Planning agreements and community infrastructure levy (CIL)

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Planning agreements and community infrastructure levy (CIL)

What are planning agreements?

Recent changes in the law have meant that more development projects are subject to planning agreements between the landowner developer and local planning authority. These used to be common on larger schemes but changes to affordable housing requirements etc. means they affect more small schemes.

Planning agreements secure obligations from or on behalf of the landowner and/or the developer to carry out certain works including provision of affordable housing; or financial contributions towards public open space etc.

S106 Agreements

Planning obligations have historically been put in place under section 106 agreements (named after the section of the Town and Country Planning Act 1990). These are private agreements between local authorities and developers and can be attached to a planning permission to make acceptable development which would otherwise be unacceptable in planning terms. The land itself, rather than the person or organisation that develops the land, is bound by a Section 106 Agreement, something any future owners will need to take into account.

S278 Agreements

If the planning permission requires off site highway improvement works the parties will enter into a planning agreement under Section 278 of the Highways Act 1980. If the works are to the public highway then only the Highway Authority has the power to do those works. If new roads are being constructed by the developer the s278 Agreement will set out the standard for the works to enable the roadway to become an adopted highway in the future.

Community Infrastructure Levy (CIL)

CIL came into force in 2010 as a tool for local authorities to get help in delivering infrastructure to support the development of their area by enabling them to charge a levy or tax on land development. The levy must be paid on the date planning permission is granted for any development covered by the charging schedule. If there is no charging schedule in force on the day planning permission is granted then there is no liability for CIL.

The Local Authority should publish any adopted CIL charging schedule together with a list (known as a Regulation 123 List) which identifies what the CIL money will be collected for. The charging schedule sets out the CIL rate as pounds per square metre of development and is levied on the net internal area of development. Each local authority can set its own rates by reference to both geography and development type and size.

CIL must be paid at the start of the development, i.e. digging foundations, which has an impact on the cash flow of the development. The liability to pay is with the party submitting the assumption of liability notice. In the absence of a notice CIL liability runs with the ownership of land and the impact of this should be carefully considered when preparing the development agreements as it is essential to be clear in the contracts as to the parties’ liabilities.

Where the local authority has a CIL schedule in place a Section 106 Obligation cannot be used to deal with matters covered by CIL. However as CIL cannot deal with affordable housing this will continue to be covered under the planning obligations?

Relief from CIL

Some developments are eligible for relief or exemption CIL provided that a Form 6 Commencement Notice is served prior to the start of the development.

If you need more information on planning agreements and or CIL and reliefs please contact us so we can look at your specific requirements.

South Worcestershire Development Plan

The South Worcestershire development plan prepared by South Worcestershire Councils of Malvern Hills, Worcester City, and Wychavon includes their Community Infrastructure Levy Preliminary Draft Charging Schedule

Gloucester City Council has published its Community Infrastructure Levy Preliminary Draft Charging Schedule and along with Tewkesbury and Cheltenham is preparing a Joint Core Strategy.

For more information see our note on planning agreements which provides more information on CIL.

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