecessary increase in CIL. This will be particularly a risk when there has been unlawful use of the relevant site. For instance, if a building has been demolished without planning permission this would be a course of action the collecting authority would have in mind.
14.2.6 Indexation – the CIL rates are increased or decreased annually by indexation related to the All-Tender Price Index in the manner set out in the formula in para. 14.1 above. These figures are available from the Building Cost Information Service of the RICS but should also be held by the collecting authority. It should be noted that it is the index figure at the relevant November in the preceding year which is used regardless that the figure is subsequently changed as often happens more than once. In para. 2.3.3a of the revised February 2014 Guidance it is recognised that the figure is revised and finalised periodically. This seems to have resulted in different practices as to which figure to use. It is acknowledged that some authorities use the most recent finalised figure published before the previous November without suggesting that this practice is wrong. What is noticeable is that there is no guidance as to what is the correct practice which seems to be a feature of CIL. If a figure is used which is later revised it raises the issue as to whether the authority should then revise the CIL calculation. There is the further issue that an index has been used which requires a paid subscription to access. With the imposition and determination of tax liabilities the required information should be publicly available and at no charge. If the government wishes to adopt this approach then it should pay for the relevant part of the index to be made available to the collecting authorities and those subject to the CIL charge.
14.2.7 Demolition –
14.2.7.1 Prior demolition - care should be taken to ensure that no demolition occurs before the commencement of the development. This should not happen because if there is demolition that may constitute the unexpected early commencement of the development with adverse CIL consequences. Further it risks the part demolished not being included in the deduction from the chargeable internal floor area as part of figure E in the formula now contained in reg. 40(7) 2010 Regulations (previously reg. 40(6)) because that requires that the demolished building should still be in place on the day that the relevant planning permission first permits development. The deduction from the chargeable gross internal area in respect of demolished buildings is restricted to the internal area of building existing at the date that the development is first permitted which is then demolished.
14.2.7.2 Deduction from gross internal floor area – the deduction allowed from the gross internal floor area when calculating the chargeable amount in relation to demolished parts is after the coming into force of the 2014 Regulations more limited than in respect of retained buildings. Each must be situate on the relevant land at the time that development is first permitted. As regards retained buildings to be deductible one of two tests needs to be satisfied – either lawful user for a continuous six month period during a three year period or no change in authorised user. With regard to demolished parts only the first test will apply. The area will be included in the E figure if the relevant part has been in continuous use for any period of six months in the three years (previously twelve months) preceding the day on which the relevant development is first permitted. The original test applicable to the twelve month period will apply in the case of development regarding which the liability notice has been issued prior to 24th February 2014. The second test will not apply as regards demolished parts and so if the first test is not satisfied by that part CIL will be charged on the area unless it is excluded from the planning permission.
14.2.7.3 Site clearance - It was proposed in the April 2014 consultation that site clearance may be treated as a separate phase which will be neutral for the purposes of CIL but this has not been included in the 2014 Regulations. This could have caused problems when each phase is treated as a separate chargeable development. However, it would have alleviated cash flow problems that arise when there is a lengthy gap between site clearance and the start of construction.
14.2.7.4 Evidence – it is important that evidence is retained as to both the nature and use of buildings demolished in the course of the development. There may be subsequent issues as to the size or use or period of user during the three years (previously twelve months) preceding the commencement of the development. The onus is on the developer or owner to provide such evidence. If not satisfied with the evidence the authority can disregard it.
14.2.7.5 Phased developments – as each phase under a phased planning permission is treated as a separate development consideration should be given, if possible, as to how the phases are carried out and to which phases the deductions for demolition or existing buildings should be applied. The new figure Ex has been added in reg. 40(8) to cope with the phasing of developments and demolition. The CIL consequences may vary particularly when there are differential rates in the area and mixed user developments. The importance of this has been increased with the extension of the treatment of phased developments to full and hybrid planning permissions as well as outline permission.
14.3 Section 106 agreements – there is no set off against the CIL liability for the costs of discharging the section 106 obligations relating to the site.
14.4 Remediation costs – similarly there is no deduction allowable against the CIL liability in respect of the costs of removing contamination or otherwise remedying a brown field site.
H. Liability for CIL –
15.1 General position - the expectation is that prior to the commencement of the development someone, normally the developer, will assume responsibility for the CIL liability. If no assumption of liability notice is served then a surcharge can be demanded and the CIL liability cannot be paid by instalments. In the absence of such a notice prior to the commencement of the development then the owner or owners of any material interests in the site will be liable (reg. 33) which will trigger a more complicated procedure. If there is more than one such owner then the CIL liability will have to be apportioned.
15.2 Assumption of liability – this will be an important element in any development and should be covered by agreement between the landowners and the developer.
15.2.1 Effective notice - in order that there should be an effective assumption of liability a valid written notice must be given by the person assuming responsibility in the prescribed form containing the particulars requested. Each charging authority will have such a form on the authority’s website to be downloaded. The correctly completed notice must be given to the collecting authority rather than the charging authority in cases where the two are different authorities (reg. 31) and it must be received before the commencement of the development if it is to prevent the landowners from becoming liable (reg. 33). The assumption of liability notice takes effect on receipt by the collecting authority (reg. 31(4)) but if received after the commencement of the development it will not be effective (reg. 31(7)). The collecting authority must send an acknowledgement to the liable person or persons.
15.2.2 Withdrawal – a person having assumed such responsibility may withdraw provided that this occurs before the commencement of the development (reg. 31(6)). To do so notice of withdrawal must be given to the collecting authority.
15.2.3 Transfer of liability – after the commencement of the development it is not possible to assume or withdraw from assumption of liability. The only manner in which another person may take on such liability is by transfer (reg. 31(7)). It is possible for a person who has assumed liability to transfer that liability to another by giving a liability transfer notice to the collecting authority (reg. 32(1)). This is possible before as well as after the commencement of development and at any time up until the date when the final payment of CIL is due (reg.32(3)). Again there is a prescribed form which can be downloaded from the website of the relevant charging authority. It takes effect on the day received by the collecting authority unless after the date on which the final payment is due in which case it is ineffective even if that payment remains outstanding. From the date of receipt by the collecting authority the named transferee will be liable for so much of the CIL liability as remains outstanding (reg. 32(5)). The collecting authority cannot object to the transferee and is required to send an acknowledgement to the person liable to pay the CIL and the person applying for the transfer of liability. It is open to a person who has assumed liability to transfer to a “man of straw” and the collecting authority can raise no objection. In such circumstances when default occurs the collecting authority will not look to the transferor but to the owners of the site (see para. 15.4 below).
15.2.4 Obligation to assume liability - an important feature of arrangements regarding a proposed development will be who is to assume liability for CIL and give the required notice. Merely to require a person such as the developer to give such a notice will not be sufficient protection. It may be withdrawn or a subsequent transfer of liability notice be given. Any obligation relating to the giving of an assumption of liability notice needs also to prohibit any withdrawal or transfer of liability or at least require the prior written consent of the owners of material interests in the site.
15.2.5 Death of person assuming liability –
15.2.5.1 Prior to commencement of development - that person’s liability will not continue after death if it occurs before the commencement of the chargeable development (reg. 39(2)). The liability can be assumed by another before the commencement by the giving of notice in accordance with the requirements set out in para. 15.2.1 above provided that it is accompanied by a death certificate. There is no express provision stating what happens if there is such a death but no assumption of liability thereafter. As the original assumption of liability has ceased to have effect due to the death reg. 36 will apply on the commencement of the development and the owners will be liable (see para. 15.3 immediately below).
15.2.5.2 After commencement – the deceased’s CIL liability will pass to the personal representatives (reg. 108(2)) but will not arise until notice requiring payment has been served.
15.3 Liability when no assumption of liability notice – in the absence of anyone assuming liability the CIL liability is by default apportioned amongst the owners of the material interests in the site (reg. 33(1)) save if the works are carried out pursuant to the exercise of a statutory right of entry on the land (see para. 15.3.2 below).
15.3.1 Material interests –
15.3.1.1 General - for these purposes a material interest is the freehold estate and any leasehold interest having a term which expires more than seven years after the planning permission first permits the chargeable development (reg. 4(2)). This may operate capriciously if the lease is for a term which is less than seven years but under which the tenant has statutory security of tenure. It means that a business tenant may not be liable for any part of a CIL liability arising from a development the tenant is carrying out even though having a right to occupy the premises for an indefinite period. It emphasises the importance from the landlord’s perspective of having appropriate provisions in the lease to cover developments carried out by the tenant giving rise to a CIL liability.
15.3.1.2 Jointly owned interests - Jointly owned interests will give rise to a joint and several liability for any CIL liability falling on the owners (reg. 37). If the interest is held by a nominee or bare trustees then the beneficiaries are liable (reg. 38(1)) whilst with settlements of such interest (excluding bare trusts) the trustees at the time of the commencement of the development and subsequently will be liable (reg. 38(2) and (3)).
15.3.2 Statutory right of entry – the owners of the material interests in the site will not be liable by default if the development works are carried out on the site by a person who does not have a material interest in the land but has entered pursuant to the exercise of a statutory right of entry without the agreement of the owners (reg. 33(4)). This does not extend to persons who enter pursuant to a right of entry conferred not by statute but by deed.
15.3.3 Apportionment – the owners of the material interests are not jointly and severally liable for the CIL liability but are solely responsible for the portion of the CIL liability apportioned to them. The apportionment to ascertain the share of liability of an owner, O, is carried out using the following formula (reg. 34(2)):
Where—
VO = the value of the material interest owned by O;
V = an amount equal to the aggregate of the values of each material interest in
the relevant land; and
A = the chargeable amount payable in respect of the chargeable development.
The value of each material interest is the open market value of that interest assuming that the chargeable development had completed the day before the apportionment. In order to carry out the apportionment the collecting authority may require information to be provided by an owner about the owner’s interest and any other relevant information in the owner’s possession or control by serving an information notice (reg. 35). The owner has 14 days from receipt to comply. It is open to question as to how much care will be put into such apportionments. There is no procedure whereby the owners may have an input into the process save that there is a right to appeal (see para. 18.4 below). The results may be controversial and unfair as between different owners of material interests. There could be further difficulties if the apportionment is delayed. Should the development wait or go ahead without knowing how the liability is to be shared and so face the prospect of a late payment of CIL.
15.4 Default by person assuming liability – for conveyancers there is one aspect arising from the provisions governing liability for CIL which will always have to be borne in mind and which will need to be covered in any arrangements between a developer and landowner. It will be expected that someone, normally the developer, will have assumed liability for the CIL. In the event that the person assuming liability fails to pay the CIL then the liability will revert to the persons who would have been responsible but for the assumption of liability. The landowners will not only be liable if there has been no assumption of liability notice given to the collecting authority.
15.4.1 Owners liability - When the collecting authority is unable to recover the full CIL liability from the person who has assumed liability then it can determine that the liability has been transferred to the owners (reg. 36). It can only do so after it has first made all reasonable efforts to recover the CIL liability using the recovery powers contained in Chapter 3 of Part 9 of the 2010 Regulations (see para. 17.4 below) (reg. 36(3)). These recovery methods are extensive but no account is to be taken of the stop notice procedure which is contained in Chapter 2 of Part 9. This does not mean that the collecting authority cannot use this method in these circumstances but there is no obligation on it to do so. It is possible to foresee disputes between collecting authorities and landowners as to whether or not the collecting authority has used reasonable efforts to recover the outstanding CIL liability. From the landowners point of view it is far better that the collecting authority undertakes such an exercise than they have to if in fact they are entitled to.
15.4.2 Default of liability notice - in such circumstances the collecting authority must serve a “default of liability notice” and apportion the outstanding CIL liability between the owners. The apportionment is between the various owners of material interests in the site. It will be dealt with in the same manner as an apportionment when no assumption of liability notice is given (see para. 15.3.3 above and reg. 34) Until the expiry of seven days from the service of the default of liability notice no stop notice can be served nor any surcharge levied by the collecting authority.
15.4.3 Response to default notice - the service of a default of liability notice is a very important step for the owners and will require some speedy liaison and a fast response. It may occur part way through the development so that the subsequent service of a stop notice by the collecting authority would have substantial adverse financial consequences for the owners. It is to be expected that such a default of liability notice will not have come as a bolt out of the blue but it does emphasise the need for owners to keep a beady eye on the progress of the development and the financial well being of the developer.
15.4.4 Effect on prior exemption - there is a further point to be borne in mind. A person may be exempt from primary liability for CIL but that will not protect that person from a CIL liability transferred due to a default by the person who assumed liability. For example if a charity is involved and part of the developed site will be occupied wholly or mainly for charitable purposes it will be exempt but it will still be liable for any unpaid CIL liability transferred to it and attributable to the part not to be used for charitable purposes.
15.5 Settlements
15.5.1 Bare trusts – if a material interest in a development site is held by a bare trustee then the beneficiary or beneficiaries will be liable for any CIL that would otherwise fall on the bare trustee (reg. 38(1)).
15.5.2 Trusts – with any trust other than a bare trust the persons who were trustees on the day that the chargeable development commenced and any subsequently appointed trustees will be liable in relation to any material interest in the development site (reg. 38(3)). Any one or more of the trustees may be pursued (reg. 38(2)).
15.6 Demand Notice –
15.6.1 Requirement - it is a mandatory requirement that a demand noticed be served by the collecting authority on each person liable to pay CIL (reg. 69(1)).
15.6.2 Form – as with the liability notice there is a prescribed form which must be either used or a form which is substantially the same. It must include:-
15.6.2.1 date of issue;
15.6.2.2 identify the liability notice to which relates;
15.6.2.3 state intended commencement date or, if appropriate, the deemed commencement date;
15.6.2.4 state the amount due from the person on whom served (including surcharges and interest) and date when payable;
15.6.2.5 if payable by instalments state the amount and payment date of each instalment;
15.6.2.6 other information required in the prescribed form.
15.6.3 Revised demand notices – the collecting authority has the ability to serve a revised demand notice at any time so any errors can be quickly corrected. Such a revised demand notice must be served on any person on whom an earlier demand notice was served if the particulars have changed. Once a revised demand notice is served any earlier demand notice will cease to have effect.
15.7 Suspension of liability –
15.7.1 Reason for ability to suspend - it is possible for a person who has received a demand notice to request the collecting authority to declare that the CIL does not have to be paid until the start of works forming part of the chargeable development on the land in which the person has a material interest (reg. 69A(1)). The reason for this provision is to protect owners whose land has been included in a planning application possibly without that person’s consent. There is no requirement that an applicant for planning permission has to be the owner of the land. An application may relate to a larger area than just that person’s land and development work may have started on another area. If no-one has assumed liability for the CIL arising upon commencement of the development then this would be sufficient to cause CIL to be payable by that owner although not involved in either the development or planning application. Reg. 69A seeks to relieve the owner in such circumstances on receipt of a demand notice. However, the conditions are rigid and there is still the prospect that the owner could be liable to pay CIL even though not involved in the triggering development.
15.7.2 Conditions - in order to benefit from this provision allowing suspension five conditions have to be satisfied. These are
(a) the CIL liability has been apportioned to the person making the request (P) and not assumed;
(b) no development works have been commenced on the land in which P has a material interest;
(c) P has not agreed to any such works being carried out on the land in which P has an interest;
(d) P has not agreed to transfer all or any part of P’s material interest to any other person under a contract enforceable under section 2 Law of Property (Miscellaneous Provisions) Act 1989;
(e) it is reasonable in all the circumstances that P should not have to pay CIL until development works start on the land in which P has a material interest.
