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The amendments to the CIL Regulations that will be felt most immediately
The most recent amendments to the Community Infrastructure Levy (CIL) Regulations (2010) come into force on 1 September and the consequences of many of the changes to the Regulations will be felt immediately.  But only in England – this is the second set of amendments to the CIL Regulations that do not apply in Wales (the first were made earlier this year and relate to London only [1]) From a development management perspective (as opposed to the drafting of charging schedules), there are several amendments relating to the calculation of CIL liability that will have immediate effect.  This blog focuses mainly on the lifting of the pooling restriction. The lifting of the pooling restriction and infrastructure funding statements Clearly, how noticeable are the changes will vary depending on the development proposed and whether or not it is a section 73 planning application.  However, beyond the introduction of a consolidated schedule for calculating CIL liability, the most noticeable immediate change is likely to be the lifting of the ‘pooling restriction’, which will arise from the deletion of Regulation 123.  Any development granted planning permission on or after 1 September 2019 may be subject to a section 106 agreement contributing to infrastructure that has already benefited from contributions from five or more planning obligations (since 2010); this has not been possible since 2015 or earlier (where CIL charging schedules took effect sooner).  It also means the end of devising ‘clever ways’ of developments contributing to a piece of infrastructure than has already benefited from five or more planning contributions, such as each development contributing towards a specific classroom of a school. The intended effect of this is to allow CIL and planning obligations to fund the same piece of infrastructure and accordingly remove what can be a barrier to development.  Whilst many have sought its removal, some in the property sector have raised concern that it will result in ‘double dipping’ (i.e. CIL and s106 contributions from the same scheme paying for the same piece of infrastructure).  But in its response to the consultation ‘Reforming developer contributions’[2], the Government said, in effect, that double dipping doesn’t matter and indeed is a sensible approach if it means the relevant piece of infrastructure will be paid for more swiftly and theoretically come forward more sooner: “This will enable more flexible and faster infrastructure and housing delivery”. Furthermore, the Government considers that the Infrastructure Funding Statements (IFSs) required annually from 31 December 2020 will allay concerns regarding double dipping by keeping an appropriate audit trail of all contributions to receiving authorities and how they are spent, whether s106 or CIL.  There is no penalty for not producing an IFS; the Government says it will consider further changes to legislation if IFSs are not produced (the matters to include in an IFS are listed in new Schedule 2[3]).  Given that the matters to include have already been diluted in response to concerns about what to include, it is possible that some contribution receiving authorities might not produce an IFS.  That said, given that Plans must set out the contributions expected and the type of infrastructure required (NPPF para 34) and site viability is to be carried out in plan-making, failure to produce an IFS might be a more obvious omission than a failure to address other recent requirements (such as an updated brownfield register or providing sufficient land for everyone on self-build housing waiting list). Before IFSs are produced, the list of infrastructure on which CIL monies are to be spent remains, but no longer needs to be referred to by developers as from 1 September it will be possible to pay s106 contributions towards items on the list. The lifting of the pooling restriction might affect planning applications that have been approved subject to a s106 agreement but before it has been signed and there is not yet a formal permission – most probably where the pooling restriction has caused difficulties that were only just surmountable.  Any changes to the planning contributions might need to be reconsidered by the planning committee, if that was the determination route.  The lifting of the pooling restriction would not affect planning permissions already granted, including outline permissions, although there might be discussion in some future instances about whether a section 73 planning permission would provide different planning obligations to the original planning permission because previous limitations have been removed.  The Government is to produce guidance on how changes to the Regulations affect historic s106 planning obligations. Failure to submit commencement notices will no longer lead to the loss of relief From 1 September, the CIL Regulations will no longer state that a chargeable development ceases to be eligible for social housing relief if the development starts before a commencement notice is submitted.  Similar changes have been made to other types of relief. Instead, there are new surcharges that relate specifically to developments granted a form of relief, where the development starts without a commencement notice being submitted.  