06.06.2019

The CIL Regs have Landed...

It isn't very often that I feel personally victimised by a government department. That changed on Tuesday, when MHCLG published their response to the most recent CIL consultation (and laid the new amending regulations before Parliament) a mere 48 hours before Stuart and I were due to deliver a CIL Training Seminar.

Having spent the last two days hurriedly rewriting the Seminar handout, I thought I would let you have my thoughts on the latest revisions.

This is a fairly high level overview. Stuart is going to explore the implications of some of the changes in more detail in a later post.*

The amendments are due to come into effect on 1 September 2019.

First, let's deal with what is not in the latest set of amendments: 

Starter Homes

We were expecting MHCLG to extend mandatory affordable housing relief to cover Starter Homes. They have not done so. Instead they have kicked the can down the road, and promised to introduce the exemption when they bring out the Starter Home Regulations in the Autumn. This means that we may be looking at a third set of amending regulations later in the year.

In the meantime, Starter Homes still attract CIL at market rates, unless your Council has adopted the discretionary relief (which very few have). MHCLG's response to the technical consultation has made it clear, however, that Starter Homes are the only non-traditional form of affordable housing that is going to be incorporated into the mandatory relief. All other forms of Discounted Market Sale models will remain excluded.

There are, however, a number of amendments that have made it through:

The Good

• The Government has removed the ridiculously onerous penalties for failing to get your paperwork in order on self-build or residential annexes. Currently a developer can lose the entire benefit of these exemptions by failing to serve a commencement notice. From September, failing to serve a commencement notice will now be punishable by a fine, of up to £2,500 rather than the loss of the entire relief.
• They have also tidied up a discrepancy in the regulations over residential extensions. The government had previously attempted to remove the requirement to serve a commencement notice in relation to residential extensions. Unfortunately, they did so by amending the regulations around commencement notices without carrying the change through to the relevant exemption, which meant you could lose your residential extension relief by failing to serve a notice that you are not required to serve in the first place. Thankfully this terrible piece of drafting has now been rectified, and commencement notices will stop being a feature of the process for residential extensions.
• Whilst not fully consolidating the regulations, MHCLG have at least consolidated all of the CIL calculation provisions into a helpful new schedule- so there is no longer a need to try and read complex mathematical equations across multiple statutory instruments. The new schedule is handily organised by scenario, with separate parts for the main calculation, s.73 consents, social housing relief etc. The maths is still pretty horrendous, but at least it is now all in the one place!
• Local authorities will be required to publish annual statements showing how indexation has affected the charging rates in their area. Given that the BCIS index is not publicly available, this is extremely helpful.

The Sensible and Slightly Boring

• The Government has dropped the idea of indexing different parts of a charging schedule to different indices. Recognising that this would be a nightmare for everyone. Instead, they have asked RICS to produce a new publicly available index for CIL purposes (which will be called the CIL index) by 2020 and until it is ready we will continue to use the BCIS index, which is already in place.
• They have tidied up the calculations around s.73 permissions to make it easier to take account of amendments which increase the liability on one phase and decrease it in another. They have also closed off the loopholes around erroneous indexation, which I have ranted about in a number of previous posts.
• The Government has taken the opportunity to make seeking monitoring costs in s.106 agreements legal again, over-riding previous case law on the point. Given that most Councils continued to insist on payment of monitoring costs regardless of the case law, I don't actually mind this particularly. It is a return to the status quo.

The Potentially Controversial (or the bits I don't like)

Stuart is going to talk about this in more detail, so I won't go into these points in depth, but MHCLG have:

• Reduced the consultation requirements for Councils adopting CIL, so it can now sneak up on  you faster than before
• Removed the pooling restrictions, so there is no longer a limit on the number of s.106 contributions that can be put towards a single piece of infrastructure. On it's own, this is fairly uncontroversial. However at the same time, they have;
• Scrapped Regulation 123 entirely, allowing local authorities to use CIL and s.106 contributions for the same infrastructure projects and removing the rules against double dipping; and
• Replaced them with a reporting requirement. Councils will have to publish annual statements detailing how they spent CIL receipts over the previous year.

Stuart and I can see these changes giving rise to a number of problems; but I promised to let him tell you about them, so watch this space!

* since we both went through the pain, it is only fair that we share the commentary.

Minister of State for Housing Kit Malthouse MP said:

Communities deserve to know whether their council is fighting their corner with developers – getting more cash to local services so they can cope with the new homes built.

The reforms not only ensure developers and councils don’t shirk their responsibilities, allowing residents to hold them to account - but also free up councillors to fund bigger and more complicated projects over the line.

The certainty and less needless complexity will lead to quicker decisions, – just another way we’re succeeding in meeting our ambition of building 300,000 homes a year by the mid-2020s
”