15.7.3 Development works on P’s land – these conditions may operate in a harsh fashion and prevent P from claiming the benefit of this right to suspend the CIL liability. This will be most worrying when the owners of other parts of the land being developed may have the right to come on to P’s land and carry out works which are part of the chargeable development. For example, the owner of an adjoining land may have being granted or reserved the right to enter P’s land for the purposes of the development to install services or to construct a road. Will the exercise of this right trigger a CIL liability to be met by P even though no more works will be carried out? It is hard to see how this outcome can be avoided. It is unfair and places P in a vulnerable position. Before the planning application is put in P may be subject to pressure that unless P agrees to be involved in the development P will be made subject to an unwelcome CIL liability which is outside P’s control. It means that before either granting such rights to come on to land to carry out such works or acquiring land subject to such rights careful thought must be given to the possible future CIL consequences and whether some form of protection is taken against future CIL liabilities arising from permission not approved by this landowner.
15.7.4 Contracts – the existence of a contract to transfer all or part of P’s material interest will prevent P being able to suspend the CIL liability. It seems strange that a contract to transfer to someone who has no involvement with the development should preclude P from being able to suspend the CIL liability. If the transferee is the developer or the adjoining landowner or an associate of either then it is understandable. Further there is a query as to how this will operate. If A the owner of the land has agreed to sell to X then will P be A or X. If A is regarded as the nominee or bare trustee of X then X will be P and so the contract will not be relevant to the question of the satisfaction of this condition.
15.7.5 Effect of suspension – once the collecting authority has made a declaration in response to a request for suspension then until a demand notice is issued under reg. 69A(6) or (7) (see para. 15.7.6 and 15.7.7 below)
(i)P will cease to pay the CIL liability apportioned;
(ii) no interest will accrue on the ground of late payment;
(iii) no recovery methods may be used against P;
no steps may be taken against P’s personal representatives in the event of P‘s death.
15.7.6 Subsequent works – the intended commencement of development works on P’s land will require P to give written notice to the collecting authority no later than the day before the start of works (reg. 69A(5)). If P serves such a notice or the collecting authority believes that such work has started but P has failed to give such notice then the collecting authority may serve a demand (reg. 36(6)). This will remove the suspension of the CIL liability. If the demand is served without P having first given notice of intended commencement the collecting authority may impose a surcharge of 20% of the CIL payable by P or £2,500 (whichever is the lower) (reg.69A(8)).
15.7.7 Subsequent contract – if the collecting authority believes that there is an enforceable contact by P to transfer all or part of P’s material interest to any other person then it must serve a demand notice on that person and not P (reg. 69A(7)).
15.8 Abatement of liability – the CIL regime has been far from clear on issues of abatement and repayments. This was a problem particularly for charging authorities. One concern for such authorities was that any budget relating to the application of CIL receipts could be upset. There has been the lurking worry that monies received would have to be repaid if there was a subsequent change in the development and this would pose a problem if those monies had already been expended on infrastructure. The new reg. 74B partially addresses this problem but not wholly. This abatement provision does not apply to a subsequent planning permission if granted pursuant to section 73 1990 Act. In those circumstances the provisions relating specifically to section 73 planning permissions including repayment by the authority of an overpayment (see section 8.4 above) will exclusively govern abatement and repayments. Reg. 74B will govern all other subsequent planning permissions.
15.8.1 General Operation – any CIL payment which has been made in respect of a development that has commenced but not been completed can be set against any CIL liability arising from a subsequent planning permission in relation to all or part of the land being developed provided that the subsequent planning permission is not a section 73 planning permission. To qualify for this ability to abate the subsequent CIL liability the charging authority must receive notice from the person who has assumed liability to pay CIL in relation to that subsequent planning permission. The notice must be to the effect that the development in accordance with the earlier planning permission will cease and that the development in accordance with the subsequent planning permission will commence or re-commence. It is open to a developer to revert to the original development and even then revert again to the subsequent development. It is provided that the abatement process can operate more than once in relation to a planning permission (reg. 74B(11)). This could result in some complicated accounting for the purposes of CIL.
15.8.2 Pre-conditions to availability (reg. 74B (3)) – a request for abatement must be made before the commencement of the development in accordance with the subsequent planning permission or if it is the recommencement of a previous development before the recommencement of that development. The request must be accompanied by proof of the amount of the CIL already paid.
15.8.3 Abatement – when a valid notice is given pursuant to reg. 74B the CIL that has been paid in respect of the earlier planning permission can be set off against the CIL liability arising from the commencement of development in accordance with the subsequent planning permission (reg. 74B(2)). It can only be credited to the extent that the CIL to be set off relates to buildings that have not been completed when the request for abatement is made and are not taken into account in reducing the chargeable amount when operating reg. 40 in relation to the subsequent planning permission (reg. 74B(6)(a) and (b)). In the event that the amount of CIL paid in respect of the earlier chargeable development exceeds that due in respect of the later chargeable development that excess will not be treated as an overpayment which is repayable so that the provisions of reg. 75 will not be triggered (reg. 74B(14)). This is in contrast to the CIL consequences flowing from a section 73 planning permission. It means that abatement may not be used as a means of improving the CIL position. For example, if an extension to a home was started which was chargeable to CIL but not completed it will not be possible to make a fresh planning application for a new planning permission which due to the new exemption for residential extensions will be subject to a nil CIL liability and then seek the repayment of the earlier CIL liability.
15.8.4 Phased development – any amount of CIL available for the purposes of abatement in relation to a subsequent phased planning permission will be applied against the CIL liability arising in respect of the first phase and then against successive phases until fully utilised (reg. 74B(7).
15.8.5 Demolished buildings – it is possible to take into account when operating reg. 40 in respect of the subsequent development authorised by the subsequent planning permission buildings which were demolished and taken into account in reducing the chargeable amount in relation to the earlier planning permission (reg. 74B(13)). This applies if had the buildings not been demolished they would have been taken into account when determining the CIL liability arising from the subsequent development. However, this treatment of demolished buildings will only be possible if the request is made within three years of the grant of the earlier planning permission (reg.74B(12)). With large developments, particularly when the proposed development scheme has been revised, this time limit could pose a problem.
15.8.6 Completion of building as part of earlier development – it had been originally proposed that any abatement would be withdrawn if work authorised by the earlier planning permission continued after the grant of an abatement. The draft provision relating to the withdrawal was removed from the draft 2014 regulations. In the amended set of regulations the new reg. 74(B)(8), (9) and (10) was added. These provisions operate if a building is completed as part of the earlier development but completion occurs after the request for an abatement and whether before or after the commencement of the subsequent chargeable development. In such circumstances if a reduced amount of CIL is paid with regard to the subsequent chargeable development triggering an abatement then the person granted the abatement must pay to the collecting authority an amount equal to the CIL paid in relation to such building completed under the earlier planning permission after the request for the abatement to the extent that it was credited against the subsequent CIL liability. A payment under these provisions is treated as CIL paid by the person liable for the subsequent development (reg. 74(10)) so that it will be included amongst the CIL paid which will be available to set against any future CIL liability under the abatement provisions.
15.9 Local land charge – a collecting authority may register a local land charge in respect of the CIL liability (reg. 66). Oddly there is no clear statement as to when this local land charge can first be registered. It is provided that the “chargeable amount payable in respect of a chargeable development is a local land charge” (reg. 66(1)). This would suggest that the liability to pay the CIL has been triggered which means that the development must have been commenced. However, a liability notice is triggered not by the commencement of the development but by when the development is first permitted. The use of the term “liability notice” suggests that the payment of the CIL need not have fallen due before the liability is viewed as arising. In practice I would expect local land charges to be registered at the same time as the liability notice is issued. It serves as a warning to third parties. In practice this is likely to be when planning permission is granted rather than when the development is first permitted. The local land charge confers on the collecting authority all the powers of a mortgagee under a deed (see para. 17.4.7 as regards enforcement of a local land charge). The charge must be removed once the CIL liability has been discharged in full or in cases where charitable or social housing relief or an exemption for residential annexes or self-build housing apply the expiry of any clawback period without the occurrence of any disqualifying event or the occurrence of a failure to comply with reg. 54D(2)(b) (provision of additional evidence for purposes of self-build housing relief) regarding which the collecting authority cannot take further action (as to that inability to take further action see section 11.5.8.4 above).
I Payment -
16.1 When payable in full – if there has been no assumption of liability the owners will be liable to pay the CIL in full on the intended commencement date unless the collecting authority has determined a deemed commencement date which will be the payment date (reg. 71(1) and (2)). In such circumstances it will not be possible to pay by instalments. In contrast when an assumption of liability notice and a commencement notice have been served then the CIL will be payable by the notice server within 60 days of the intended commencement date of the development (reg. 70(7)) unless an instalment policy is available (see para. 16.2 below). This emphasises the importance of there being an assumption of liability. Without it payment by instalments will not be available assuming that it is otherwise available.
16.2 Instalments –
16.2.1 General – Both the availability of the ability to pay CIL by instalments and the terms of the instalments policy will be crucially important as regards a development’s cash flow and possibly even the development’s viability. In order to be able to pay CIL by instalments it is a pre-condition that the relevant charging authority has published on its website an instalment policy (reg. 69B(1)). This will need to state when it is possible to pay by instalments, the number and amount of the instalments and when due. Normally there will be a minimal amount of CIL below which it cannot be paid by instalments. The timing of the instalments will be related to the commencement of the development. I have seen a suggestion that the timing could be linked to the progress of the development but in my view that is not permissible because it is not just deferring payment of the CIL liability but introducing a new contingency for which there is no statutory authority. The instalment policy cannot take effect before the date it first appears on the website. The position in London is complicated by the Mayoral CIL which is payable by instalments but will defer to the instalment policy of the relevant London Borough (see para. 19.6 below). When the CIL liability is discharged in whole or part by payment in kind (whether land or the provision of infrastructure) then this can be by instalments in the same way as money payments.
16.2.2 Examples – Portsmouth has had a CIL charging schedule since 1st April 2012. Payment by instalments is available for all amounts of CIL. If the chargeable amount is less than £250,000 then it is payable by two instalments – 25% of the chargeable amount payable within 90 days of the commencement of the development and the remaining 75% within 270 days of commencement. If the chargeable amount is more than £250,000 then the first instalment of 25% is payable within 90 days of commencement, a further 25% within 180 days of commencement and the final 50% within 360 days of commencement. Redbridge has gone for four levels of CIL. Any amount less than £100,000 is payable in full within 60 days of the commencement. Between £100,000 and £250,000 it is payable in two instalments. Between £250,000 and £500,000 it is payable by three instalments and above £500,000 by four instalments. Huntingdonshire DC has been even more generous with five tranches. The CIL is payable in full only when the chargeable amount is less than £16,000 and even then 120 days from the commencement is allowed. With all the other tranches the CIL can be paid by three instalments. CIL in excess of £500,000 is payable as to 25% within 180 days of commencement then 50% within 450 days and the remaining 25% within 720 days. Although generous there is yet another of those paragraphs which are being put in at the bottom of some authority’s lists. This one speeds up payment by providing that if at any time 25% or more of the chargeable development is occupied then any outstanding amount of CIL will be payable in full within the time under the instalment policy or 60 days whichever is the lesser unless otherwise agreed in writing with the authority before commencement of the development. As is evident from these examples there is a great difference between instalment policies which will be a material factoring in costing and funding a development.
16.2.3 Revision or revocation - it can be replaced by a new policy but not earlier than 28 days from the earlier policy taking effect. If the authority no longer wishes to have an instalment policy then notice has to be given on its website of the date that its instalment policy is to cease to have effect which must be not less than 28 days from the policy having come into effect.
16.2.4 Precautions to take - it will be necessary, therefore, to establish with each development that the relevant charging authority has an instalment policy; that it has not been withdrawn; and the terms of the policy including whether it has an accelerator provision. Each authority will have its own instalment policy. As has been seen from the examples mentioned above there is a need to consider the list carefully and in particular to check if there are any traps set at the bottom of the list which seeks to speed up payment. Whether and to the extent that the payment is spread will normally depend on the amount of the CIL liability. Any default in paying an instalment will cause the whole outstanding CIL to be payable in full immediately (reg. 70(8)) and a fresh demand notice for the full amount of the outstanding CIL must be issued. It is, therefore important to take care to ensure that each instalment is paid in full and by the date for payment.
16.3 Payment in kind –
16.3.1 Land - it is possible for CIL (including CIL payable by instalments) to be paid in full or part by the acquisition of land but only from the person who has assumed liability to pay the CIL liability and not from any person otherwise liable for the CIL (reg. 73). The CIL liability is reduced by the value of the land which will not include the value of any works on the land pursuant to a section 106 agreement. The charging authority should seek to use the land for the purpose of providing or facilitating infrastructure but if it does not then it must deem an appropriate cash amount held by it to be CIL. A written agreement regarding the acquisition of the land must be entered into which must be separate from and not form part of any section 106 planning obligations (reg. 73(7)(b)). Care must be taken to ensure that the agreement satisfies the requirements of section 2 Law of Property (Miscellaneous Provisions) Act 1989.
16.3.2 Infrastructure – It is now possible in certain circumstances to discharge a CIL liability by the provision of infrastructure (reg. 73A inserted by reg. 9(6) 2014 Regulations). The amount of CIL discharged will be the value of the infrastructure provided. The provision will occur when the agreed funds are applied for that purpose or are subjected to an arrangement securing their application in that manner (reg. 74(3A) – see section 16.3.6(iv) below). This is a significant change because it will re-introduce the need for negotiation between the authority and the developer not dissimilar to that involved with section 106 planning obligations which the original CIL regime sought to exclude. The advantage for the developer is that it provides certainty that the work is carried out and for the authority that the works are carried out on its behalf without the need to incur the burden.
16.3.2.1 Availability in area – before accepting an infrastructure payment the charging authority must have made such payments available in its area (reg. 73A). To achieve this the authority must issue a document which gives notice that it is willing to accept infrastructure payments; state the commencement date from which it is willing to accept them; and include a policy statement as to the infrastructure projects or types which it will consider accepting possibly by reference to its reg. 123 list of infrastructure (reg. 73B(1)). This must be published on its website and made available for inspection at its principal office and other appropriate places within the area.
16.3.2.2 Revision of policy – to revise the infrastructure payment policy the authority must issue a document with a statement of the revised policy and the date from which it is to operate (reg. 73B(2)). This also must be published on the authority’s website and made available for inspection.
16.3.3 Revocation of availability of infrastructure payments –this must also be effected by a document giving notice of the revocation and stating the last day on which the authority will consider entering an agreement to accept an infrastructure payment (reg. 73B(3)). This date cannot be earlier than 14 days from the publication of this revocation on the authority’s website. The notice must be published on the website and made available for inspection.
