The Department of Communities and Local Government laid the new draft CIL amendment regulations before Parliament on Monday 9 December and they were made public last week.  Parliamentary approval is expected in the new year with the regulations coming into force by the end of January 2014. Headline changes of interest to developers include an extension to the 'in lawful use' test, a CIL abatement for scheme revisions where CIL has already been paid on an earlier permission, allowing for phasing of CIL payments for all permissions and pushing back the date for pooling of planning obligations to April 2015. The main changes will not be retrospective, so property developers intending to make design revisions to a scheme already permitted, or otherwise take advantage of the changes, may wish to wait until these regulations come into force before securing permissions which are on the point of being granted, so that they do not have to pay CIL twice (on development where CIL is chargeable).

The Planning and Consents team at Herbert Smith Freehills are in the process of reviewing the draft regulations in detail. Some important points to note are listed below:

  1. It should be easier to claim the 'in lawful use' reduction for existing buildings: Existing buildings will have to be in lawful continuous use for six months in the previous three years (lengthened from 12 months) to be deductible from the CIL charge. The three years is calculated from the date the planning permission first permits development.
  2. It will be possible to make design changes to schemes without incurring another full CIL charge for a new permission: Where development has commenced on a site with a planning permission and design revisions take place resulting in the granting of a new planning permission which is implemented instead, any CIL payable under the earlier permission can be credited against the CIL due under the second permission. The development under the second permission must not have commenced. Currently CIL is payable in full on the first permission and again in full on any new permission with design changes.
  3. It will be possible to provide infrastructure as a 'payment in kind' instead of a CIL cash payment: this will apply where the charging authority has issued a policy statement to that effect. The authority must 'aim' to ensure that the infrastructure payment supports development in the area. An agreement in writing must be entered into with the authority setting out the terms of the payment by way of infrastructure.
  4. It will be possible to pay CIL in phases for any phased planning permission (not just for outline permissions): this will allow for phasing of CIL payments where phasing is permitted in the permission, whether outline, detailed or hybrid. There is a provision allowing demolition credit to be carried forward to later phases. Otherwise the phasing provisions are not very detailed and do not cater for all kinds of phasing e.g. where one building straddles more than one phase.
  5. An extra year is added until the restrictions on pooling s.106 planning obligations come into effect (to 6th April 2015 rather than 2014): This should give authorities more time to get their CIL charging schedules and lists of infrastructure in place and work out the interaction between CIL and s106 obligations.
  6. Authorities will be able to set differential CIL rates depending on scale: as well as differential rates for zones and uses, a new amendment will give authorities the chance to set differential rates based on gross internal area and the number of dwellings or units. This could help provide more certainty in CIL estimates, for example on large schemes.
  7. Rules for claiming exemptions and reliefs will be amended: including making it easier to claim exceptional circumstances relief and clarifying the types of affordable housing eligible for social housing relief. Currently exceptional circumstances relief can only be claimed where a section 106 agreement is in place which imposes a higher contribution to infrastructure costs than the levy liability, but this restriction will be removed which should make the relief easier to claim. Communal areas such as stairs and corridors will be included in social housing relief calculations, which could improve scheme viability.

Developers should bear in mind that the regulations are due to come into force by the end of January 2014 (subject to Parliamentary process), given that the main changes will not be retrospective.