Nine months on and we are nearly there – CIL reform is on the horizon

21 Nov 2017

It seems a long time ago that we welcomed the White Paper’s conclusion that CIL required reform.  Since that teaser we have been waiting for the Autumn Budget to, hopefully, deliver the framework for that reform.   The independent report of the CIL Review Group will inevitably form the basis of any changes and a few of those proposals are below:

  1. A “twin track” developer contribution system to be introduced to combine a new “low-level tariff” calculated on a national formula  ( the Local Infrastructure Tariff (LIT)) and Section 106 planning obligations. LIT will be sought on all development, regardless of size, and an additional Section 106 planning obligation on developments of 11 units plus. 
    • Objective – To introduce a simpler and fairer way to collect money that is required to mitigate the effects of development.
    • Thoughts  – At this stage it sounds simpler but we can all be sceptical given CIL was also introduced as a more transparent procedure promising certainty and clarity for all.
  2. There should be no (or very few) exemptions to the LIT, and if exemptions are kept the method for claiming them needs to be simplified.
    • ObjectiveAll development should pay for infrastructure; this is a core theme in the report.
    • Thoughts – This needs to be well thought out.  Self-build development and the constructions of affordable housing should be protected still, not burdened and made unviable.  It will be interesting to see what exemptions are axed and the argument for doing so.  Claiming exemptions does need to be simplified; currently the penalties for those who fail/are unable to follow complex CIL procedures are disproportionate, unfair and unforgiving. 
  3. The Regulation 123 List and pooling restrictions should be scrapped.
    • Objective – To eliminate an ineffective provision which fails to work alongside s106 Agreements. 
    • Thoughts – This is promising news.  These lists do not add anything of value to funding allocations or lead to clarity and openness; they are ineffective, do not reduce reliance on s106 Agreements nor compel Councils to introduce CIL (as previously envisaged).
  4. Along with other proposals, it is proposed that Section 106 Agreements are standardised.
    • Objective - To ensure S106 Agreements do not require lengthy negotiations.
    • Thoughts – The report acknowledges that this has been tried before and not worked; it is hoped that declining Council budgets will however “rejuvenate this approach”.  The concern here is that this is a rather idealised and naïve approach; it fails to understand how S106 Agreements work and appreciate that no development, nor the parties’ negotiating solicitors, will be a carbon-copy of each other.  It is not a convincing argument that a decrease in a Council’s budget will make them less likely to negotiate a S106 Agreement especially when they feel that the development’s impact is not being mitigated adequately.

Within the political rhetoric of “fixing our broken housing market” would these reforms help if introduced by the Autumn Budget?  Certainly, CIL cannot continue as the unwieldy beast it is and a change would be widely welcomed, but the return to an increased use of S106 Agreements and the new additional burden on smaller sites could actually hinder viability and development.  Also, the lack of clarity as to how LIT will be applied to non-residential development, which is usually zero-rated for CIL purposes, is worrying; any additional burden on this type of development could also have an impact on investment and development.  With this in mind it will be interesting to see how far the proposals for reform go in the Autumn Budget and whether the above concerns are considered and dealt with.

Let’s hope though that the government will take this opportunity to lay out significant proposals to reform CIL in the Autumn Budget and really consider how a new procedure would work.  However, with Brexit legislation taking up everyone’s attention in Parliament I’m not sure we will see the effects of any proposed reform for quite some time.  I’d prepare yourselves for another wait…

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