An avalanche of Community Infrastructure Levy schedules is coming and there is a need to consider
- how CIL operates
- what changes to documentation will be needed and with regard to which types of transaction
- whether any planning permissions can be obtained before it is established in the development site’s area and whether it is advantageous to do so
- are there less CIL expensive areas to carry out a development
- is it worth staggering a development
- can the designs used affect the CIL payable
- how will different parts of complex developments be characterised
- what planning obligations may still be required in order to obtain planning permission for a site
- the CIL consequences of changes to existing planning permissions
- will there be issues over deductions relating to retained or demolished buildings
- will changes of use trigger a CIL liability
- what evidence does the developer need to retain
This is the fifth revision of my CIL and is up to 24th April 2015. This revisions includes
- the decision in R (oao Hourhope Limited) v Shropshire County Council – discussed in article below;
- more detailed consideration of section 106 planning obligations and relationship with CIL in chapter 20;
- the amendment to social housing relief in the 2015 Regulation;
- new appeal decisions by appointed persons;
- evolution of views
In addition the authorities that have introduced CIL as well as being set out in Appendix 1 to the Guide are for convenience also set out separately in this document – List of Authorities. This list seeks to show the authorities which have introduced CIL by the 29th April 2016 – just over 120 authorities. There is no central register and so reliance has to be placed on web searches and alerts to try to keep up to date. Some may have escaped this net so it is best to check the website of the particular authority if not on this list. Some such as Poole are in the process of reviewing the existing CIL Charging Schedule so that they may be subject to change. There are over 100 authorities in the process of introducing CIL having reached different stages of the process at different paces. It is likely that a number will introduce CIL in the second and third quarters of 2016.
Many developers and self-builders have received unexpected CIL demands for sums they cannot pay. Such CIL liabilities should have been expected and with a degree of care and foresight might have been avoided. Often this is caused by the obtaining of retrospective planning permission to authorise works which have not complied with an earlier planning permission. The problems and possible lessons to be learnt are discussed in this article [click for PDF].
There have now been 35 appeals against surcharges and demand notices. Few succeed. There are a number of lessons to be taken from the decisions which are covered in the article [Click for PDF]. However, the most important point to come out of them is that many developers have not yet learnt that a working knowledge of the CIL regime and its procedures is crucially important. Gone are the days when a difficulty could be resolved by picking up the telephone. The CIL regime is inflexible and the administration is rigid. There is no ability to waive or relax the statutory requirements. There has to be compliance.
Section 73 planning permissions have been a continual problem in the operation of the CIL regime. The amendments in 2012 sought to avoid double CIL charges and to charge the section 73 permission only on any increase introduced to the development by the section 73 permission. A CIL appeal decision in January has had to consider an aspect of this in the context of a pre-CIL parent permission. In that case when applying the X-Y formula in regulation 128A an authority had determined the Ip figure in the indexation element of the notional CIL liability in relation to the pre-CIL parent permission by reference to the date of the grant of that parent permission which was prior to the introduction. Inevitably indexation applied in that manner increases the CIL liability in relation to the section 73 permission. The appointed person held that even when calculating the notional CIL figure (Y) Ip should be determined using the date of the grant of the section 73 permission and not the date of the grant of the parent permission. This decision avoids the unfortunate CIL consequence that virtually every section 73 varying the conditions of a parent permission will give rise to an unexpected CIL liability purely due to the application of the indexation provisions. This decision is now the subject of judicial review proceedings so it will be necessary to wait until the Autumn before there is a greater degree of certainty [Click for PDF].
Charging Authorities have been concerned that a CIL liability could be reduced or avoided by splitting a development between a number of planning applications. The decision in R (oao Orbital Shopping Centre (Swindon) Limited) v Swindon BC  EWHC 448 (Admin) shows that this concern was justified. If there had been a single planning application resulting in a single planning permission there would have been a CIL liability of just over £170,000. By making two planning applications there was no CIL liability. This decision is considered in an article first published on the Local Government Lawyer website on 10th March 2016 – [Click for PDF]
Authorities that are in the process of introducing CIL but have not yet done face a funding problem in the interim period until CIL is introduced. How far can planning obligations be used now to fund infrastructure. In the context of infrastructure are planning obligations now limited to site specific issues or do they still have a wider but more limited role. These issues are discussed in Christopher’s article in the Local Government Lawyer in May 2015 [Click for PDF]
In the first judicial review case on the operation of the Community Infrastructure Levy Christopher appeared for the successful local authority, Shropshire CC. The authority had refused a claim for a demolition deduction. The Planning Court held that to qualify as an “in-use building” the building had actually to be in use and gave guidance on what would constitute use for these purposes. A full copy of the Judgment can be downloaded at www.bailii.org/… The decision serves to emphasise that a building needs to be in actual use if a deduction is to be claimed for CIL purposes. It will not be enough to have a caretaker or security guard looking after the building. A full consideration of the implications of the decision is to be found here.
Unexpected CIL consequences from unimplemented permissions – This considers the changes which were introduced by the Community Infrastructure Levy (Amendment) Regulations 2012 in relation to section 73 permissions.
April 2013 proposals for further Reforms
Earlier this month it was announced that the government would consult on further reforms to the Community Infrastructure Levy. It was publicised as a radical overhaul. A reading of the consultation document suggests that it is a useful exercise but it will be hard put to justify the publicity.
For developers there will be particular advantages in
- the ability to offer to provide both off-site and on-site infrastructure. It will offer greater certainty;
- the phasing of developments whether full or outline planning permission has been granted and the neutralisation of site preparation as regards CIL. This will assist with cash flow.