This surcharge must be imposed, and in relation to this, the consultation response provides an interesting insight to the differing approaches of some of the collecting authorities.  Some considered a mandatory surcharge inflexible, while others said the penalty was too small to incentivise submission of a commencement notice.  On concerns about inflexibility, the Regulations are clear that a collecting authority does not have to impose a surcharge when the cost of chasing it would be greater than the surcharge itself. New abatement provisions for s73 phased planning permissions first permitted before CIL was in effect (‘balancing’ and ‘phasing credits’) New abatement provisions will be introduced for phased planning permissions first permitted before the Levy came into force in an area, which are subsequently amended after a charging schedule is in effect.  This will include a mechanism to allow for the balancing of liabilities between phases for developments which were first permitted before the Levy came into force. The Government is considering providing worked examples of these provisions as it is acknowledged that they are complex, particularly with regard to keeping an audit trail of phasing credits and potential difficulties in calculating the “notional” liability of a pre-CIL planning permission. New schedule 1 seeks to set out clearly which formulas to apply to different scenarios where a planning permission is amended (see below). The new provisions do not extend to taking into account the floorspace of an ‘in-use building’ when calculating CIL where that building has been demolished by virtue of a pre-CIL planning permission and is therefore not an ‘in-use building’ for the purposes of the subsequent section 73 planning permission. A future Lichfields’ Planning Matters blog will consider these changes in more detail. Carrying over of exemption, relief and payment by instalments to s73 planning permissions The amendment regulations seek to ensure that where a planning permission benefits from exemption or relief, or the right to pay by instalments, this can be carried over into an amended planning permission; currently this is not always the case. Applying indexation to s73 planning permissions According to the Government’s response the amended regulations “seek to avoid a new liability for the entire floorspace of the development being calculated at the latest indexed rate where a section 73 application is granted. The regulations ensure that any increases in liability resulting from a section 73 application are charged at the latest rate, including indexation, while previously permissioned floorspace continues to be charged at the rate/rates in place when those elements of the development were permissioned”. The Government plans to produce guidance to assist interpretation of this amendment. These amendments are purported to have been introduced in the interests of fairness, but arguably they are only required because some collecting authorities have been seeking to take advantage of potentially unclear drafting in the existing Regulations, when the intention as now set out more clearly was already clear. Consolidation of key formulas used to calculate the levy As noted above, the new schedule 1 at the end of the Regulations attempts to consolidate into one place the formulas for calculation of CIL liability and social housing relief, providing various scenarios for amended planning permissions that are clearly identified.  New indexation arrangements from 1 January 2020 The Government will not go ahead with its proposal to use different indexes for residential and commercial development.  Instead, the Government has asked the Royal Institution of Chartered Surveyors to produce a bespoke index for the Levy, based on the Building Cost Information Service’s (BCIS) All-in Tender Prices Index, to be known as the ‘RICS CIL index’. This new index will be produced annually, be made publicly available and will not change through the year.  The charging authority will also provide an ‘annual CIL rate summary’. The Regulations require that the BCIS index applies to planning permissions granted before 1 January 2020.  From 1 January 2020 the RICS CIL index that is to be published at the end of this year will be used for planning permissions granted on or after that date. The BCIS index will reapply if for any reason the RICS CIL index is not produced in November of any preceding year. [1] Community Infrastructure Levy (Amendment) (England) Regulations 2019 [2] Government response to reforming developer contributions[3] The Community Infrastructure Levy (Amendment) (England) (No. 2) Regulations 2019


Draft London Plan EiP: A change is gonna come
