Prospects of CIL relief ‘virtually nil’
Regulation 55, for example, provides discretionary relief from the levy in order to remedy the impact of the CIL charge on the viability of a development on very specific terms. As a consequence, this relief is only available where the burden of CIL would render a scheme unviable having regard to the terms of the relevant section 106 (S106) planning gain agreement.
The problem is that the associated planning permission must secure chargeable development and, as a consequence, must already be subject to CIL. Indeed, regulation 128 makes it clear that CIL can only apply to development granted consent after a charging schedule is introduced. It follows, therefore, that viability and the associated impact of CIL will have already been assessed in securing planning permission and in setting the terms of the S106 obligations. In these circumstances, the prospects of securing any available exceptional relief will be virtually nil and the only remedy for an unviable scheme will be to revisit the S106 agreement.
Watchful eye is needed
It is also important for councils wishing to continue with S106 agreements in conjunction with CIL to remember that regulation 123 ensures that on the local adoption of a CIL schedule there will be a restraint on pooled contributions towards items that may be funded through the levy. In addition, where an item of "relevant infrastructure" is not intended to be funded by the CIL schedule, pooled planning obligation contributions can be secured, but only from no more than five separate planning obligations to fund the identified infrastructure works.
However, the "relevant infrastructure" for an area will be governed by the "list of infrastructure projects" published on the council’s website and importantly within the broad scope of regulation 59 this list can be amended at will by the council. This facility might well be used by councils to remedy any potential conflict between CIL and a proposed S106 obligation and might also enable a council to quickly release a "meaningful proportion" of revenue back to a neighbourhood. It does, however, mean that developers will need to keep a careful eye on the content of this potentially changing list if they are to fully understand the scope of future S106 agreements.
Phased developments will pose challenge
It is, in addition, noteworthy that regulation 40 sets out the process for calculating CIL and the arrangements for the deduction of charges having regard to existing floorspace within the development site. The amount of CIL payable is calculated by adding together the sums attributable to each of the CIL charging rates for the chargeable development. The CIL payable is calculated by multiplying the particular rate for a type of development by the "deemed net area chargeable". This includes provision for the aggregate of all buildings which at the date of planning permission were situated within the relevant land and will not be retained.
The challenge comes in applying this process to CIL payable on a phased development, which is "a separate chargeable development" for the purposes of the regulations. As such, the mechanism for calculating a CIL payment appears to only contemplate a deduction for existing floorspace set against the chargeable development within a particular phase. In consequence of these provisions, a developer will need to ensure that any new development scheme is closely aligned with the disposition of any existing development if they are to benefit from any deduction for existing floorspace within that phase. This might not be welcomed by the local authority and may well operate to compromise the proper planning of the development. There would appear to be no easy remedy to this issue.
These are just some of the issues associated with CIL, but they serve to demonstrate the complexity of the regulations and the very real opportunity for error when dealing with complex development schemes.
- Stuart Andrews is head of planning at law firm Eversheds.