16.3.4 Factors to be considered by authority before accepting – there are a number of factors to be taken into account by the charging authority and so anyone negotiating with an authority which accepts infrastructure payments must also bear them in mind and focus on them. These are:-
(1) the aim of the authority “must” be to ensure that infrastructure provided in this manner will be used to support the development of the areas. The authority can accept infrastructure which is situated outside the area if it considers that it will provide such support;
(2) the person offering the infrastructure payment has sufficient control of the land it is to be constructed on and has obtained or will be likely to obtain any relevant statutory authorisation necessary for the construction;
(3) the infrastructure to be provided is a project or type listed on its reg. 123 list assuming it has one;
(4) the infrastructure is not needed to make the relevant planning permission acceptable in planning terms. The infrastructure payment must not be something which should be the subject of a section 106 planning obligation or section 278 highway agreement.
16.3.5 Further conditions –
(i) Provider assumed liability - an infrastructure payment can only be provided by a person who has assumed liability for the CIL. For these purposes provision means the completion of the construction and the transfer of ownership. No financial ceiling has been placed on the amount of the infrastructure payment although one had been proposed by reference to the limits in the EU tendering rules. Although there is no cap those rules will still need to be borne in mind by the authority.
(ii) Written agreement - there must be an agreement which must be entered into before the chargeable development is commenced. In the event that the infrastructure is provided to an authority nominated by the charging authority that authority must be a party to the agreement (reg. 73A((7)(c)).
(iii) Provided to charging authority or nominee - the infrastructure must be provided to the charging authority or a person nominated by the authority. If a person is to be nominated the authority can only do so if satisfied that the nominee will use the infrastructure to support the development of the area.
16.3.6 Agreement – there has to be a written agreement which must satisfy the following requirements:
(i) be in writing;
(ii) state the valuation of the infrastructure;
(iii) the date by which the infrastructure is to be provided and the amount of the CIL payment and the interest to be paid if not the infrastructure is not provided by then or any agreed extension of that date;
(iv) the amount referred to in (iii) must have been used to provide the infrastructure by the agreed date (or any agreed extension) or be held so
(a) it can only be used for the provision of the infrastructure;
(b) cannot be used to secure additional funding by the provider or otherwise benefit that person;
(c) any interest or other benefit accruing belongs to the authority;
(d) any funds remainder after the provision of the infrastructure belongs to the authority;
(e) if the CIL becomes payable then the funds will be used for that purpose.
16.3.7 Value of infrastructure payment – despite the concerns of the British Property Federation the value of such infrastructure is limited to the cost of providing it which includes the design cost but does not include legal or administrative costs (reg. 73A(11)). This has to be determined by an independent person. Such a person must be appointed with the agreement of the authority and any person liable to pay CIL and have appropriate qualifications and experience. It was proposed by the DCLG in the 2013 consultation that there be a cap restricting payments in kind to costs below the EU procurement thresholds. That proposal was dropped but if the threshold will be exceeded by such an infrastructure payment then the procurement rules will need to be complied with which may make it an unattractive prospect.
16.4 Default in payment – in the event that a person liable to pay CIL defaults the collecting authority may seek to recover the outstanding CIL liability from other persons. In particular if the default is by a person who assumed the liability then the collecting authority may transfer the liability to the owners of the site (see para. 15.4 above). If the default involves a failure to pay an instalment in full then it will be the full outstanding CIL that is being claimed from any new person who has become liable for the CIL.
J Enforcement
17. General – the CIL regime confers a considerable array of weapons by which to enforce payment of any CIL liability and compliance with the obligations imposed. The most draconian from the point of view of the development is the stop notice which requires the development to be immediately stopped with obvious dire consequences. Before considering that method of enforcement account has to be taken of the means by which the CIL bill may increase. This may occur due to the imposition of surcharges or the accrual of interest.
17.1 Surcharges – surcharges may but do not have to be levied by a collecting authority in a number of different circumstances. Almost inevitably at present they come as a surprise to the recipient. There is still very much a feeling that everything can be resolved by a telephone call to the authority. The CIL regime is defined to remove such an approach. There is a right of appeal against surcharges (see para. 18.6 below) but it is not general right but only for limited grounds. Grievances caused by a developer or owner being told by a employee of the local planning authority that they are free to proceed with the development without any mention of the need to serve a commencement notice will not be a good ground for an appeal. Surcharges may be levied in the following circumstances:-
17.1.1 No assumption of liability (reg. 80) – if no person assumes liability for the CIL before the commencement of development then a surcharge of £50 can be imposed on every person liable for the CIL. This seems more of an irritant and it cannot be administratively cost effective to charge.
17.1.2 Apportionment of liability – if required to apportion CIL between different owners of material interests in the development site a collecting authority may impose a surcharge of £500 on each owner (reg. 81).
17.1.3 Failure to submit notice of chargeable development – if a chargeable development is commenced under a general consent rather than a planning permission before notice of commencement is given then the collecting authority may impose a surcharge of 20% of the CIL or £2,500 (whichever is the lower) (reg. 82).
17.1.4 Failure to give notice of commencement – in the event of such a failure a surcharge may be imposed equal to 20% of the CIL or £2,500 (whichever is the lower) (reg. 83).
17.1.5 Failure to notify occurrence of disqualifying event – the surcharge is equal to 20% of the CIL or £2,500 (whichever is the lower) (reg. 84). It applies in respect of the various exemptions from CIL (such as the charitable exemption) the benefit of which will be lost if a disqualifying event occurs within the seven year period running from the commencement of the development. It also applies to the residential annexe exemption if withdrawn within three years of completion.
17.1.6 Late payment – when there is a failure to pay the CIL in full within 30 days of the due date for any CIL the collecting authority may impose a surcharge equal to 5% of the full amount of the CIL liability or £200 whichever is the greater (reg. 85). Further surcharges may be imposed for the same amounts save that it is 5% of the amount unpaid if there is CIL due for more than six months and for twelve months.
17.1.7 Failure to comply with an information notice – if a proper response is not given within 14 days then the collecting authority may impose a surcharge equal to 20% or £1000 (whichever is the lower) (reg. 86).
17.2 Late payment interest – interest is payable on any unpaid CIL from the day after the due date until payment in full at the rate of 2.5% above Bank of England base rate (reg. 87). This will be payable on surcharges as well but not on late payment interest. It is mandatory and may result in more than one demand notice being issued in order to deal with the interest which accrues.
17.3 Stop-notice – this is the means of enforcement most to be feared. It puts an immediate stop to the development.
17.3.1 Preliminary steps –
17.3.1.1 Expediency - not only must there be an outstanding CIL liability but the collecting authority must consider it expedient to stop the development (reg. 89).
17.3.1.2 Warning notice - Having reached this conclusion the authority must first serve a written warning notice on the person liable, any owner of a material interest in the site, any occupier and any other person who will be materially affected. This warning notice will need to state the reason for serving it, the amount unpaid, that the CIL is immediately payable, the period after which a stop notice can be served, the effect of a stop notice and the possible consequences of a failure to comply with a stop notice. As well as serving the warning notice it must be displayed at the development site.
17.3.2 Period for serving stop notice – there must be gap of at least three days between service of the warning notice and the stop notice but not more than 28 days.
17.3.3 Stop notice – this may be served by the collecting authority after a warning notice has been served and all or part of the CIL remains unpaid (reg. 90). It must be served on the same classes of persons as with the warning notice (see para. 17.3.1.2 above). The notice must state the date on which it is to take effect, the authority’s reason for issuing it, the unpaid amount that is due in full immediately, the relevant activity which must cease and the possible consequences of failing to comply. As well as service the notice must be displayed at the site. There is a right of appeal against stop notices (see para. 18.8 below)
17.3.4 Effect of stop notice - any activity connected with the chargeable development specified in the stop notice and any activity associated with such specified activity must cease with effect from the date specified in the notice. Excluded from this prohibition is any activity needed to be carried out in the interests of health and safety. The force of the stop notice will run from the date specified until the notice is withdrawn. To enforce the consequences of the stop notice a collecting authority may apply to either the High Court or the County Court for an injunction to restrain by injunction any breach or apprehended breach (reg. 94). Further any such breach may be a criminal offence (see para. 17.3.5 below). Details of the stop notice must be entered in the register of enforcement and stop notices kept pursuant to section 188 TCPA 1990 as soon as practical and in any event within 14 days (reg. 92).
17.3.5 Criminal offence - Contravention of the stop notice will be an offence unless the person was not served with the notice and was unaware, and could not reasonably be expected to know, of its existence (reg. 93). Causing or permitting a contravention is an offence. More than one offence may be committed by reference to different days or periods of contravention. On summary conviction the fine cannot exceed £20,000 but on conviction on indictment there is no such limit. In determining the amount of the fine account is to be taken of the financial benefit accruing or appearing to accrue to the offender. In addition the possibility of an application under the PoCA 2002 must be borne in mind (see para. 9.4.3 above).
17.3.6 Withdrawal – a stop notice is withdrawn by a withdrawal notice (reg. 91). A withdrawal notice may be served at any time and must be if the CIL is paid in full. Such a notice must be served on the persons on whom the stop notice was served and also be displayed at the site. The stop notice does not cease to have effect once the CIL is paid but only once the withdrawal notice is served (reg. 91(4)).
17.3.7 Warning – failure to pay the CIL liability in full and promptly runs the risk of the collecting authority halting the development until payment in full. Failure to pay an instalment will mean that the full amount will be payable and can be enforced in this manner. Once halted work cannot start again until a withdrawal notice is served and it will not be enough to have paid the CIL in full.
17.4 Recovery of CIL – a number of methods of recovery are contained in Chapter 3 of Part 9. A pre-condition of their use is the obtaining of a liability order first from the magistrates.
17.4.1 Liability order – prior to seeking a liability order a collecting authority must serve a reminder notice on the person with an unpaid CIL liability setting out all the amounts due (reg. 96). If any part remains unpaid after seven days the collecting authority can apply to the magistrates for a liability order which will be for the outstanding CIL and the costs reasonably incurred in obtaining the order (reg. 97). Once the order is made it allows other recovery methods to be used.
17.4.2 Distress – once a liability order has been made a collecting authority may levy distress against the debtor’s goods (other than clothing, bedding, furniture, household equipment or provisions necessary for the basic domestic needs of the debtor and the debtor’s family and any other goods protected by statute from distress) and sell them (reg. 98). Charges connected with the distress will be recoverable as well. Any person aggrieved by the levy or attempted levy of distress may appeal to the magistrates’ court (reg. 99).
17.4.3 Committal to prison – after distress has not produced sufficient sums to meet the CIL liability and the collecting authority can prove that a charging order will not produce the required sum then the authority may apply to the magistrates’ court for a warrant committing the debtor, if an individual, to prison for a term not exceeding three months (reg. 100). It is for the magistrates to determine whether the failure to pay is due to “wilful or culpable neglect”. If the court forms the view that it is then a warrant can be issued or a term of imprisonment fixed with postponement of the issue of the warrant subject to such conditions as the courts thinks just. The amount due will include the authority’s reasonable costs incurred in respect of the application.
17.4.4 Charging orders – provided that a liability order has been made against a CIL debtor and more than £2,000 is due then a collecting authority may seek a charging order over a debtor’s interest in land but must follow the specified procedure (reg. 103).
17.4.4.1 Notification – before applying for a charging order a collecting authority must serve written notification on the debtor and any person who may be prejudiced by the making of a charging order setting out the authority’s reasons for seeking a charging order; the effect of such an order; the CIL amount due; and the steps that the authority will take if payment is not made. This notification needs also to be displayed on the land concerned.
17.4.4.2 Application – the application can be made if payment of the outstanding CIL is not made within 21 days (reg. 103(7)). The application must be made to the appropriate court in accordance with section 1 Charging Act 1979. In deciding whether or not to make a charging order account must be taken of the personal circumstances of the debtor and whether a charging order will prejudice any other person. If the Court decides to make an order it has the choice whether to make an absolute order or a suspended order (reg. 104(2)(b)). The order will take effect as an equitable charge so that the interest charged can be sold but this will require an order for sale. It will be capable of being protected by a land charge or notice on the registered title. The debtor may at any time apply to vary or discharge the order.
17.4.5 Insolvency petition – it will be open to a collecting authority to issue a bankruptcy petition or winding petition based on a liability order (reg. 105).
17.4.6 Debt proceedings – instead of obtaining a liability order a collecting authority may seek to enforce payment by proceedings in the normal manner (reg. 106).
17.4.7 Local land charge - if the collecting authority wishes to enforce a local land charge imposed under the CIL regime then the debtor and any person who may be prejudiced by enforcement must be notified giving the required particulars (reg. 107). Enforcement proceedings may wait 21 days from such notification and the CIL liability must be not less than £2,000. The collecting authority entitled to a local land charge has all the powers of a mortgagee under a deed.
17.4.8 Right of entry – a collecting authority may authorise a person at any reasonable time to enter land which is subject to a planning permission to carry out a development to ascertain matters such as whether a development has commenced, whether any power conferred by the CIL regime should be exercised, or whether information supplied is correct (reg. 109). If the land comprises a private dwelling then a warrant from a JP will be required.
K. Reviews and appeals
18.1 Review of chargeable amount – the chargeable amount of CIL must be reviewed if an interested person makes a written request and not later than 28 days after the liability notice was issued (reg. 113). Unless the planning permission in relation to the development was granted after the commencement of the development no request for a review can be made after the commencement of the development (reg. 113(9)). If a request is made before the development has started but before a decision is notified the development commences then the request will lapse (reg. 113(10)). After 23rd February 2014 a request for a review can be made after the commencement of the development if the grant of planning permission in relation to a development is after the commencement. Written representations can accompany the request. There must be a review if a proper request is made and it must be by a person senior to the person who made the original calculation and consideration must be given to the accompanying representations. A decision made on a review cannot itself be reviewed. Within 14 days of the request a reasoned decision must be given.
18.2 Appeal regarding chargeable amount – if a person has requested a review of the chargeable amount and is aggrieved by the decision or does not receive a decision within the 14 day period then that person may appeal to the Valuation Office Agency (“VAO”) to appoint an appointed person (a valuation officer or district valuer) on the ground that the chargeable amount is wrong (reg. 114). This does not allow other grounds to be considered. In an appeal relating to a permission for the erection of single storey self-storage units (see section 6.2.6.2 above) the appointed person pointed out that arguments based on an alleged delay in granted planning permission until after the putting in place of a charging schedule was outside the remit of a reg. 114 appeal. Appeals can raise the issue whether the development qualifies for the exemption in respect of developments for minor developments of less than 100 square metres (see section 10.3.2) or whether the permitted works are excluded from treatment as a development (see section 10.2.1) or whether a development is within a particular class of use (see section 5.4.4.4.2) or whether the Gross Internal Area has been measured correctly (see section 14.2.1).
18.3 Timing - the appeal must be made within 60 days of the liability notice but not earlier than 14 days from the request for a review. If there is no request for a review then there can be no appeal. An appeal cannot be made if the development has commenced (reg. 114(3)) unless the planning permission in relation to the development was granted after the commencement of the development (reg. 114(3A). As a result of reg. 11(3) of the 2014 Regulations introducing reg. 114(3A) when a revised development scheme is authorised after the commencement of a development it is now possible to appeal whereas previously such an appeal was not possible due to the earlier commencement of the development. The appeal will lapse if the development commences before the decision on the appeal is notified unless the planning permission in relation to that development was granted after the commencement (reg. 114(4)). Only one appeal can be made in respect of a chargeable development.
