A fresh alternative Home | News & events | Legal updates | The Implications Of The Community Infrastructure Levy For Registered Providers

The Implications Of The Community Infrastructure Levy For Registered Providers

23 February 2010

On 10 February 2010, the Government published the final version of its long awaited Community Infrastructure Levy Regulations (“CIL”).

The Regulations come into force on 6 April 2010, a month before the most likely date for the General Election. The Regulations will apply both in England and Wales and further details of the exemptions available for social housing delivery are set out below.

The good news for Registered Providers (“RPs”) is that the Regulations do contain provisions allowing for full exemption of social housing development from payment of CIL. This follows lobbying by the National Housing Federation, the Chartered Institute of Housing and Shelter following publication of the draft regulations. It is, however, important that RPs understand the detail to ensure that claims for relief are made in a timely and correct fashion.

Detail

In essence, the purpose of the Regulations is twofold:

  1. to provide “charging authorities” (which includes local planning authorities) with a new power to collect financial contributions from developers of land to fund the provision of infrastructure; and
  2. to scale back the use of Section 106 Planning Agreements to those obligations which are “necessary”, “directly related” and “reasonable” to the proposed development.

There are also other related changes restricting the use of local tariff based policies in the future.

The Regulations will apply to all new development with limited exceptions. The amount of CIL payable in respect of a particular development will be calculated by reference to a “Charging Schedule” which must be prepared by the charging authority and be adopted by them as policy following a public consultation process.

The liability for CIL arises upon the grant of planning permission (or in the case of an outline permission upon the final approval of reserved matters).  Dependent on the amount payable, this will then need to be paid to the charging authority either within 60, 120, 180 or 240 days from the date of commencement of development.

Regulation 49 deals with this so-called “Social Housing Relief” and the key points are:

(a) let by a private Registered Provider or a Registered Social Landlord or a local housing authority on one of the tenancies set out in the Regulations which includes assured tenancies (excluding any assured short hold tenancy), a secure tenancy or an intermediate rent basis or .
(b) a dwelling which is occupied under a shared ownership arrangement, with the percentage of the value of the dwelling paid as a premium on the day on which a lease is granted under the shared ownership arrangement not exceeding 75% of the market value; and the annual rent payable being no more than 3% of the value of the unsold interest.  Further, in any given year, the annual rent payable must not increase by more than the RPI Index plus 0.5%.Regulations 50 and 51 then contain provisions as to how the amount of Social Housing Relief is to be calculated and the procedure for claiming relief. Regulations 52 to 54 deal with the re-calculation of CIL in the event that a development ceases to be eligible for Social Housing Relief. 

Comment

While the introduction of Social Housing Relief will be welcomed by RPs, there will be a need to ensure that they adhere to the process and procedures set out in the Regulations for claiming that relief, and importantly that their proposals do fall within the definition of “qualifying dwellings”. 

In the wider context, and while it is extremely helpful to have Social Housing Relief built into the Regulations, it will also be important for a balance to be struck between the need to stimulate social housing development going forward, and the charging authority securing adequate levels of CIL from other developers to fund essential infrastructure.

What RPs will not want is a situation whereby there is a shortfall in funding leading to a delay in the provision of the very infrastructure which may be key to the RPs own proposals.

These concerns may never materialise of course, as there is still some uncertainty in relation to the future of the CIL regime itself. The Conservatives have stated publicly that they do not support the CIL regime, preferring instead a locally based tariff mechanism, and that could lead to some further changes in the Spring.
Further details of the CIL proposals are on our website .

© Shoosmiths. This page is for general information: it is not legal advice. Please read our full terms and conditions for details of the disclaimers and exclusions which apply.

Get in touch

Tim Willis

Associate
T: 03700 86 4095
I: +44 (0)121 625 4095
E: tim.willis@shoosmiths.co.uk