Lichfields is currently monitoring the draft London Plan Examination in Public (EiP), which is scheduled to last until May 2019, and will report on relevant updates as part of a blog series. The seventh blog of the series focuses on some key further suggested changes proposed by the Mayor. After months of hectic hearing sessions, lengthy written statements, endless words, minor suggested changes, followed by further suggested changes, we are now officially in the break-month of the London Plan Examination in Public (EiP), which will duly resume at the end of April. In this context, you might well be forgiven for having lost the plot over where we are at with the draft London Plan, and the latest GLA position on some of the more contentious proposed policies. Whilst, we are still far from knowing any official recommendation from the Planning Inspectors (with the Inspectors’ report currently expected sometime in Summer 2019), the break creates an opportunity to look back at some of the changes the GLA has officially endorsed via published further suggested changes. Below, I have listed six key policy changes (plus a little bonus) which are likely to significantly affect the development sector in London, if endorsed and confirmed by the Inspectors. All the references below to draft London Plan policies/paragraphs are taken from the latest version of the whole Plan (published August 2018, available here). 1. Housing targets and monitoring: a steep stepped approach? One of the main concerns for London Boroughs has surely been the high annualised housing targets (set out in table 4.1 in the draft Plan) and their immediate application from April 2019. The GLA seems to have accepted that it is unrealistic (and procedurally questionable, given that the Plan is not yet adopted) for London Boroughs to step-up their housing delivery at the levels the GLA envisages from year one. Accordingly, it proposes to allow Boroughs to increase their housing targets gradually, allowing them ‘to set out a realistic, and where appropriate, stepped housing delivery target over a ten-year period’ (Paragraph 4.1.3[1]). This might provide a short-term solution to address under-delivery in the first years, but the cynics among us might say that it will simply allow Boroughs to kick the can down the road. Interestingly, the proposed change also touches on another very contentious point, this being the interplay between proposed housing targets, the Government’s standard method for assessing housing need, and the Housing Delivery Test. Boroughs wishing to opt for a stepped housing delivery target are to clearly articulate ‘how these homes will be delivered and any actions the boroughs will take in the event of under-delivery’; the draft Plan now notes that a ‘clear articulation […] would also fulfil the requirement of a ‘Housing Delivery Test action plan’’. Notwithstanding the questions raised by London Boroughs on the potential impacts of this ad-hoc regime (with the new London Plan based on the 2012 NPPF, while Local Plans will be based on the 2019 NPPF), MHCLG concerns about London’s deviation from the standard method for assessing local housing need, and the draft Plan’s reference to the Housing Delivery Test, the Mayor seems firm in his view that housing delivery in London should be assessed against his targets, rather than the standard method-derived housing requirements. This makes for a policy area of the draft London Plan worth following, particularly to understand what the Inspectors will recommend in light of these differing views between the Government and the GLA, as well as for the potential practical implications it may carry.  2. Small sites: yet, not too small to contribute Another contentious policy, due to the draft Plan’s over-reliance on its potential achievements and the modelling assumptions behind it, is Policy H2 ‘Small sites and small housing developments’. Further suggested changes proposed to this policy provide clarifications that any affordable housing requirement that Boroughs wish to apply to small housing developments of nine units or less should only be ‘a tariff approach rather than seeking on-site contributions’ (Policy H2 H[2]). Additional changes to supporting text further stress that ‘affordable housing requirements from development of nine or fewer units should be asked for as a cash in lieu contribution’. Moreover, the presumption in favour of small housing developments[3] would also apply to change of use of non-residential buildings to residential use, which has now been deleted from the list of small housing developments exempted from the presumption; this was added to the list via August 2018 minor suggested changes (Policy H2 F, and related supporting text at paragraph 4.2.3A [4]). The deletion of the above and other exemptions to the presumption in favour of small housing developments (including the exemption for designated Green Belt and MOL sites) suggests that the original assumptions behind small sites-related housing delivery might have been too optimistic. 3. Affordable Housing or employment land, that is the question There is no doubt that the provision of affordable housing in London is the number one priority of the draft London Plan. A suggested affordable housing change that is already worrying some in the Built to Rent sector relates to Boroughs being able to ‘require a proportion of affordable housing as low cost rent (social rent or London Affordable Rent) on Build to Rent schemes’. Furthermore, these potential low cost rent homes ‘must be managed by a registered provider’ (Supporting text 4.13.9A[5]). This could represent quite a conundrum for those Build to Rent developers who are not registered providers (the large majority), and could create issues around different managements within the same building. The draft London Plan also includes affordable housing policies relating to residential development on London’s industrial land. In order to achieve some form of planning benefit from future losses (beyond provision of new homes) and ‘given the difference in values between industrial and residential development’ the draft London Plan policy H6 proposes a threshold of 50 per cent affordable housing for development in certain industrial locations where there would be a net loss of industrial capacity.  