18.4 Appeal against apportionment of liability - any owner of a material interest in land subject to a development may appeal to the VAO for the appointment of a appointed person (a valuation officer or district valuer) if aggrieved by the apportionment (reg. 115). A request for a review should first be made. There is a time limit of 28 days from the issue of the demand notice. If the appeal is successful then all demand notices issued before the appeal will cease to have effect, any surcharge imposed will be quashed and the apportionment will be recalculated. There is no requirement that the appeal must be before the commencement of the development as the apportionment may not be made and a liability notice issued until after commencement.
18.5 Appeal regarding charitable relief – after a request for a review an interested person aggrieved by a collecting authority’s decision regarding charitable relief may appeal to the VAO to appoint an appointed person (a valuation officer or district valuer) (reg. 116). Such an appeal must be made within 28 days of the decision but must be before the development commences. The appeal will lapse if the development commences before the decision is notified.
18.6 Appeal on surcharge – a person aggrieved by a decision to impose a surcharge may appeal to the Planning Inspectorate for the appointment of an appointed person (the Secretary of State or person appointed by that person) on the ground that the alleged breach did not occur or that no liability notice had been served or that the calculation is incorrect (reg. 117). The time limit is 28 days from the imposition of the surcharge and whilst the appeal is on foot the surcharge is not payable.
18.7 Appeal regarding deemed commencement – when a demand notice is served stating a deemed commencement date an appeal may be made to the Planning Inspectorate for the appointment of an appointed person (the Secretary of State or person appointed by the Secretary of State) on the ground that the date is incorrect (reg. 118). It must be made within 28 days of the issue of the demand notice. If successful earlier demand notices will cease to be effective, a revised deemed commencement date will be determined and any surcharge imposed will be squashed.
18.8 Appeal from stop notice – an aggrieved person may appeal to the Planning Inspectorate for the appointment of a person appointed by the Secretary of State against a stop notice on the ground that no warning notice was served or the development had not commended (reg. 119). The appeal must be made within 60 days of the stop notice taking effect. The stop notice will continue in force pending the outcome of the appeal so it is not a means of suspending the stop notice. The appointed person may correct any defect, error or misdescription in the stop notice or vary it provided that this will not cause injustice to the appellant or any interested person.
18.9 Appeal against levy of distress or attempted levy – appeal to magistrates court and authority may be ordered to pay compensation.
18.10 Appeal regarding residential annexe exemption – an appeal can be made on the ground that the collecting authority has wrongly decided that the annexe is not wholly within the curtilage of the main house and no other ground. The appeal is to the VAO for the appointment of an appointed person (a district valuer or valuation officer) and made by the interested person who is defined as the person who was granted the exemption (reg. 11(b) 2014 Regulations inserting reg. 112(2)(c). Presumably this means the person who would be entitled to the exemption if it had been granted. The appeal must be made within 28 days of the authority’s decision and before development commences.
18.11 Appeal regarding self-build exemption – an appeal can be made on the ground that the collecting authority has incorrectly determined the value of the exemption. The appeal is to the VAO for the appointment of an appointed person (a district valuer or valuation officer) and made by the interested person who is defined as the person who was granted the exemption (reg. 11(b) 2014 Regulations inserting reg. 112(2)(c). The appeal must be made within 28 days of the authority’s decision and before development commences.
18.12 Interested person – an interested person may appeal or put in written representations or the interests of that person may need to be taken into account. The definition of interested person varies dependent upon the particular review or appeal. These are set out in reg. 112. The charging and collecting authority will be included as well as the persons jointly liable for the CIL with the appellant. Also included amongst them is the Mayor of London when a London borough is involved. It has been stated that the policy of the Mayor will be to support the collecting authority when Mayoral CIL is involved.
18.13 Form of appeal – an appeal must be in writing and in the form or be substantially the same as the form provided by the Secretary of State (reg. 120(2)). A copy can be downloaded from the website of the Valuation Office Agency or the Planning Inspectorate (as appropriate).
The VAO has a helpful guide to the completion of the form on its website which is to be found at –
http://www.voa.gov.uk/corporate/Publications/Manuals/CommunityInfrastructureLevy/toc.html
There is a similar helpful guide to be found with regard to enforcement appeals at the Planning Portal -
https://www.planningportal.gov.uk/planning/appeals/otherappealscasework/cilappeals
18.14 Appeal process - the appointed person must acknowledge the appeal and serve the acknowledgment on all interested parties. The appeal form will contain the appellants written representations. Receipt of the appeal form will start the time limit of 14 days or such longer period as the appointed person in any case may determine within which interested persons may make written representations. Such representations must be received by the appointed person within that period. Copies of any representations received by the appointed person must be sent to the appellant and any other interested persons. The time limit for comments on the representations originally required that they be sent within 14 days of the end of the representation period but as regards any appeals made on or after 24th February 2014 this has been changed by reg. 11(5) 2014 Regulations so that the comments are received by the appointed person within 14 days of the expiry of the representation period. This is so that there is greater certainty. The appointed person will know when the comments are received but not when they were sent. When received copies of the comments must be sent to everyone else. The representations and comments must be taken into account by the appointed person.
18.15 Commencement of development – prior to 24th February 2014 no appeal could be made after the commencement of development. After 23rd February 2014 it is now possible to make such appeals if the relevant planning permission was granted after the commencement of the development.
18.16 Withdrawal – the appellant may withdraw the appeal at any time.
18.17 Decision – the appointed person must give a reasoned decision which must be notified to the appellant and the interested parties.
18.18 Costs – the appointed person has the power to decide which parties’ costs are to be borne and by whom (reg. 121).
L. Mayoral charge
19. Mayoral CIL and Crossrail contribution – there are four methods being adopted to fund the Crossrail project for London. Two of these are the Mayoral CIL and section 106 contributions. Each is intended to raise £300 million. In addition the Crossrail Business Rate Supplement is estimated to raise £4.1 billion and the remainder of the core funding provided by the Mayor will be funded by TfL.
19.1 Infrastructure funding – the Mayoral CIL is to fund roads or other transport facilities, including, in particular, for the purpose of, or in connection with, scheduled works as defined within Schedule 1 to Crossrail Act 2008. Education and health have been specifically excluded. The reason for a two tier CIL system in London is so that there is provision for both local and strategic cross London infrastructure. No portion of these CIL receipts will be paid for the purposes of neighbourhood funding.
19.2 Charges – the Mayoral CIL charge rates have been in force since 1st April 2012. For this purpose London is divided into three zones. The boroughs comprised in the zones are set out in the Third Appendix. The rates fixed are £50 for zone 1; £35 for zone 2; and £20 for zone 3. They apply to all developments save that there is no Mayoral CIL payable for developments for medical or health uses or which are wholly or mainly for provision of education as a school or college. This Mayoral CIL is in addition to the CIL charged by the relevant borough council so that any chargeable development in London may be charged to both or possibly only one dependent on whether the borough council has established its own CIL regime.
19.3 Exemptions and relief – the general charitable exemption will apply but not the possible discretionary charitable relief in reg. 44. It was felt that the latter would result in administrative complexity. Similarly a decision has been made that the possible relief for exceptional circumstances in reg. 57 will not apply. The judgment has been made that it is preferable to address the viability of any development by reason of contributions for Crossrail by making adjustments with the section 106 contribution. If the CIL charge equals or exceeds the section 106 contribution then only the CIL is payable and the latter is not payable but if the section 106 contribution exceeds the CIL charge then the CIL is payable and the excess is payable as a “top-up” as a section 106 contribution.
19.4 Collection – the collecting authorities for the Mayoral CIL will be the relevant London boroughs or a MDC if established (see para. 19.7 below). The monies collected will be paid to Transport for London.
19.5 Payment – the liability to pay the Mayoral CIL will be calculated and paid in accordance with the regulations applicable to the general CIL charge. A calculator can be found on the TfL website. The monies raised must be applied for the purpose for which they have been raised unless otherwise agreed.
19.6 Instalments – with effect from 1st April 2013 the Mayoral CIL may be paid by instalments if £500,001 or more. It will be payable by two instalments. The first instalment will be the greater of £500,000 or one half of the CIL liability which will be payable within 60 days of commencement of development. The remainder shall be payable within 240 days of commencement of development. Any CIL liability of £500,000 or less must be paid not more than 60 days after commencement of development. This instalment policy applies if CIL is not chargeable within a borough or it is but there is no borough instalment policy. In a borough which has its own instalment policy that will also apply to the Mayoral CIL. This applies in Brent, Croydon, Redbridge and Wandsworth. In the case of Barnet and the City of London the instalment policy is the same.
19.7 Mayoral development areas – the Mayor of London has the power to designate any part of Greater London as a Mayoral development area (section 197 Localism Act 2011). If the Mayor does so then the Secretary of States must establish a Mayoral Development Corporation (“MDC”) for the area (section 198) which corporation will have the object of regenerating the area (section 201). The Mayor may designate the MDC as the local planning authority for all or a portion of the area (section 202). Amongst the powers of a MDC is the power to provide or facilitate the provision of infrastructure (section 205). In April 2012 the first MDC was set up, the London Legacy Development Corporation, to take over the Queen Elizabeth Olympic Park and some surrounding area (but not Stratford Town Centre). Such MDC may act as both the charging authority and the collecting authority for its area (see para. 5.2 above) and will have authority to grant discretionary reliefs and exemptions (reg. 7 of the 2013 Regulations). The MDC will be able to collect for itself the CIL related to developments in its area as well as collecting the Mayoral CIL.
M. Section 106 agreements and highway agreements
20. Funding – the Government’s preferred route for the future funding of infrastructure by local authorities is by using the CIL regime rather than section 106 agreements. A number of restrictions to section 106 agreements have been introduced to encourage the use of the CIL regime and to avoid “double dipping” whereby developers have to pay twice for infrastructure through payments of CIL and then through planning obligations. These restrictions have been extended in part but not wholly to highway agreements by the 2014 Regulations (see section 20.5 below). The overall objective is that once CIL is introduced section 106 planning obligations if not prohibited by the “pooling restriction” should be limited to matter which are directly related to the development site and do not appear on the reg. 123 list of infrastructure.
20.1 Relationship with CIL regime - There is no credit given against the CIL charge for the financial burden of any planning obligation imposed as a condition of the planning permission nor is any credit for the CIL given to be set against the cost of any planning obligation saves in the case of the Mayoral CIL (see section 19.3 above). Notwithstanding that no account of each is taken in the operation of the other it is not the intention that the CIL regime will wholly replace the section 106 planning obligations in those areas in which the CIL regime is adopted. There will be a continuing role for such planning obligations and it is intended that the two regimes should complement each other. With developments subject to the CIL regime the section 106 system as regards infrastructure will be limited to management of the development and site specific works and not relate to the general infrastructure needs of the particular area. The system will also continue to play a role with regard to affordable housing which is outside the CIL regime. The system will continue to play a less restricted role in areas where the CIL regime has not been adopted (but the pooling restrictions will still apply after 6th April 2015 – see section 20.4 below) and in areas where it has been adopted with developments not subject to the CIL regime.
20.2 General Test – reg. 122 gives statutory effect to what had been previously set out in Circular 5/05 but only when the development is capable of being charged to CIL regardless of whether the CIL regime has been adopted by the particular area. It will not apply if the development is not within the CIL regime such as the grant of planning permission for a wind farm, quarries or a golf course. In such circumstances it will be covered by the guidance in Circular 5/05. Regulation 122 provides that a planning obligation can only be a reason for the grant of planning permission on or after 6th April 2010 if the planning obligation satisfies the following three criteria:-
20.2.1 it is necessary to make the development acceptable in planning terms;
20.2.2 it is directly related to the development;
20.2.3 it is fairly and reasonably related in scale and kind to the development.
Local authorities will continue to be able to require planning obligations which are specific to the infrastructure needs of the particular development site but planning obligations requiring generic payments for general infrastructure will not be permissible.
20.3 Infrastructure –
20.3.1 General - a planning obligation may not provide for the funding or provision of relevant infrastructure other than scheduled works within Schedule 1 of Crossrail Act 2008 (reg. 123(2) and para. 5.5 above). This is to restrict the scope for double charging and not have the developer pay for infrastructure through the CIL charge and then have to provide the infrastructure under a section 106 planning obligation. Relevant infrastructure comprises infrastructure projects or types of infrastructure contained in a list on a charging authority’s website (reg. 123(4) see section 5.5 above). The reg. 123 list of infrastructure will set out that infrastructure which is to be funded exclusively from CIL receipts. If there is no list then subject to one exception the authority cannot impose a section 106 obligation in relation to any infrastructure as in those circumstances all infrastructure will be funded by CIL. any infrastructure save in relation to a planning obligation requiring a highway agreement to be entered into or a condition imposed on a planning permission requiring a highway agreement when it means no infrastructure. The exception is highway infrastructure. If there is no reg. 123 list of infrastructure then there will be no restriction with regard to highway agreements.
20.3.2 Composition of the reg. 123 list of infrastructure - this restriction applies to a planning determination after the date when the relevant charging authority’s first charging schedule takes effect. Once the charging authority brings into operation the CIL regime in its area then if it publishes a reg. 123 list planning obligations cannot be used to fund any type of infrastructure or project contained in that list even if this could be justified as site specific works. If it has no such list then no infrastructure can be provided or funded through a section 106 obligation. It will continue to be possible to raise a contribution to the Cross rail project using section 106 agreements (see para. 20.8 below). It may be preferable to deal with some infrastructure projects by a section 106 planning obligation in which case it would be sensible for the relevant charging authority to have a reg. 123 list but to omit the project from the list. This will permit the authority to impose a planning obligation with regard to the project. For example, a large residential development may throw up a need for a new school or an increase in the capacity of a local school. The CIL charge payable by the residential developer will not fund the whole of this school project. In consequence it is better for the authority to exclude the project from its reg. 123 list and to fund the carrying out of this project through planning obligations imposed on the residential developer. The list could include education infrastructure but expressly exclude the particular local school. The government has expressed concern that authorities may change the reg. 123 list to allow section 106 obligations to be imposed. However, the suggestion in the latest consultation that it would introduce controls has come to nothing and nothing was included in the 2014 Regulations. This may be an issue which it will have to revert to dependent on what practices develop on the part of authorities. The ability to change the list will mean that a careful eye will need to be kept on such published lists to ensure any changes do not go unnoticed.
20.4 Pooling – This restriction is a very heavy incentive to encourage authorities to bring into force the CIL regime and explains the accelerating number of authorities carrying forward the procedure leading to publication of a charging schedule.
20.4.1 Restriction - a planning obligation relating to a planning determination on or after 6th April 2015 (originally 6th April 2014 but extended by reg. 12(c) 2014 Regulations) or if earlier the date when the relevant charging authority’s first charging schedule takes effect cannot provide for the funding or provision of an infrastructure project or type if five or more separate planning obligations relating to planning permissions granted for development within the charging authority’s area entered into on or after 6th April 2010 already provide for the provision or funding of such infrastructure project or type. This means that even were a charging authority not to operate the CIL regime in its area it will not after 5th April 2015 have an unlimited ability to impose planning obligations to fund its infrastructure. From that date there will be a limit of a maximum of five planning obligations to fund any project or type of infrastructure by a section 106 contribution. If the authority introduces the CIL regime earlier then this pooling restriction will apply from that earlier date. It is estimated that the process of introducing the CIL regime takes up to thirty months to complete and even many authorities which had already embarked on it would not have completed by the original April 2014 deadline. The extension will allow many more authorities to meet this deadline but some will not. Following the extension some authorities are adopting charging schedules now to take effect on 5th April 2015 in order to avoid the application of the pooling restrictions for the maximum period and to receive the maximum amount of section 106 funding.