- the changes to social housing relief to include communal areas and to allow for a revision of the CIL liability after the commencement of the development;
- the extension f the social housing relief to include discounted sale;
- the deduction of all existing unused internal space without any specific time limits as at present. In a few cases the developer will face problems if the authority is arguing that the previous use had been abandoned.
- the relaxation of the conditions relating to the exceptional circumstances relief so that it may actually operate in a few cases.
- the possibility of an appeal even after the development has started
A full summary of the proposals is to be found here Update on proposed reforms of CIL [PDF]
Outcome of Consultations
The Government has published the outcome of the recent consultation and indicated what amendments to the CIL regime it proposes to introduce. It has said that it will do this speedily with the objective of bringing them in by the end of January 2014. The significant proposals are:-
- Extensions and annexes – these are to be exempt from CIL rather than chargeable if over 100 square metres. There will be as yet unannounced robust but straightforward eligibility tests.
- Vacancy test – to be able currently to deduct existing space it must have been in lawful use for six continuous months during the last twelve months. The suggestion that this be removed has not been taken up. Instead it is to be relaxed to six months continuous user in the last three years. In cases in which there is to be no change of use CIL will only be chargeable if there is an increase in internal floor space or the previous use had been abandoned.
- Changes in chargeable development – the present abatement provisions are triggered by a section 73 planning permission whereby an earlier CIL payment is set off against the CIL liability arising from the section 73 permission. This is to be extended to cover all types of planning permission so that an adjustment to CIL can be made as a result of a change in design between commencement of the development and completion.
- Phased developments – currently each phase of a phased development will only be treated as a separate development for CIL purposes if carried out pursuant to an outline planning permission. This is to be extended to full and hybrid planning permissions.
- Commencement date – when a planning permission is subject to a pre-commencement condition it does not authorise development until satisfaction of the condition. This is to be changed so that the commencement date will be the later of the grant sate or the approval of the last reserved matter.
- Pooling restrictions – the deadline for the imposition of the restriction on the pooling of planning obligations to five for the same item of infrastructure is to be moved from April 2014 to April 2015.
- Highway agreements – restrictions are to be introduced to prevent double contributions by CIL and obligations under highway agreements unless the agreement relates to a trunk road network. However, neither the pooling restrictions nor the statutory tests in reg. 122 will apply to highway agreements as they do to planning obligations.
- Social housing relief – communal and ancillary areas are now to be included in the calculation of internal floor space which will avoid unexpected CIL liabilities. Discount market sale homes may also be included at the discretion of the charging authority.
- Payments in kind – to be extended to on-site and off-set infrastructure without any ceiling as to value.
A fuller summary of the outcome is contained in Community infrastructure levy – govt October 2013 response [PDF]
CIL Appeals –
The results of five appeals to an appointed person in relation to CIL have been posted on the VAO website but with every item of information which could possibly identify the individuals and property removed plus more. It makes the decisions hard to read let alone understand. They are concerned with fairly basic points
(a) Conversion of house to two flats – a CIL liability notice was issued which was set aside on appeal as the conversion of one dwelling to two is exempt. The authority was not represented so there was no real argument. It has been suggested that to take the benefit of the exemption the conversion has to be to two houses rather than flats but there was no suggestion of such a limitation in this decision. It should be noted that a conversion from a number of dwellings to one will not be exempt from CIL.
(b) Delayed grant of planning permission – a planning permission was granted conditional on implementation within three years and this period expired so a fresh application was made. Before the new permission was granted the CIL regime was introduced in the area. The site owner appealed against a CIL liability on the ground that the authority had delayed and the new permission should have been granted earlier. The appeal was rejected as it was outside the statutory remit of the appeal which is only to consider whether or not the chargeable amount is wrong. Although mentioned was made of reg. 65 2010 Regulations in my view the timing of a grant is not a matter governed by the CIL regime. The solution if there is delay must come from planning law.
(c) new build less than 100 square metres – there is an exemption in respect of new builds developments under 100 square metres. So far this has thrown up two appeals but in both cases there was not any real doubt as to the outcome.
- (i) very strangely CIL was charged when unconditional planning permission was granted to use a building for worship and to carry out minor works on the basis it would seem that the whole area of the building was to be used for the computation. Prior to this there had been a temporary permission to use the building for this purpose. The CIL liability was set aside. On the papers the appointed person considered that there was no increase in floor space so the exemption applied. The temporary permission was sufficient to cause the building space prior to the grant of the unconditional permission to be in lawful use and so the internal floor area of the original building was deductible.
- (ii) the second appeal concerned the claim by the site owner that if the development was more than 100 square metres then the exemption operated to exclude the first 100 square metres from the CIL calculation. This was easily rejected. The exemption only applies to new build developments under 100 square metres.
(d) Class C3 use (residential) – with some authorities differential CIL rates have been fixed and the planning use classes have been used for this purpose. This is likely to throw up a number of appeals. In this one the issue was whether the conversion of five units for holiday lets into a single nine bed roomed unit for holiday lets gave rise to a CIL liability. It had been charged by the authority on the basis that the new use is a Class C 3 use (residential). There are a fair number of authorities on this issue in the context of planning law and in particular the Court of Appeal in Moore v SSCLG  EWCA 1202. In this appeal it was held not to be a residential use within Class C3. 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.
The draft Community Infrastructure Levy (Amendment) Regulations 2014 which were laid before the House of Commons in December 2013 with a view to their coming into force towards the end of January 2014 have been replaced by a new set on 20th January. In consequence the timetable may slip. With the introduction of the exemption for self-build housing another step has been taken away from having a uniform principle of fairness. Amendments to Community Infrastructure Levy – work in progress or overload? February 2014 Corporate Briefing
If you have any queries on CIL please contact me