What is it: A payment towards local community infrastructure (this does not include contributions towards affordable housing!) based on the net additional increase in floor space as a result of development.
The charge will be set per square meter, and it remains to be seen as to what each Council will set as the rate. By way of example we understand that Poole will be charging (on residential development) £150 p/sm in Sandbanks/Branksome Park/Canford Cliffs, £100 p/sm in Poole Town Centre, and £75 p/sm for the remainder of the Borough.
The rate will again vary depending on what the development is i.e. residential, commercial etc.
What is it not: It is not a replacement for section 106 agreements, although it will narrow the scope. Section 106 agreements will remain for development specific planning obligations (such as affordable housing contributions) and will be subject to a new statutory ‘relevance’ test. This means it will now be necessary for a Local Planning Authority to show that a planning obligation can only be taken into account if the planning obligation is: Necessary to make the development acceptable in planning terms; directly related to the development; fairly and reasonably related in scale and kind to the development.
This means that any payment under a section 106 agreement may be open to challenge by the developer (or an interested third party) on relevance grounds.
Where has it come from: The CIL was born out of the ‘will they wont they’ localism legislation, a legacy of the former Labour government.
The framework of CIL is set out in sections 205 – 225 of the Planning Act 2008, and the exacting detail is contained in The Community Infrastructure Levy Regulations 2010.
The incumbent government, as a result of much criticism, rejected any further advance of the original scheme known as ‘Planning Gain Supplement’, but it now seems that it is being retained albeit under the new guise of CIL. More worryingly is how quickly it is being manoeuvred in to the market.
Impact: Poole Borough Council estimates that the CIL will be chargeable on granted planning permissions from July of this year, although it is expected that October/November is more likely.
It is almost certainly going to feature in 2012 and thereafter. The liability to pay the CIL charge will exist from the date that a planning permission was granted, although the CIL payment itself will not become payable until the development has commenced.
It may be prudent to act now and obtain planning permission before the CIL is implemented. If this cannot be achieved then the developers will need to include a CIL calculation when negotiating a price for land.
The rate of CIL will vary depending on the area.
In Practice: As stated, you will become liable to pay CIL on the grant of the planning permission and certain requirements (primarily the serving of notices) need to be met before development is started.
Once the requirements have been met a 60 day payment window will open. If the CIL is under £10,000.00 it must be paid, in full, within 60 days. If the CIL is greater than £10,000.00 initial payments must be made within 60 days but instalments are accepted by the governing Council. We understand that payments can be made in 4 instalments from 60 to 240 days following commencement.
Example: A developer demolishing one house in Branksome Park (Say, 200 square meters) and erecting 3 houses (each being 200 square meters) would mean a potential net increase of 400 square meters, based on mooted figures means a potential CIL payment of £60,000 on top of what you have paid for the land and aside from any section 106 payments which might be due.
(This is by way of crude example only and does not deal with mitigation tactics which might be available)
Action: You cannot ignore CIL and if you do not serve the correct notices prior to commencing the development or pay the required rate on commencement of development, the council can add charges and interest. It can also serve stop notices making any further building illegal until such time as payment has been made.
Act now. Assess your development plans for this year, and the future, in light of the CIL.
For further information please contact James Kidner at our Canford Cliffs office on 01202 709898