20.4.2 Planning obligations not caught – the pooling limit will not apply to matters which cannot be funded by CIL such as affordable housing or non-infrastructure items such as training. It will also not apply to highway agreements (amendment to reg. 123(3) introduced by reg. 12(c)(i) 2014 Regulations). Any planning obligation relating to Crossrail is also excluded.
20.4.3 Planning obligations – all planning obligations in planning agreements made after 6th April 2010 are to be taken into account. This includes conditions in section 73 planning permissions. Account is taken of planning obligations even if the planning permission to which they relate has not been implemented. The revised June 2014 Planning Practice Guidance (para.95) emphasises that with staged payments under a section 106 obligation the payments will collectively count as one planning obligation. It will also apply across the whole of the authority’s area regardless of any zoning and zero rates of CIL. The query has been raised whether zones with a zero rate would avoid the pooling restriction but that is not the case because the whole of the area will be subject to the restriction regardless of the CIL rate.
20.4.3.1 Generic description - as is pointed out in para 2.6.3.2 of the February 2014 CIL Guidance the pooling restriction will hit hardest authorities that refer to infrastructure by a generic description such as education rather than by specific projects. The permitted limit of five planning obligations will soon be used up and thereafter no more can be imposed once CIL has been introduced to the area or if earlier the 6th April 2015 is reached.
20.4.3.2 Duplication of planning obligations - it is not clear whether all planning obligations in a section 106 agreement relating to the same infrastructure project or type of infrastructure will be counted in determining whether there are already five in existence or will be counted as one. The point has been made in legal blogs that more than one planning obligations in a section 106 agreement can relate to the same infrastructure project. For example, an obligation to make a contribution can be bolstered by an obligation that the site may not be occupied unless and until the contribution is made. Should these count as two relevant planning obligations towards the limit of five? The same point arises if there is more than one such planning obligation proposed in the draft section 106 agreement. If not counted as one then not all these planning obligations will be valid if the limit is exceeded. The limitation has been deliberately set by reference not to planning agreements but planning obligations. Weight is added to this point by official guidance which states that an “agreement entered into for the purposes of section 106 may contain more than one planning obligation to which regulation 123 relates.” (para. 91 April 2013 DCLG Guidance repeated in para. 2.6.2.2 of the February 2014 CIL Guidance). However, in the Mayor of London’s guide it refers to “the pooling of contributions from “five or more separate developments” in a local authority’s area (para. 1.12) which appears to have added an unfounded gloss to the wording of reg. 123.
20.4.4 Verifying limit - The issue as to how it is ascertained whether the limit has been reached has not been addressed by the current regime. There is no register of such planning obligations. How will a developer be able to gather the necessary information to challenge a condition or obligation on the ground that this restriction has been infringed? How will local authorities monitor compliance? It has the potential to store up problems for the future. Challenges could come sometime after the completion of a development. Trawling back through past grants of planning permission is an inefficient method with no certainty that a complete picture will be achieved.
20.4.5 Pooling in practice – It is hard to understand how this restriction will operate in practice. For example, if there have been five planning obligations since 6th April 2010 does that mean that no more planning obligations are possible because the limit of five has been hit? Does it mean that the authority has to break down the type of infrastructure into classes of ever smaller scope? What is a type of infrastructure for these purposes? Can the local authority focus on continually creating new infrastructure projects? If it does will these be free from taking into account earlier planning obligations which do not directly relate to the particular project but do relate to the type of infrastructure it concerns? There seem to be numerous questions as to how this restriction will operate with no real guidance in the regulations. Some of the suggestions on web sites for breaking up projects into ever smaller elements strike me as dangerous. If the authorities get this aspect wrong and impose unlawful planning obligations then when it comes to light there must be a risk that there will be a considerable number of claims going back many years. A bonanza for lawyers and surveyors but with very worrying implications for local authority finance.
20.5 Highway agreements – in order to obtain planning permission a developer may enter an agreement under section 278 of the Highways Act 1980 with the highway authority. This will require the developer to finance or provide highway works. As a result of concern that this could lead to developers paying CIL to fund such infrastructure work and then having to fund or provide the same infrastructure work through a highway agreement the restriction in reg. 123(2) previously applying only to planning obligations has been extended to cover highway agreements as well (reg. 123(2A)). The separate pooling restriction is applicable only to planning obligations and not to highway agreements. Similarly the statutory test in reg. 122 will only to planning obligations and not to highway agreements.
20.5.1 Restriction (reg. 123(2A) - subject to agreements within reg. 123(2B) (see section 20.5.2 below) it will no longer be possible to impose a condition on the grant of planning permission that a highway agreement shall be required for funding or providing “relevant infrastructure”. The definition of relevant infrastructure is not identical to that in the context of planning obligations. It covers infrastructure projects or types of infrastructure which are included in the reg. 123 list of infrastructure published by the charging authority (as to which list see section 5.5 above). This list of infrastructure is intended to be funded exclusively by the charging authority by CIL receipts and cannot also be the subject of a highway agreement. Whereas with planning obligations if the charging authority has no reg. 123 list of infrastructure then all infrastructure will be covered by the restriction in contrast with highway agreements the restriction will not bite. However, the reality is that all charging authorities will have such reg. 123 lists but the list may not include reference to any highway project or type of highway infrastructure. When the charging authority and the highway authority are not the same authority there will be a need for the two authorities to liaise to avoid the inadvertent inclusion of an item covering highway schemes thus preventing the use of highway agreements. It may be that in the future references in such lists to highway infrastructure will be kept to a minimum.
This restriction applies to an obligation requiring entry into a highway agreement and also a condition which prevents or restricts the carrying out of a development until a highway agreement is entered into.
20.5.2 Excluded highway agreements - the restriction on highway agreements imposed by reg. 123(2A) will not apply to highway agreements with the Highway Agency acting for the Secretary of State for Transport, the Welsh Ministers or Transport for London. These will concern projects relating to trunk roads which will not be funded through CIL receipts.
20.5.3 When restriction takes effect - this restriction on highway agreements will take effect on the earlier of 6th April 2015 or the date the charging authority publishes a reg. 123 list of infrastructure after 24th April 2015 (being two months after the 2014 Regulations came into force) (reg. 14(5) and (6) 2014 Regulations). It means that with charging authorities with a reg. 123 list of infrastructure published before the 2014 Regulations came into force the restriction will not apply until 6th April 2015. The same is true for those introducing CIL after the 2014 Regulations came into force but before 25th April 2014. With those authorities bring in CIL after 24th April 2014 but before 6th April 2015 it will be the date the reg. 123 list of infrastructure is introduced.
20.6 Absence of relief – there is no deduction from the CIL charge in respect of any planning obligation imposed in relation to the development nor is there any reduction in any contribution under a planning agreement other than with a Crossrail section 106 contribution (see 19.3 above).
20.7 Purchase of planning permission – one suggested outcome of the imposition of the statutory test for planning obligations was that it would be harder for the grant of planning permission to be encouraged by the applicant agreeing to generous planning obligations not specific to the development site. This is open to doubt if the applicant offers the incentives. This is exemplified by the appeal decision in Barratt Southern Counties’ Bishopdown Farm scheme (APP/Y3940/A/10/2143011). In that case Barratt’s achieved planning permission in Salisbury for 500 homes by a 51 hectare country park. In the section 106 agreement the housebuilder agreed to contribute to the layout and maintenance of the park and to transfer it to the Council. The Inspector rejected this as not satisfying the test on the grounds that the country park’s relationship with the development was limited and the provision was not fairly or reasonably related to the development. The Secretary of State rejected this objection as misguided as the provision regarding the country park was merely part of the application. Provided such provision is offered by the applicant the test is not triggered. It is not clear whether this has to involve land owned by the applicant. It would appear to circumvent the strictness of the test in reg. 122 and to open another route by which the applicant can offer community benefits with a view to gaining acceptance for the particular development. Allowing a CIL liability to be discharged in whole or part by the provision of off-site infrastructure may be another route by which this type of outcome could be achieved.
20.8 Appeals – a new procedure has been introduced by which an application can be made to revise a section 106 planning obligation relating to affordable housing and to appeal to the Secretary of State any refusal (section 106BA, BB, and BC of the 1990 Act inserted by Growth and Infrastructure Act 2013).This is to allow revisions if the original obligation makes the development unviable. A DCLG guide is to be found at https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/192641/Section_106_affordable_housing_requirements_-_Review_and_appeal.pdf.
20.9 Crossrail contribution – as well as the Mayoral CIL charge it is possible for a section 106 Crossrail contribution to be required provided that the proposed development will add to the congestion that is to be eased by Crossrail. Financing this project is excluded from the restriction in reg. 123 on funding infrastructure projects (reg. 123(4)). This means that the Crossrail contributions will run until the required sum is raised. However, the areas in which it operates are not identical to those in which the Mayoral CIL charge operates.
20.9.1 Areas – the areas are limited to those in which it is believed that the completed Crossrail project will ease congestion. A section 106 Crossrail contribution can only be sought in Central London; within approximately a kilometre radius of Paddington and Liverpool Street stations; the Isle of Dogs within approximately a kilometre radius of the new Canary Wharf station; and within approximately a kilometre radius of all other Crossrail stations outside the Central London zone. Maps of the contribution areas are contained in the Second Appendix and are reproduced (with the permission of the Mayor of London) from the Supplementary Planning Guidance issued in April 2013 on behalf of the Mayor.
20.9.2 Test – the intention is that a section 106 contribution to the funding of the Crossrail project is to be imposed if it is considered that it is likely that the development will increase or create congestion in London. The requirements of the test contained in reg. 122 (see para. 20.2 above) must be satisfied but a detailed investigation has been carried out to establish which uses contribute to the congestion and to what degree and in what areas. This has resulted in the Mayor of London deciding to operate through the section 106 system a charging regime similar to the CIL regime. The relevant local authorities will not need to carry out an examination of the circumstances of individual development. Instead a contribution will be required dependent on the intended use of the completed development and the area in which it is located. The Mayor will impose the section 106 Crossrail contribution if deciding the planning application. If the planning application is being decided by the relevant London Borough then it will be expected to impose such obligation and it if fails to do so the mayor may seek to have the planning decision called in by the Secretary of State.
20.9.3 Rates - as with CIL it is based on the increase in gross internal area resulting from the development but the rules are not identical and there can be cases in which the contribution is determined by reference to internal space which is not exclusively new additional area. In particular the addition of mezzanine floors requiring planning permission for an area greater than 500 square metres will be taken into account for this obligation whereas for CIL it will not be. There are three different charging zones and within these zones there are different rates applicable to retail, office and hotel uses. The differences are based on the evidence established by the investigation that was carried out into how different types of development in different areas contributed to congestion in London. What is proposed by way of charges is set out in the table taken from the Mayor of London’s supplementary planning guidance. These are subject to the initial reductions (as to which see para. 20.9.4.5 below).
Indicative Level of Charge per sq. m, by land use and location as at July 2010
Central London
Isle of Dogs
Rest of London
Including approximate 1 km indicative radii outwards around Paddington and Liverpool Street Stations
Including approximate 1 km indicative radius outwards around the proposed Canary Wharf station at West India Quay inclusive of and south of the Poplar DLR lands
Including approximate 1 km indicative radius outwards around the proposed Canary Wharf station at West India Quay north of the Poplar DLR lands as well as such radii around all other stations outside the Central Contributions Areas apart from Woolwich Arsenal.
Office
£140
£190
£31
Retail
£90
£121
£16
Hotels
£61
£84
-
The following notes are contained in the table by way of explanation:-
“Indicative contribution levels
Where indicative contribution areas overlap the starting point for negotiations would be the higher of any rates that could be applicable
Notes to Table 2
Office is defined as any office use including offices that fall within Class B1 Business of the Town and Country Planning (Use Classes) Order 1987 as amended, or any other order altering, amending or varying that Order. Uses that are analogous to offices which are sui generis, such as embassies, will be treated as offices.
Retail is defined as all uses that fall within Classes A1, A2, A3, A4 and A5 of the Town and Country Planning (Use Classes) Order 1987 as amended, or any other order altering, amending or varying that Order, and related sui generis uses including retail warehouse clubs, car showrooms, launderettes
Hotel means any hotel use including apart-hotels uses that fall within Class C1 Hotel of the Town and Country Planning (Use Classes) Order 1987 as amended, or any other order altering, amending or varying that Order.
In all cases, contributions should be calculated in respect of developments exceeding 500 sq. m. with a net increase in floor area of the relevant use.
For mixed use developments, contributions will be sought on any increase in floor space for any of the three uses (subject to 500 sq. m. threshold)”
20.9.4 Regime – the manner of calculating the section 106 Crossrail contribution is similar to that with CIL in that it is based on gross internal floor area but there are a number of differences. Amongst the material difference are the following:-
20.9.4.1 rates – the differential rates are different as shown by the table immediately above;
20.9.4.2 area – the Crossrail contribution operates in a more limited area than CIL as is apparent from the above table;
20.9.4.3 de minimis threshold – developments with a chargeable area of 500 sq. m. or less will not trigger a Crossrail contribution (para. 5.29 Mayor of London’s Guide);
20.9.4.4 economic viability – if the payment of the Crossrail contribution will affect the economic viability of a development then the Mayor’s guidance encourages financial appraisals to be submitted to justify modification of the contribution. With CIL it depends on whether the charging authority has elected for the exceptional circumstances relief to apply.
20.9.4.5 initial reduction – for developments lawfully commenced before 31st March 2013 there is a reduction of 20%. With phased developments this applies only in respect of such phases as are commenced before that date. For the period of twelve months ending on 31st March 2014 there is a reduction of 10% in relation to developments commencing before that date. In the case of planning permissions granted during a period of reduction but not started within that period the reduction will not apply. After 31st March 2014 the full rate will apply.
20.9.4.6 measurement of internal area – the rules are similar to those applicable to CIL (see para. 14.2 above) but not identical. For example, new mezzanine floors which added more than 500 sq. m. of area will trigger the Crossrail contribution but not a CIL charge. Existing floor space will only be deductible for the purposes of the Crossrail contribution if it has been used for the use classes covered by the policy (see para. 5.11 Mayor of London’s Supplementary Planning Guide and para. 20.9.5 below). The material date is not when the development is first permitted (as with CIL) but when the grant of planning permission is made.
20.9.4.7 Indexation – instead of using the All in Tender Price index for the Crossrail contribution the Consumer Price Index is used and is based on the index figure as at April 2011. It is calculated as at the date that the section 106 payment falls due and not the date when the planning permission is granted.
20.9.5 Mixed user – when there is a site with mixed use which is to be redeveloped then the internal areas used for each of the existing class of use will be set against the new internal areas for classes of use. In appendix 4 of the Mayor of London’s earlier guide (not as yet repeated in April 2013 guide although reference is made to Appendix 4) the following example is given for a development in the Central London contribution area:-
Use
Existing Area sq. m.