The supporting text of Policy H6, as amended, refers to ‘industrial floorspace capacity’ and says ‘residential development proposals that would result in a net loss of industrial floorspace capacity on Strategic Industrial Locations, Locally Significant Industrial Sites or Non-Designated Industrial Sites are expected to provide at least 50 per cent affordable housing to follow the Fast Track Route’ (Supporting text 4.6.6[6]). However, the concept of ‘industrial floorspace capacity’ comes with some caveats, in the form of recently proposed footnote 46E. This recognises that the floorspace capacity approach also applies to ‘sites used for utilities infrastructure or land for transport functions that are no longer required’ for the purposes of Policy H6; furthermore, the footnote acknowledges that ‘some surplus utilities sites are subject to substantial decontamination, enabling and remediation costs’. In these instances, and if ‘it is robustly demonstrated that extraordinary decontamination, enabling or remediation costs must be incurred to bring a surplus utilities site forward for development, then a 35 percent affordable housing threshold could be applied, subject to detailed evidence, including viability evidence, being made available’ (Footnote 46E[7]). The above is a sensible change given that development on industrial land often incurs in greater costs in terms of site preparation. One might assume that such decontamination costs should be accounted for in the price paid for land, but it is also true that many sites might have been bought well before the fast-track route approach to affordable housing was introduced. 4. Industrial land: exempting from the plot (ratio) Still on industrial land policies, significant debate emerged at the related hearing session on the introduction of a minimum floorspace plot ratio of 65% (industrial floorspace/total land) as benchmark against which the principle of ‘no net loss’ of industrial floorspace capacity should be measured. In the draft London Plan industrial floorspace capacity is defined ‘as either the existing industrial and warehousing floorspace on site or the potential industrial and warehousing floorspace that could be accommodated on site at a 65 per cent plot ratio (whichever is the greater)’[8].   However, the GLA recognises that not all industrial uses might be able to operate or being commercially viable if a strict 65% floorspace plot ratio were to apply. Accordingly, a further suggested change provides for exceptional circumstances, where ‘it should be demonstrated that it is not feasible to achieve no net loss of industrial floorspace capacity through alternative configurations, multi-storey industrial development, a wider mix of industrial uses, or other appropriate measures’ (Supporting text 6.4.5AB[9]). However, this exceptional approach will not apply to industrial developments proposed as part of SIL/LSIS consolidation processes, and for industrial/residential/non-industrial co-location schemes. 5. Green Belt and Metropolitan Open Land: national policy and no land-swap Green Belt and Metropolitan Open Land (MOL) policies are always a contentious topic, and the draft London Plan is surely no exception. However, and quite surprisingly, the GLA does not propose to amend Policy G2 B (i.e. Green Belt ‘de-designation will not be supported’), which many consider inconsistent with national policy. The Mayor of London written statement clarifies the reason for this, as the ‘policy wording has a different emphasis to the NPPF, with the NPPF requiring the demonstration of exceptional circumstances to justify boundary changes. The emphasis in the draft London Plan is considered justified as Green Belt release is not considered necessary, with the vast majority of London’s development needs being able to be met within London, without developing on the Green Belt’ (Paragraph 65.8[10]). The capacity to meet the vast majority of London’s development needs within its own boundaries has been challenged by many stakeholders, particularly in light of the very high housing targets, industrial land policies, and over-reliance on small sites potential housing delivery. It will be interesting to learn the Inspectors’ view on this point. In terms of further suggested changes, the GLA clarifies that MOL ‘is afforded the same status and level of protection as Green Belt’ and that this should be ‘protected from inappropriate development in accordance with national planning policy tests that apply to the Green Belt’. Interestingly, the supporting text reference to the principle of land swaps being potentially applicable to MOL had been removed (Supporting text 8.3.2[11]). 