February 2014 saw another round of reforms to the Community Infrastructure Levy regulations. Many of these are welcome changes brought in to deal with some of the issues that have arisen since local authorities introduced their CIL charges.
A few of the headline changes to note:
Changes to the lawful use test
A much criticised area of the CIL regulations has been that the test for getting a discount for buildings in use was too tight, meaning that too many consents for change of use attracted CIL. Previously a building had to have been in lawful use for six in the past 12 months to qualify; now the rule has been relaxed so that the building need only have been in lawful use for six months in the past three years.
CIL can be paid in phases
Where a planning permission is granted for development in phases, CIL can now be paid in phases, rather than as a lump sum at commencement.
This represents a useful opportunity for developers to potentially reduce the amount payable at commencement. Note, however, it only applies where there are pre-commencement conditions, which will need to be drafted so as to be dischargeable on a phase by phase basis.
Payments in kind
The new regulations now allow for developers to provide infrastructure in place of paying the equivalent amount of CIL.
This may help developers who want to control the delivery of certain items of infrastructure, which may be key to getting the development ready for marketing or occupation.
New exemptions – residential extensions, annexes and self-build
Before the amendments were brought in, substantial residential extensions were liable to CIL if the new space was in excess of 100 sqm. The amendments now allow complete exemption from CIL, provided that the extension is carried out by an owner occupier.
The building of residential annexes by owner occupiers is also potentially exempt, subject to a claw-back procedure, whereby the right is lost if the annex is let or sold as a separate dwelling within a three year period following completion.
Those wanting to make use of the new exemptions will need to follow the rules set out in the regulations carefully, or the exemption will be lost. Of particular note is that in order to benefit from the exemption, the owner will need to make their claim before commencing the development permitted. The exemption will therefore apply to permissions granted prior to the new regulations being brought in, provided the development has not already been commenced.
A further exemption has been brought in for self-builders, providing they are building a property as their main residence – again this exemption is subject to a claw-back procedure if the building is sold or let within a three year period from completion.
Overall, developers should find the changes work to their favour. The rules address some of the problems that became evident as CIL worked in practice and should allow CIL to work more flexibly.
Susanna Weatherstone, Solicitor, Fladgate LLP (email@example.com)