Theoretical charge
Proposed
Development area sq. m
Crossrail charge
Variation
Residential
10,000
No charge
15,000
No charge
Nil
Retail
15,000
15,000 x £88 = £1.32 m
5,000
5,000x £88 = £0.44m
-£0.88m
Office
15,000
15000 x £137 = £2.035m
10,00
10,000 x £137 = £0.685m
-£0.65m
Hotel
0
0
35,000
35,000 x £60 = £2.1m
£2.1m
£0.35m
20.9.6 Charity exemption – the general charity exemption from CIL will apply also to the Crossrail contribution subject to the same qualifications but will not extend to the discretionary charitable exemption in relation to property held by a charity for investment purposes.
20.9.7 Payment – the Crossrail contribution will be payable at the time the development commences. However, by agreement it can be deferred if the viability of the development will be adversely affected by immediate payment or the size or nature of the development is such as to require deferred payment. The payment can by agreement be phased or linked to completion of the development.
20.9.8 Section 73 permissions - the position with Crossrail contributions arising from section 73 applications will be in line with the CIL position following the amendments in the 2012 regulations (see para. 8.4 above). This means that a further amount will only be payable if the section 73 permission results in an increase in the gross internal area and if there is a reduction then a repayment will be due but only if more than £10,000 is repayable and there is sufficient evidence to justify the repayment (para. 5.11 of the Mayor of London’s Guide).
20.9.9 Temporary developments – if the planning permission is for a limited period then consideration should be given as to whether this contribution is reasonable. Account is to be taken of the duration and likely impact of the development on the rail network. If for two or more years then it is likely that such a contribution will be sought.
20.9.10 Reporting – TfL is obliged to provide regular reports regarding the monies Crossrail contributions received and their application. The London Plan Annual Monitoring Report will also refer to the receipts.
N. Impact on contracts
21. Contractual provisions – there is not just a need to understand how the CIL regime operates and where the liability will or may fall. In addition there is a need to consider what contractual provisions covering CIL need to be included in development and conveyancing documentation. This is an aspect which will need to be kept under regular review and such contractual provisions will be refined and added to as a better understanding is acquired. This is a tentative stab both at setting out the type of provisions which need to be included and which types of documentation will be affected.
21.1 Planning promotion agreements – these are arrangements whereby the owner of land retains ownership whilst planning permission is applied for by the “planning promoter” in return for a payment often related to the increase in the value of the land as a result of obtaining planning permission. Areas which will need to be covered in such arrangements are:-
21.1.1 Assumption of liability – it is important to establish who will assume liability for any CIL and who is responsible for giving the assumption of liability notice. In this respect much will depend on whether the planning promoter is to be involved in the carrying out of the planning permission obtained. If the promoter’s involvement cease once the planning permission is obtained then there is no reason for the promoter to assume such a liability and it is a matter for the landowner or any developer taking over once the planning permission has been obtained.
21.1.2 Indemnity – an indemnity may be required by the party who is not taking responsibility to cover against default in discharging the CIL liability.
21.1.3 Payment – if the size of the promoter’s payment is determined by the value of the land once the planning permission is obtained then the owner will need to ensure that this value takes into account the CIL liability payable when the development commences. To provide that the CIL liability is deducted in full from the value of the land may result in double accounting as the value of the land may already take that into account.
21.1.4 Planning application – the landowner may wish to have a greater say in the planning application and in particular the type of user of the land for which authorisation may be sought. It depends on whether the resulting CIL liability is a concern to the owner. With the differential rates it may be that the owner will wish to focus on those which result in a smaller CIL liability. This will apply not just to the terms of the original application but also to any subsequent variations during the application.
21.2 Overage arrangements –
21.2.1 Overage triggers - when the land has been sold but the vendor has retained an interest by way of an overage arrangement there will be little reason to add further controls over the planning application just to account for the CIL liability. There will be the usual important issue for the vendor to consider as to whether the arrangement should provide for multiple triggers or just a single trigger but subject to one caveat the answer to that issue will not be decided by the impact of the CIL regime. The caveat is if it is possible that a planning application will be put forward which attracts a zero or lower CIL rate with a view to subsequently seeking a change of use in such a way that it does not attract a CIL liability. In those circumstances it would be important to provide for multiple triggers rather than seek to rely on a single trigger if the maximum benefit is to be derived from the overage.
21.2.2 Overage payment – the purchaser will want to ensure that account is taken of any CIL liability. This may be achieved by taking it into account when negotiating the overage payments to be made. Alternatively, a provision may be sought deducting the CIL liability from the value of the land with the benefit of the planning permission but this in turn will give rise to the need to consider whether this will cause any double accounting of the liability. The position may be more complex when there is a phased development with staggered overage. This will need to take account of the possibility that the CIL rates may vary. On the other hand if the overage payment is determined not by reference to the value of the land but to the net proceeds of the realisation of the development then a specific deduction for the CIL payable can be included without regard to double accounting.
21.2.3 Existing overage arrangements – the impact of a CIL charge may be felt by the purchaser or any successor which was not expected when the overage arrangement was entered into but there is nothing in the CIL regime which will vary that overage arrangement. In consequence it will be necessary to review the overage documentation to ascertain whether the CIL charge will be a deduction when computing the overage payment and if not whether it will affect the value of the land in the event that the overage payment is determined by reference to that value.
21.3 Disposal of land –
21.3.1 With no planning permission – when the whole of the land is being disposed of by the owner before planning permission has been granted then there should be no need to consider future CIL charges unless there is an overage arrangement (see para. 21.2 above). However, if the disposal relates to part only of the land then consideration should be given to the CIL risks if the disposal contains a grant of a right of entry on the retained land to carry out works such as the construction of an access road. The risk for the vendor is that the purchaser could apply for planning permission relating to land which includes not just the part disposed of but the retained part. It is possible to suspend the operation of the CIL regime (see para. 15.7 above). However, in the event that any planning permission granted includes the retained land then a development of the retained land could commence when the purchaser or a successor exercises the right of entry to construct, say, an access way to a residential development on the part of the land disposed of. This risk needs to be guarded against. One possibility would be to make the exercise conditional on the provision of funds to secure payment of any CIL liability triggered. The same will be the case if such rights are reserved over the part of the land disposed of save that in such circumstances it will be the purchaser who will need to consider the CIL risks.
21.3.2 With planning permission but before commencement of development – a number of specific matters relating to CIL will need to be considered.
21.3.2.1 Assumption of liability – it will need to be ascertained whether an assumption of liability notice has been given. If it has not then it will be necessary to establish who is to give it. The purchaser would seem to be the obvious candidate. If such a notice has been given then provided there is time before the commencement of the development there needs to be a withdrawal of that assumption of liability notice and the giving of a new one if the purchaser is to take on liability. In such circumstances an obligation against withdrawal may be required.
21.3.2.2 Indemnity – the vendor will probably require an indemnity against any CIL default.
21.3.2.3 Easements – the grant or reservation of rights will need to be carefully considered if there is a disposal of part only for the reasons given in para. 21.3.1 above.
21.3.3 With planning permission and after commencement of development –
21.3.3.1 Assumption of liability – it is to be expected that an assumption of liability notice will have been given and once the development has commenced this notice cannot be withdrawn. There must be a transfer of liability notice given (see para. 15.2.3 above).
21.3.3.2 Indemnity – even with the giving of a transfer of liability notice the vendor will probably require an indemnity.
21.4 Leases – it is a statement of the obvious that the terms of a lease have to govern a relationship over the term of years granted and so will be applied to occurrences that were not at the time of the grant expected or only in very general terms. It is, therefore, necessary to think ahead as to what may occur during the course of the term. This is important because both the landlord and the tenant may find themselves liable for CIL but have had no involvement with the planning permission or development that has resulted in the CIL charge. In the absence of an assumption of liability notice a CIL liability is apportioned between all those having a material interest in the relevant land. This will include the landlord’s reversionary interest and leasehold interests which were for seven or more years when granted. As already mentioned this could operate harshly when the development is carried out by a 1954 Act tenant with a term for less than seven years with the consequence that the freeholder will be liable in the absence of a contrary agreement under the regulations.
21.4.1 User clause – a change of use can give rise to a CIL charge if additional internal floor area results or the premises have been vacant for six months or more in the last twelve months. This is likely to encourage tougher restrictions on the making of such a change or the imposition of an indemnity to protect the landlord against such liability arising on the change.
21.4.2 Planning applications – a similar response of greater restrictions or an indemnity is likely with regard to the tenant’s ability to make planning applications. A further provision that should be considered is to impose an obligation on the tenant that the tenant will give an assumption of liability notice in respect of any development authorised by a planning permission obtained by or on behalf of the tenant. An even wider responsibility would be to apply this to all planning permissions obtained during the term.
21.4.3 Easements – care will need to be given as to whether any easements reserved in favour of the landlord could if exercised cause the tenant to be liable to a CIL charge. For example, if the landlord obtains planning premises for adjoining land and the demised premises and exercises a reserved right to construct, say, an access road or pay services. Easements granted in favour of the tenant are less likely to have this effect but it needs to be borne in mind.
21.4.4 Alterations/new buildings – an increase in the internal area demised may give rise to a CIL charge and will need to be provided for so that the landlord does not have to bear all or an apportioned part.
21.4.5 Indemnity – it would be prudent to include an indemnity in favour of the landlord to cover all CIL charges attributable to the tenant’s actions including alterations and the construction of new buildings. It may be that there should be an apportionment if the development has the effect of improving the value of the landlord’s reversionary interest.
21.5 Development agreement – there are a variety of arrangements by which a development can be carried out ranging from the grant of an immediate lease to a construction contract.
21.5.1 Construction contract - A straightforward construction contract will not require much consideration as regards CIL. The landowner should be the person to deal with the application of the local CIL regime to the site. More consideration will be required if the transaction seeks to be the commissioning of a house for a person who will occupy it as that person’s sole or main residence. Such a transaction will qualify for the self-build exemption. It will be necessary to structure it so that it comes within the requirements applicable to the exemption. Provisions will need to be added to ensure that the necessary compliance procedures are carried out and to cover the risk that the exemption is either not granted or subsequently withdrawn.
21.5.2 Licence – licences in favour of developers are still recommended from time to time with a hoped for sdlt advantage. This can be combined with a consideration linked to the proceeds of the sale of the development. In such circumstances the question as to who should be responsible for the CIL may be a little harder to decide. It is obviously an issue which will need to be considered carefully as responsibility for giving the assumption of liability notice has to be allocated. Similarly it will be necessary to provide how the CIL payment is to be taken into account when calculating the consideration to be paid to the developer.
21.5.3 Options – an option to buy conditional upon the grant of planning permission needs to include provisions which ensure that the purchaser is wholly liable for any CIL resulting from the grant and wholly responsible for compliance with the local CIL regime. The person granting the option will want to back this up with an indemnity to cover any default in compliance with that regime. On the other hand the purchaser will want to ensure that the price paid for the land takes the CIL into account. If the land is to be acquired in stages possibly because the permission allows for phased development then it will necessary to ensure that the provisions taking into account the CIL liability allow for any increase in CIL due to changes in the local CIL rate during the course of the phased developments.
21.5.4 Building lease/ Agreement to grant lease on completion of development – from the point of view of allocating responsibility in relation to the CIL regime it seems to me that it does not really matter whether the lease is granted immediately or after the occurrence of the completion date for the development. The substance of the relationship for this purpose is similar. There is a much stronger argument in either set of circumstances for the developer/lessee to give the assumption of liability notice.
21.6 Charity/Social housing relief – if the development involves charity exemption or social housing relief then there may need to be special contractual arrangements put in place (see relevant parts of section 11 above).
0. Searches and Enquiries
22. Searches – in areas in which the CIL regime has been operated it will be necessary to exercise greater care with regard to development sites and developments subsequent to the establishment of the local CIL rates.
22.1 Warning - the decision of Montrose Creek Property Limited and Manningtree (“MM”) v Brisbane City Council in the Queensland Planning & Environment Court although an Australian decision not based on our CIL regime serves as a warning about the need to make full searches prior to a transaction concerning a development site. MM purchased a completed development with an approved use which had started unaware that there remained outstanding infrastructure contributions amounting to $400,000. The vendor was pursued for these arrears but went into voluntary liquidation. In consequence the City Council went after MM and was successful. A number of defences were rejected. MM had carried out a standard search which did not disclose this information as opposed to a full search which would have done so. It was a requirement in the permission that payment be made before commencement of use but notwithstanding this condition it was held that the failure to comply was not a once and for all breach but a continuing obligation.
22.2 Searches – there will be no comprehensive public register kept by the charging authority or collecting authority dealing with the application of the CIL regime to any site. In particular there will be no public details as to the progress of the CIL debt recovery process in respect of a site and the amount outstanding. In consequence the task of ascertaining the position in relation to any particular site will be a combination of enquiries and searches. However, it should be possible to discover much of the CIL position. As regards searches the following may provide information concerning the CIL position:-
22.2.1 Local authority – the standard local authority search has been expanded to enquire whether a Charging Schedule has been published for the area. It will not say if one is imminent. A better statement of the authority’s position with regard to the introduction of CIL is likely to be found on its website.
22.2.2 Planning authority– it will be possible to ascertain certain information from the planning authority. It will be not just any pending planning applications, plans and planning decisions which will be available to be inspected (whether at the offices or online). In addition it is likely that the authority will retain with these documents the CIL notices such as the liability notice, the assumption of liability notice and the commencement notice. What will not be retained with these will be demands and the current state of the CIL account as these will be regarded as part of the debt recovery process and not the planning process. However, this should provide useful information.
22.2.3 Charging orders – if a collecting authority has sought to enforce any outstanding CIL by means of charging orders then these may be protected by an entry on the registered title or by registration of a land charge. Such charging orders will come to light by the usual searches.
22.2.4 Local land charges – a CIL liability may be registered as a local land charge by the collecting authority and the likelihood is that all authorities will register a local land charge. It is likely that such registration will occur when the planning permission is granted rather than later when the necessary approvals have been given and a liability notice has been issued. If this is not the practice then there will be a time gap between the grant of planning permission and the registration of a local land charge. In consequence such a search needs to be combined with an investigation of the existing planning permissions and applications. Such searches will probably provide a partial answer to the question whether there is either still CIL due in relation to the property or a potential CIL liability. The presence of a local land charge relating to CIL will mean that there is still some at least outstanding or likely to arise as otherwise the charge would have been removed. The local land charge will remain on the register if there is a chance of a clawback of CIL being triggered. A further problem could be that the authority will be slow to remove the local land charge thus hampering any intended sale. With some authorities there have been delays of five weeks or more in obtaining receipts for a payment of a CIL liability. This may cause loss if the receipt is needed to prove that the CIL liability has been discharged.
22.2.5 Register of enforcement and stop notices – details of any stop notice to enforce a CIL liability should be entered on a register kept under section 188 of the 1990 Act.
Such searches will assist in ascertaining whether a CIL liability has arisen and if it has what steps have been taken against the site or an interest in the site. It will not answer the question as to the current state of the particular CIL account and whether there is a risk that a CIL liability may become enforceable against a person acquiring an interest in the site in the event of default by the person who has assumed liability. This will require further enquiries to be made.
22.3 Enquiries – on the assumption that planning permission has been granted then copies of all the CIL documentation should be obtained to the extent not available from the planning authority. In addition the up to date position with regard to the payment of the CIL liability needs to be known. This will enable a person acquiring an interest in the developed site to assess the extent of the CIL liability that could subsequently fall on that person and the risk of it doing so.