6. Affordable workspace with an expiry date Low-cost and affordable workspace policies are an interesting innovation of the draft London Plan, although initially many of the details were to be left to the Boroughs for their decision. More details have been provided in relation to affordable workspace, where spaces are provided at below market rate due to the ‘specific social, cultural, or economic development purpose’. Affordable workspaces can be provided ‘and/or managed directly by a dedicated workspace provider, a public, private, charitable or other supporting body; through grant and management arrangements; and/or secured in perpetuity or for a period of at least 15 years by planning or other agreements’ (Supporting text 6.3.1[12]). The removal of the expectation that affordable workspace should only be secured permanently will probably be a great relief to the development sector, given the uncertainty that surrounds this new policy. Further suggested changes proposed to remove the reference to ‘reasonable proximity’ for the re-provision of lower-cost business spaces, possibly due to the difficulties in defining what ‘reasonable proximity’ might have meant in practice. Bonus track: live hub of planning data Not strictly policy related, but of interest to the development sector in the Capital is the recent update on the development of a live hub of planning data by the GLA. As explained in a useful article[13], the London Development Database will be used to ‘monitor implementation of the London Plan’. To support the monitoring phase, the GLA has published Non-Technical Planning Data Standard which sets out the key information that will be collected up-front on planning applications ‘in machine readable fields, so that planning application information can travel automatically through systems and out to the public’. As stated on the GLA website ‘[a] Technical Planning Data Standard will follow with further information on schemes, fields, and other relevant details’. Importantly, the goal is for this automation process to be ready ‘in conjunction with publishing the new London Plan. […] Based on the outcome of the London Plan EiP, [the GLA] will amend any fields in the Data Standard that do not align with the final London Plan before the automation project goes live’. Having robust systems in place to collect information and directly feed-back to the GLA is crucial to ensure that the practical implications of new policy approaches are closely monitored, and potential unintended consequences addressed as soon as practicable. The draft London Plan: a marathon, not a sprint The London Plan EiP is still moving forward, with four additional weeks of hearing sessions scheduled until the end of May, and which will cover some crucial areas such as town centres, social infrastructures and viability. We know that the Inspectors aim to write their final report on the draft London Plan between May-July 2019, and we could reasonably expect this to be published towards the end of Summer 2019. The current target is for the final version of the new London Plan to be published early in 2020, just before the next Mayoral Election takes place (May 2020). As the Mayor has repeatedly said over the last three years, solving the housing crisis ‘is going to be a marathon, not a sprint’, and we can surely state the same for the new London Plan publication process. However, as someone with a far better voice than mine used to sing:‘It’s been a long, a long time coming But I know a change is gonna come, oh yes it will’ [1] Appendix 1: M19 Further Suggested Changes[2] Appendix 2: M20 Further Suggested Changes[3] ’For the purposes of part D, the presumption in favour of small housing developments means approving proposals for small housing developments which are consistent with the policies of the London Plan while recognising that local character should evolve over time to provide new homes’ (Policy H2 E, Matter 20 Further Minor Suggested Changes to Policy H2)[4] Matter 20 Further Minor Suggested Changes to Policy H2[5] Appendix 1: M29 Further Suggested Changes[6] Appendix 1: M24 Further Suggested Changes[7] Appendix 1: M24 Further Suggested Changes[8] Supporting text at paragraph 6.4.5 (The draft London Plan showing minor suggested changes, August 2018)[9] Matter 62: Land for Industry, Logistics and Services, Further Suggested Changes[10] Mayor of London Written Statement on M65 Green Belt and Metropolitan Open Land[11] Matter 65 Further suggested changes to be made to Policy G3 Metropolitan Open Land[12] Matter 60: Low Cost and Affordable Business Space Further Suggested Changes[13] A live hub of planning data for London – update (Medium) See our other blogs in this series: Draft London Plan EiP: A new hope for industrial land? Draft London Plan EiP: Heritage and culture are now dusted Draft London Plan EiP, Affordable Housing: 3D snakes and ladders Stand and deliver… Draft London Plan EiP: ‘Willing Partners’ or not? Draft London Plan EiP: Design – fit for purpose? Lichfields will publish further analysis on the draft London Plan Examination in Public in due course. Click here to subscribe for updates. This blog has been written in general terms and cannot be relied on to cover specific situations. We recommend that you obtain professional advice before acting or refrain from acting on any of the contents of this blog. Lichfields accepts no duty of care or liability for any loss occasioned to any person acting or refraining from acting as a result of any material in this blog. © Nathaniel Lichfield & Partners Ltd 2019, trading as Lichfields. All Rights Reserved. Registered in England, no 2778116. 14 Regent’s Wharf, All Saints Street, London N1 9RL. Designed by Lichfields 2019.