Changes to the Community Infrastructure Levy (CIL) are set to be introduced on 16 November 2020 that will allow developers to claim relief for any first homes provided as part of a CIL liable development.
The draft Community Infrastructure Levy (Amendment) (England) (No.2) Regulations 2020 have been laid before parliament and will take effect subject to approval of the House of Commons.
CIL is a levy on development that can be adopted and charged by local authorities. The rules governing the adoption, calculation, application and enforcement of CIL are all codified in the Community Infrastructure Levy Regulation 2010. Where it is adopted, CIL is charged at a rate per square metre on new development. The rate of CIL and types of development to which it will apply are set locally, by the charging authority.
A number of reliefs and exemptions from CIL are already available under the regulations. These allow various forms of development, including affordable housing, to be discounted from the overall CIL liability if certain criteria are met.
Two forms of relief apply to affordable housing:
- a mandatory Social Housing Relief that currently applies to Shared Ownership, Social Rented and Affordable Rented Housing; and
- a Discretionary Social Housing Relief that applies to Discounted Market Housing, but only if it is has been expressly adopted by the charging authority
The proposed changes would make First Homes qualify for the mandatory Social Housing Relief. The qualifying criteria are:
- The first sale of the dwelling is for no more than 70% of its market value; and
- A planning obligation has been entered into prior to the first sale of the dwelling to ensure that any subsequent sale of the dwelling is for no more than 70 per cent of market value
In the same way as it currently is for other forms of affordable housing, the relief is subject to a claw back period, which means that if the relief is granted, but the dwelling is then subsequently sold in a way that does not meet the qualifying criteria, CIL must be paid in respect of the dwelling. For first homes, the claw back period begins on the commencement of development and ends when the development is first sold in accordance with the criteria.
The draft regulations also make a change to the Discretionary Social Housing Relief as it applies to discounted market housing. This would introduce a new criteria requiring that, to qualify for the relief, the discounted market housing must not only be sold initially at a discounted price of not more than 80% of its market value, it must now be subject to a planning obligation requiring every subsequent sale of the dwelling to also be for no more than 80% of its market value.
The regulations therefore pave the way for the introduction of the first home product as a mandatory form of affordable housing under proposed changes to the National Planning Policy Framework (NPPF).