ChristopherCant©2014
First Appendix- Authorities with charging schedules
A. In order in which established CIL regime
(i) Newark and Sherwood DC – the charging schedule took effect on 1st December 2011 and divides the area into six zones for the purposes of residential development with varying rates - two £0, two £45, one £55, one £65 and the last £75. Other types of development are divided both by area as there are seven zones and class of development of which there are nine (hotel; residential institution; industrial; offices; retail; community/institutional; leisure; agricultural; and sui generis). Most are at £0 psm but retail is £100 in six zones and £125 psm at Newark Growth Point.
(ii) Redbridge - this authority has a single CIL rate applicable to all types of development wherever located in the area. It has been set at £70 per square metre (“psm”) with effect from 1st January 2012.
(iii) Shropshire - with effect from 1st January 2012 new residential development in Shrewsbury, the market towns and key centres is set at £40 psm whilst it is £80 psm for new residential development elsewhere. Any other development is at a nil rate.
(iv) Portsmouth – took effect on 1st April 2012 with a basic CIL rate of £105 for any development not specifically mentioned. A CIL rate of £53 applies to in-centre retail of any size, out of centre retail for less than 280 square metres, hotels and residential institutions. A £0 rate applies to office and industrial developments and community uses.
(v) Huntingdonshire – the charging schedule came into force on 1st May 2012. The rates apply across the whole of the area but vary according to the type of development. Retail development with an area of 500 sq. m or less is chargeable at £40 psm and if greater than 500 sq. m at £100. This differential in size with retail developments is being considered in a number of other areas and has met with opposition from some of the major retailers. The charging authority must justify such a differential with supporting evidence. After the 2014 Regulations the grounds for objection have been removed. Hotel developments are chargeable at £60. Institutional residential developments are charged at £40 whilst for health developments the rate is £65. There is a nil rate for business (B1), general industrial storage and distribution (B2 and B3); community uses (D1 and D2) save for Health uses and agriculture. Any other development is chargeable at £85.
(vi) Wandsworth – these took effect on 1st November 2012 and the CIL Rates are determined by four different areas within the borough. The Mayor of London charge will also apply. Dependent on the area
(a) the residential rates are 575; £265; £250; and £0.
(b) office or retail rates are £265; £250; and £0.
(c) all other developments £0.
(vii) Wycombe – with effect from 1st November 2012 the area is divided into two charging zones. The rate for residential developments (including sheltered accommodation) is £150 in one zone and £125 in the other. In both zones there is a rate of £200 for convenience based supermarkets (defined as shopping destinations in their own right where weekly food shopping needs can be met and which also include non-food floor space as part of the overall mix of the unit) and retail warehousing (defined as large stores specialising in the sale of household goods (such as carpets, furniture and electrical goods), DIY items and other ranges of goods, catering for mainly car-borne customers) with net retail selling space of over 280 square metres. All other retail and uses akin to retail are chargeable at £125. Any other developments are at £0.
(viii) Bristol – these took effect on 1st January 2013. The rates for developments are: residential chargeable at £70 (Inner zone) and £50 (Outer zone); hotels at £70; retail at £120; student accommodation at £100; commercial (classes B1, B2 and B8) £0; other development £50.
(ix) Poole – with effect from 2nd January 2013 a simple charging schedule has been introduced. There are three zones with residential developments chargeable at rates of £150, £100 and £75. Any other development is chargeable at £0.
(x) East Cambridgeshire – with effect from 1st February 2013. Residential development set for three zones at £40/£70 and £90. Retail is £120 and all other developments at £0.
(xi) Croydon – with effect from 1st April 2013 the rates for residential developments are £0 within the Croydon Metropolitan Centre but £120 outside it; £120 for business developments within the Metropolitan Centre but £0 outside that area; £0 for institutions in the whole area; and £120 for any other developments in the whole area. The latter may unexpectedly catch some developments.
(xii) Elmbridge –with effect from 1st April 2013 the rates are residential dwellings (class C3) £125; all retail developments (class A1-A5) £50; and all other developments £0.
(xiii) Barnet – with effect from 1st May 2013. The rates are £135 Residential (C1 - C4, Sui Generis HMOs) excluding ancillary car parking; £135 Retail (A1 - A5) excluding ancillary car parking; and £0 all other use classes.
(xiv) Fareham – with effect from 1st May 2013.The rates are £105 for residential developments (C3(a) and (c)/C4; £60 Care homes (C3(b)/C2); £35 hotels within C1; £0 for comparison retail in zones of town centres shown on maps (there is a long definition of comparison retail including clothing, household appliances, carpets, furniture, toys, sports equipment and cameras); £120 for all other types of retail; £0 for all other developments.
(xv) Plymouth – with effect on 1st June 2013 most rates are set at £0 so as to encourage development. Residential is £30; purpose built student accommodation is £60 save it is £0 if located within a particular zone within the city; and £100 for superstores and supermarkets with gross internal floor space of 1000 square metres or more including any extensions. Oddly both superstores and supermarkets appear to have the same definition which is that used for supermarkets by Wycombe, namely “shopping destinations in their own right where weekly food shopping needs can be met and which also include non-food floor space as part of the overall mix of the unit.” If this is correct then many retail superstores will not be caught as they will not meet the weekly food needs of their customers. It is noteworthy that Wycombe has a different definition which is applicable to superstores.
(xvi) Brent – with effect from 1st July 2013. The rates are; residential, residential institutions, student accommodation, hostels and HMOs £200; hotels £100; retail £40; warehouse clubs £14; assembly and leisure excluding swimming pools £5; remainder including light industrial £0.
(xvii) Broadlands – with effect from 1st July 2013. There are two charging zones for residential developments (C3/C4 excluding affordable housing but including domestic garages excluding shared–use and decked) with rates of £75 and £50. Large convenience goods based stores (at least 50% of net floor space area given over to convenience goods) with floor space of 2000 square metres or more. Such store developments are rated at £135 psm. All other retail and assembly and leisure rated at £35 includes sui generis akin to them such as petrol stations, retail warehouses, nightclubs and amusement centres. Public service development such as fire and police stations (C2; C2A; and D1) are rated at £0. All other developments are rated at £0.
(xxviii) Norwich – with effect from 15th July 2013 the rates are residential development (Classes C3 and C4 excluding affordable housing) including domestic garages but excluding shred-user and decked garages £75; flats in blocks of 6 or more £65; large convenience goods based stores (more than 50% of net floor area is intended for sale of convenience goods) of 2000 sq.m or more £135; all other retail uses (A1-A5) and assembly and leisure development plus sui generis uses such as retail warehouse clubs, petrol stations, nightclubs, amusement centres and casinos £25; Class C2, C2A and D1 and sui generis fire and rescue stations, ambulance stations and police stations £0; all other uses covered by CIL regulations (including share-user/ decked garages) £5.
(xix) Havant – with effect from 1st August 2013. The rates are: residential £100 in a defined area and £80 elsewhere; retail out of town centre over 280 sqm £80, under 280sqm £40, town centre £0; and all other developments £0.
(xx) Waveney – with effect from 1st August 2013. There are four residential charging zones and the rates are £150; £60; £45; and £0. For holiday lets the rate is £40. For Supermarkets, superstores and retail warehouses the rate is £130. All other developments are £0.
(xxi) Southampton – with effect from 1st September 2013. The rates are £43 for retail developments (A1-A5) and £70 for residential (C3, C4 and houses in multiple occupation) but not C2 (residential institution).
(xxii) Chorley – with effect from 1st September 2013. The rates are dwelling houses £65; apartments £0; convenience retail (excluding neighbourhood convenience stores) £160; retail warehouse, retail parks and neighbourhood convenience stores) £40; community uses £0; all other uses £0. The use definitions are contained in an appendix to the Charging Schedule.
(xxiii) South Ribble – with effect from 1st September 2013 the rates are dwelling houses (excluding apartments) £65; apartments £0; convenience retail (excluding neighbourhood convenience stores) £160; retail warehouse, retail parks and neighbourhood convenience stores £40; community uses £0 and all other uses £0. The various uses are defined in Appendix two to the Charging Schedule.
(xxiv) Bassetlaw – with effect from 1st September 2013. There are four residential charging zones and the rates are £55; £20; £5; £0. There are three commercial charging zones as regards industrial developments the rates are £15, £0 and £0 whilst for retail developments they are £100; £25; £0.
(xxv) Preston – with effect from 30th September 2013 the rates are dwelling houses (excluding apartments) £65 save for those in the Inner Preston Zone when the rate is £35; apartments £0; convenience retail (excluding neighbourhood convenience stores) £160; retail warehouse, retail parks and neighbourhood convenience stores £40; community uses £0 and all other uses £0. The various uses are defined in Appendix two to the Charging Schedule.
(xxvi) Harrow – with effect from 1st October 2103 the rates are residential use within Class C3 £110; Hotel use within Class C1, residential institutions except hospitals (Class C2), student accommodation, hostels and HMO’s (sui generis) £55; Classes A1- A5 (retail, financial and professional services, restaurants and café, drinking establishments, hot food take-aways) £100; all other uses nil).
(xxvii) Oxford – with effect from 21st October 2013 uses in Classes A1-A5 (shops, financial and professional services, restaurants and cafes, drinking establishments, and hot food establishments) have a rate of £100; uses in Classes B1 (business), B2 (general industrial), B8 (storage or distribution), C1 (hotels) and C2 and C2A (residential institutions and secure residential institutions) are rated at £20; uses in Classes C3 (dwellinghouses including self contained sheltered accommodation and self-contained graduate accommodation) and C4 (houses in multiple occupation) and student accommodation are rated at £100; uses in Classes D1 (non-residential institutions) and D2 (assembly and leisure) are rated at £20; all other development uses are rated at £20.
(xxviii) Exeter – with effect from 1st December 2013 the rates are £80 residential (excluding Class C2); student housing whose occupation is limited by planning permission or planning obligation £40; retail (A1-A5) outside city centre £125; and all other developments nil rate.
(xxix) Newham- with effect from 1st January 2014. There are two zones for residential developments with rates of £80 and £40. For the whole area the remaining rates are £30 for retail; £120 for hotels; £130 for student accommodation; and remainder £0.
(xxx) Merton – with effect from 1st April 2014 there are two zones for the residential rates which are £220 and £115. There is a single rate of £100 for retail warehouses and superstores (defined in the schedule).
(xxxi) Bedford – with effect from 1st April 2014 there are five zones for residential development with rates of £40; £55; £100; £120; and £125. For these purposes dwelling units are stated to include not just C3 units but also C2 units together with C3 units where the units directly benefit from communal facilities comprising 10% or more of the total gross floor space as part of the overall mix of the unit. Care homes, extra care and other residential institutions have a nil rate. Convenience based supermarkets and superstores and retail warehouses (net retailing space over 280 sq.m. are rated at £120. Office, industrial, warehousing and other uses have a nil rate.
(xxxii) Dartford – with effect from 1st April 2014 there are two zones for residential development. In Zone A all residential development is rated at £200. In Zone B residential development of less than 15 homes providing solely market housing is rated at £200 whilst residential development of 15 homes or more providing a housing mix which includes a proportion of affordable housing is rated £100. This seems to provide scope for planning residential development to reduce the CIL liability. It also seems to leave a gap with some residential developments not within either category. There are two different zones relating to retail development. In Zone D all retail development above 500 sq.m. is rated at £125 whilst all other is nil rated. In Zone C supermarkets and superstores are rated at £65 and all other is nil rated. Office, industrial, hotel and leisure developments are rated at £25. Any other developments are nil rated.
(xxxiii) Winchester – with effect from 7th April 2014 the area is divided into three zones. In Zone 1 there is a £0 rate. In Zone 2 the rate for residential and retail development is £120. In Zone 3 the residential rate is £80 whilst the retail rate is £120. The rate for all other developments is £0.
(xxxiv) Waltham Forest – with effect from 15th April 2014. There are two zones for residential development with rates at £70 and £65. The remainder of the rates apply across the area. Those rates are publicly funded care homes £0; convenience superstores and retail warehouses - £150; hot takeaways and restaurants - £80; betting shops - £90; and hotels - £20.
(xxxv) South Norfolk – with effect from 1st May 2014 there are two zones for residential development (C3 and C4 excluding affordable housing) including domestic garages but excluding shared-user and decked garages £75 and £50. A rate of £135 applies to large convenience goods based stores (more than 50% of net floor area is intended for sale of convenience goods) of 2000 sq.m or more; all other retail uses (A1-A5) and assembly and leisure development plus sui generis uses such as retail warehouse clubs, petrol stations, nightclubs, amusement centres and casinos £25; Class C2, C2A and D1 and sui generis fire and rescue stations, ambulance stations and police stations £0; all other uses covered by CIL regulations (including share-user/decked garages) £5.
(xxxvi) Chelmsford – with effect from 1st June 2014 the rates are residential £125; convenience retail (A1 food) £150; comparison retail (A1 non-food; A2-5; and sui generis uses akin non-food) £87; and the rest nil.
(xxxvii) Mid Devon – with effect from 1st June 2014 there is only one rate of £40 in relation to dwelling houses (Class C3). All the rest of the uses have a rate of £0.
(xxxviii) Purbeck – with effect from 5th June 2014 the rates are £75 for A1 retail; £20 for A2-5; for C2 (care homes) and C3 (sheltered homes) there are three zones with rates of £100, £30 and nil; for C3 (not sheltered homes) and C4 there are four zones with rates of £180, £100, £30 and £10; for all other developments nil.
(xxxix) City of London – with effect from 1st July 2014. Residential development is charged at a rate of £150 in the “Riverside” zone and £95 elsewhere. Office development is to be charged at £75. Developments for medical, educational and emergency service are at a rate of £0. All other developments have a £75 rate.
(xxxx) Trafford – with effect from 7th July 2014. The terminology and approach is a little different from other charging schedules. There are three zones for private market houses – helpfully called cold, moderate and hot. The rates are £20, £40 and £80. For apartments (which include sheltered housing and retirement apartments) the rates in those zones are £0; £0; and £65. The remainder of the rates are retail warehouses (defined in the Appendix to the Charging Schedule) £75; supermarkets outside town centres (similarly defined) £225; supermarkets in defined town centres £0; public and institutional facilities for education, health, community and emergency services and public transport £0; offices, industry and warehousing £0; leisure £10, hotels £0; all other developments £0.
(xxxxi) Sevenoaks – with effect from 4th August 2014 the rates are residential (Class C3) £125 and £75 dependent on the zone and a single rate for supermarkets and superstores primarily selling convenience goods of £125; retail warehousing £125; and other forms of development £0. The uses have their own definitions in the schedule.
(xxxxii) West Berkshire – with effect from 1st April 2015. There are two zones for the residential (C3 and C4) rate (£125 and £75) whilst the retail (A1-A5) rate is £125 in both. The rate for business, hotel and residential institutions is £0 across the area.
(xxxxiii) New Forest DC – with effect from 6th April 2015 the CIL rates are dwelling houses (C3) £80; £0 retail (A1), industry and offices (B1, B2 and B3), hotels (C1), residential institutions (C2) and any other uses.
B. Alphabetically
Barnet – with effect from 1st May 2013. The rates are £135 Residential (C1 - C4, Sui Generis HMOs) excluding ancillary car parking; £135 Retail (A1 - A5) excluding ancillary car parking; and £0 all other use classes.
