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Further consultation 'Reforming Developer Contributions' issued on new changes to the Community Infrastructure Levy

The Government has launched a further consultation to seek views on draft regulations to further amend the Community Infrastructure Levy Regulations 2010. The proposed changes to the 2010 Regulations follow the package of reforms announced in the Autumn Budget 2017, which are aimed at making the system of developer contributions more transparent and accountable. ­However, these amendments, together with those previously announced, still fall short of the recommendations of the report by the CIL Review team of October 2016 ('A New Approach to Developer Contributions').

When launching the consultation, Housing Minister Kit Malthouse MP said:

"Communities and developers must know that vital infrastructure needed to support new homes is going to arrive - even before a shovel hits the ground. The billions of pounds already paid by developers has been critical in delivering the more, better, faster homes this country so desperately needs, but we must go further. These reforms will make the system simpler, transparent and easy to understand and will accelerate the place of homebuilding - it's now up to housebuilders and residents to tell us what they think".

The proposed changes to the regulations are significant and offer the prospect of a genuinely simplified CIL system, particularly as regards the confusion between CIL and S106. They include:

  • Wholly removing the 'pooling restrictions' in Regulation 123 of the 2010 Regulations, which prevents local authorities from using more than five section 106 obligations to fund a single infrastructure project. This goes a step further than the previous suggestion, that limited the circumstances in which the pooling restrictions could be considered removed.
  • Removing the need for a Regulation 123 list, which currently requires local authorities to list infrastructure projects or types of infrastructure that any CIL will be applied to. Under the draft regulations, local authorities will instead be required to publish an annual 'Infrastructure Funding Statement', setting out detail of revenue from developer contributions (whether S106 or CIL) and the way in which they have been/will be applied.

The upshot of the above two amendments is that local authorities will have greater flexibility in how they use both S106 and CIL monies, and can use both measures to fund the same infrastructure.

  • Reducing the penalties charged for failing to serve commencement notices before starting development. This is a step back from the measures previously suggested, which included a grace period post commencement in which a commencement notice could still be submitted. This will be disappointing for many, and from our own experience particularly with self-build projects, often exemptions are lost due to a failure to know about, or understand the current notification requirements.
  • Confirming (via the amended 2010 Regulations) that local planning authorities can seek a monitoring fee through section 106 agreements, for the purpose of monitoring compliance with section 106 obligations. Any fee must be 'reasonable and proportionate'.
  • Relaxing the CIL 'abatement provisions', to ensure that a phased development which was originally consented before the introduction of CIL can balance any liabilities between different phases of the same development (i.e. when a s73 application is granted).
  • Further tweaks to indexation to change indices to, for residential developments, a three year smoothed average of the annual local house price index, and for non-residential developments the consumer price index.
  • Changes to how indexation applies in s73 situations, an area that has proved particularly troublesome. Regulations in 2018 corrected how indexation would apply to s73 consents where the 'parent' permission was granted in a pre-CIL world, so that indexation would only be charged on the change in floorspace and not the whole. The same change was not made, but now will be, to situations where both the parent permission and the s73 permission were granted post the adoption of a CIL. Therefore, in the words of the consultation: 'any increases in liability… are charged at the latest rate including indexation, while previously permissioned floorspace continues to be charged at the rate in place when those elements of the development were permissioned'.
  • A technical clarification to Regulation 40 and the meaning of 'retained parts of in-use buildings', to be clearer as to how to properly apply Regulation 40 in situations involving s73 consents where there are retained parts of in use buildings to consider.

Consultation on the revised text is open until 31 January 2019. Any responses should be submitted online using the following link: 

https://www.surveymonkey.co.uk/r/PMPJKXJ

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