Bassetlaw – with effect from 1st September 2013. There are four residential charging zones and the rates are £55; £20; £5; £0. There are three commercial charging zones as regards industrial developments the rates are £15, £0 and £0 whilst for retail developments they are £100; £25; and £0.
Bedford – with effect from 1st April 2014 there are five zones for residential development with rates of £40; £55; £100; £120; and £125. For these purposes dwelling units are stated to include not just C3 units but also C2 units together with C3 units where the units directly benefit from communal facilities comprising 10% or more of the total gross floor space as part of the overall mix of the unit. Care homes, extra care and other residential institutions have a nil rate. Convenience based supermarkets and superstores and retail warehouses (net retailing space over 280 sq.m. are rated at £120. Office, industrial, warehousing and other uses have a nil rate.
Brent – with effect from 1st July 2013. The rates are; residential, residential institutions, student accommodation, hostels and HMOs £200; hotels £100; retail £40; warehouse clubs £14; assembly and leisure excluding swimming pools £5; remainder including light industrial £0.
Bristol – these took effect on 1st January 2013. The rates for developments are: residential chargeable at £70 (Inner zone) and £50 (Outer zone); hotels at £70; retail at £120; student accommodation at £100; commercial (classes B1, B2 and B8) £0; other development £50.
Broadlands – with effect from 1st July 2013. There are two charging zones for residential developments (C3/C4 excluding affordable housing but including domestic garages excluding shared–use and decked) with rates of £75 and £50. Large convenience goods based stores (at least 50% of net floor space area given over to convenience goods) with floor space of 2000 square metres or more. Such store developments are rated at £135 psm. All other retail and assembly and leisure rated at £35 includes sui generis uses akin to them such as petrol stations, retail warehouses, nightclubs and amusement centres. Public service development such as fire and police stations (C2; C2A; and D1) are rated at £0. All other developments are rated at £0.
Chelmsford – with effect from 1st June 2014 the rates are residential £125; convenience retail (A1 food) £150; comparison retail (A1 non-food; A2-5; and sui generis uses akin non-food) £87; and the rest nil.
Chorley – with effect from 1st September 2013. The rates are dwelling houses £65; apartments £0; convenience retail (excluding neighbourhood convenience stores) £160; retail warehouse, retail parks and neighbourhood convenience stores) £40; community uses £0; all other uses £0. The use definitions are contained in an appendix to the Charging Schedule.
City of London – with effect from 1st July 2014. Residential development is charged at a rate of £150 in the “Riverside” zone and £95 elsewhere. Office development is to be charged at £75. Developments for medical, educational and emergency service are at a rate of £0. All other developments have a £75 rate.
Croydon – with effect from 1st April 2013 the rates for residential developments are £0 within the Croydon Metropolitan Centre but £120 outside it; £120 for business developments within the Metropolitan Centre but £0 outside that area; £0 for institutions in the whole area; and £120 for any other developments in the whole area. The latter may unexpectedly catch some developments.
Dartford – with effect from 1st April 2014 there are two zones for residential development. In Zone A all residential development is rated at £200. In Zone B residential development of less than 15 homes providing solely market housing is rated at £200 whilst residential development of 15 homes or more providing a housing mix which includes a proportion of affordable housing is rated £100. This seems to provide scope for planning residential development to reduce the CIL liability. It also seems to leave a gap with some residential developments not within either category. There are two different zones relating to retail development. In zone D all retail development above 500 sq.m. is rated at £125 whilst all other is nil rated. In Zone C supermarkets and superstores are rated at £65 and all other is nil rated. Office, industrial, hotel and leisure developments are rated at £25. Any other developments are nil rated.
East Cambridgeshire – with effect from 1st February 2013. Residential development set for three zones at £40/£70 and £90. Retail is £120 and all other developments at £0.
Elmbridge –with effect from 1st April 2013 the rates are residential dwellings (class C3) £125; all retail developments (class A1-A5) £50; and all other developments £0.
Exeter – with effect from 1st December 2013 the rates are £80 residential (excluding Class C2); student housing whose occupation is limited by planning permission or planning obligation £40; retail (A1-A5) outside city centre £125; and all other developments nil rate.
Fareham – with effect from 1st May 2013.The rates are £105 for residential developments (C3(a) and (c)/C4; £60 Care homes (C3(b)/C2); £35 hotels within C1; £0 for comparison retail in zones of town centres shown on maps (there is a long definition of comparison retail including clothing, household appliances, carpets, furniture, toys, sports equipment and cameras); £120 for all other types of retail; £0 for all other developments.
Harrow – with effect from 1st October 2103 the rates are residential use within Class C3 £110; Hotel use within Class C1, residential institutions except hospitals (Class C2), student accommodation, hostels and HMO’s (sui generis) £55; Classes A1- A5 (retail, financial and professional services, restaurants and café, drinking establishments, hot food take-aways) £100; all other uses nil).
Havant – with effect from 1st August 2013. The rates are: residential £100 in a defined area and £80 elsewhere; retail out of town centre over 280 sqm £80, under 280sqm £40, town centre £0; and all other developments £0.
Huntingdonshire – the charging schedule came into force on 1st May 2012. The rates apply across the whole of the area but vary according to the type of development. Retail development with an area of 500 sq. m or less is chargeable at £40 psm and if greater than 500 sq. m at £100. This differential in size with retail developments is being considered in a number of other areas and has met with opposition from some of the major retailers. The charging authority must justify such a differential with supporting evidence. After the coming into force of the 2014 Regulations a ground of objection based on the size of internal area is no longer possible. Hotel developments are chargeable at £60. Institutional residential developments are charged at £40 whilst for health developments the rate is £65. There is a nil rate for business (B1), general industrial storage and distribution (B2 and B3); community uses (D1 and D2) save for Health uses and agriculture. Any other development is chargeable at £85.
Merton – with effect from 1st April 2014 there are two zones for the residential rates which are £220 and £115. There is a single rate of £100 for retail warehouses and superstores (defined in the schedule).
Mid Devon – with effect from 1st June 2014 there is only one rate of £40 in relation to dwelling houses (Class C3). All the rest of the uses have a rate of £0.
New Forest DC – with effect from 6th April 2015 the CIL rates are dwelling houses (C3) £80; £0 retail (A1), industry and offices (B1, B2 and B3), hotels (C1), residential institutions (C2) and any other uses.
Newark and Sherwood DC – the charging schedule took effect on 1st December 2011 and divides the area into six zones for the purposes of residential development with varying rates - two £0, two £45, one £55, one £65 and the last £75. Other types of development are divided both by area as there are seven zones and class of development of which there are nine (hotel; residential institution; industrial; offices; retail; community/institutional; leisure; agricultural; and sui generis). Most are at £0 psm but retail is £100 in six zones and £125 psm at Newark Growth Point.
Newham- with effect from 1st January 2014.There are two zones for residential developments with rates of £80 and £40. For the whole area the remaining rates are £30 for retail; £120 for hotels; £130 for student accommodation; and remainder £0.
Norwich – with effect from 15th July 2013 the rates are residential development (Classes C3 and C4 excluding affordable housing) including domestic garages but excluding shred-user and decked garages £75; flats in blocks of 6 or more £65; large convenience goods based stores (more than 50% of net floor area is intended for sale of convenience goods) of 2000 sq.m or more £135; all other retail uses (A1-A5) and assembly and leisure development plus sui generis uses such as retail warehouse clubs, petrol stations, nightclubs, amusement centres and casinos £25; Class C2, C2A and D1 and sui generis fire and rescue stations, ambulance stations and police stations £0; all other uses covered by CIL regulations (including share-user/ decked garages) £5.
Oxford – with effect from 21st October 2013 uses in Classes A1-A5 (shops, financial and professional services, restaurants and cafes, drinking establishments, and hot food establishments) have a rate of £100; uses in Classes B1 (business), B2 (general industrial), B8 (storage or distribution), C1 (hotels) and C2 and C2A (residential institutions and secure residential institutions) are rated at £20; uses in Classes C3 (dwellinghouses including self contained sheltered accommodation and self-contained graduate accommodation) and C4 (houses in multiple occupation) and student accommodation are rated at £100; uses in Classes D1 (non-residential institutions) and D2 (assembly and leisure) are rated at £20; all other development uses are rated at £20.
Plymouth – These are due to take effect on 1st June 2013 with most rates are set at £0 so as to encourage development. Residential is £30; purpose built student accommodation is £60 save it is £0 if located within a particular zone within the city; and £100 for superstores and supermarkets with gross internal floor space of 1000 square metres or more including any extensions. Oddly both superstores and supermarkets appear to have the same definition which is that used for supermarkets by Wycombe, namely “shopping destinations in their own right where weekly food shopping needs can be met and which also include non-food floor space as part of the overall mix of the unit”. If this is correct then many retail superstores will not be caught as they will not meet the weekly food needs of their customers. It is noteworthy that Wycombe has a different definition which is applicable to superstores.
Poole – with effect from 2nd January 2013 a simple charging schedule has been introduced. There are three zones with residential developments chargeable at rates of £150, £100 and £75. Any other development is chargeable at £0.
Portsmouth – took effect on 1st April 2012 with a basic CIL rate of £105 for any development not specifically mentioned. A CIL rate of £53 applies to in-centre retail of any size, out of centre retail for less than 280 square metres, hotels and residential institutions. A £0 rate applies to office and industrial developments and community uses.
Preston – with effect from 30th September 2013the rates are dwelling houses (excluding apartments) £65 save for those in the Inner Preston Zone when the rate is £35; apartments £0; convenience retail (excluding neighbourhood convenience stores) £160; retail warehouse, retail parks and neighbourhood convenience stores £40; community uses £0 and all other uses £0. The various uses are defined in Appendix two to the Charging Schedule.
Purbeck – with effect from 5th June 2014 the rates are £75 for A1 retail; £20 for A2-5; for C2 (care homes) and C3 (sheltered homes) there are three zones with rates of £100, £30 and nil; for C3 (not sheltered homes) and C4 there are four zones with rates of £180, £100, £30 and £10; for all other developments nil.
Redbridge - this authority has a single CIL rate applicable to all types of development wherever located in the area. It has been set at £70 per square metre (“psm”) with effect from 1st January 2012.
Sevenoaks – with effect from 4th August 2014 the rates are residential (Class C3) £125 and £75 dependent on the zone and a single rate for supermarkets and superstores primarily selling convenience goods of £125; retail warehousing £125; and other forms of development £0. The uses have their own definitions in the schedule.
Shropshire - with effect from 1st January 2012 new residential development in Shrewsbury, the market towns and key centres is set at £40 psm whilst it is £80 psm for new residential development elsewhere. Any other development is at a nil rate.
South Norfolk – with effect from 1st May 2014 there are two zones for residential development (C3 and C4 excluding affordable housing) including domestic garages but excluding shared-user and decked garages £75 and £50. A rate of £135 applies to large convenience goods based stores (more than 50% of net floor area is intended for sale of convenience goods) of 2000 sq.m or more; all other retail uses (A1-A5) and assembly and leisure development plus sui generis uses such as retail warehouse clubs, petrol stations, nightclubs, amusement centres and casinos £25; Class C2, C2A and D1 and sui generis fire and rescue stations, ambulance stations and police stations £0; all other uses covered by CIL regulations (including share-user/decked garages) £5.
South Ribble – with effect from 1st September 2013 the rates are dwelling houses (excluding apartments) £65; apartments £0; convenience retail (excluding neighbourhood convenience stores) £160; retail warehouse, retail parks and neighbourhood convenience stores £40; community uses £0 and all other uses £0. The various uses are defined in Appendix two to the Charging Schedule.
Southampton – with effect from 1st September 2013. The rates are £43 for retail developments (A1-A5) and £70 for residential (C3, C4 and houses in multiple occupation) but not C2 (residential institution).
Trafford –with effect from 7th July 2014. The terminology and approach is a little different from other charging schedules. There are three zones for private market houses – helpfully called cold, moderate and hot. The rates are £20, £40 and £80. For apartments (which include sheltered housing and retirement apartments) the rates in those zones are £0; £0; and £65. The remainder of the rates are retail warehouses (defined in the Appendix to the Charging Schedule) £75; supermarkets outside town centres (similarly defined) £225; supermarkets in defined town centres £0; public and institutional facilities for education, health, community and emergency services and public transport £0; offices, industry and warehousing £0; leisure £10, hotels £0; all other developments £0.
Wandsworth – these took effect on 1st November 2012 and the CIL Rates are determined by four different areas within the borough. The Mayor of London charge will also apply. Dependent on the area
(a) the residential rates are 575; £265; £250; and £0.
(b) office or retail rates are £265; £250; and £0.
(c) all other developments £0.
Waltham Forest – with effect from 15th April 2014. There are two zones for residential development with rates at £70 and £65. The remainder of the rates apply across the area. Those rates are publicly funded care homes £0; convenience superstores and retail warehouses - £150; hot takeaways and restaurants - £80; betting shops - £90; and hotels - £20.
Waveney – with effect from 1st August 2013. There are four residential charging zones and the rates are £150; £60; £45; and £0. For holiday lets the rate is £40. For Supermarkets, superstores and retail warehouses the rate is £130. All other developments are £0.
West Berkshire – with effect from 1st April 2015. There are two zones for the residential (C3 and C4) rate (£125 and £75) whilst the retail (A1-A5) rate is £125 in both. The rate for business, hotel and residential institutions is £0 across the area.
Winchester – with effect from 7th April 2014 the area is divided into three zones. In Zone 1 there is a £0 rate. In Zone 2 the rate for residential and retail development is £120. In Zone 3 the residential rate is £80 whilst the retail rate is £120. The rate for all other developments is £0.
Wycombe – with effect from 1st November 2012 the area is divided into two charging zones. The rate for residential developments (including sheltered accommodation) is £150 in one zone and £125 in the other. In both zones there is a rate of £200 for convenience based supermarkets (defined as shopping destinations in their own right where weekly food shopping needs can be met and which also include non-food floor space as part of the overall mix of the unit) and retail warehousing (defined as large stores specialising in the sale of household goods (such as carpets, furniture and electrical goods), DIY items and other ranges of goods, catering for mainly car-borne customers) with net retail selling space of over 280 square metres. All other retail and uses akin to retail are chargeable at £125. Any other developments are at £0.
Second Appendix
Contribution areas in London for Cross rail contributions through section 106 obligations
(with the permission of the Mayor of London reproduced from the Supplementary Planning Guidance April 2013)
1. Central London contribution area
2. Isle of Dogs contribution area
3. Rest of London contribution area – West London
4. Rest of London contribution area – East London
Third Appendix
Zones for Mayoral CIL
Zone 1
Camden, City of London, City of Westminster, Hammersmith and Fulham, Islington, Kensington and Chelsea, Richmond-upon-Thames, Wandsworth
Zone 2
Barnet, Brent, Bromley, Ealing, Greenwich, Hackney, Haringey, Harrow, Hillingdon, Hounslow, Kingston upon Thames, Lambeth, Lewisham, Merton, Redbridge, Southwark, Tower Hamlets
Zone 3
Barking and Dagenham, Bexley, Croydon, Enfield, Havering, Newham, Sutton, Waltham Forest
ChristopherCant©2014
