Relief for self-built homes
After much lobbying the government is consulting on proposals to introduce a relief from paying the levy for all self-build housing. Concerns have been expressed that the levy undermines the viability of self-build projects as self-builders are often at a disadvantage due to budget constraints, cash flow limitations and an inability to benefit from large discounts from suppliers on material costs available to larger developers.
The government is proposing a two-stage process for the relief to apply. First, an application for the self-build relief will need to be made before starting development. Second, upon completion of the development, the self-builder would need to produce documentary evidence that the house was a self-build project and would be owner occupied.
It is intended that the relief will cover homes built or commissioned by individuals or groups of individuals for their own use, either by building the home on their own or working with builders.
Social housing relief
The current levy regulations provide a relief for social housing for rent or shared ownership. The government is looking at extending this relief to other forms of affordable housing being provided through intermediate tenures, including homes for sale provided at a cost below market levels. The consultation proposes that social housing relief could apply to housing provided at an affordable rent or price at least 20% below open market levels.
Discretionary relief for exceptional circumstances
Discretionary relief from the levy is currently only available where the amount payable under a section 106 agreement is higher than the levy liability and the amount of levy payable would have an unacceptable impact on the economic viability of the scheme.
The consultation considers abolishing the requirement for there to be a planning obligation higher than the levy liability or adjusting the requirement to a set percentage of the value of the CIL charge (ie 80%).
Payments in kind
The consultation considers allowing councils to accept levy payments in kind from developers providing infrastructure instead of cash or land.
The current regulations allow charging authorities to accept one or more land payments in satisfaction of the whole or part of the levy due. The amount of the levy treated as having been paid is an amount equal to the value of the acquired land. The consultation recognises that there will be circumstances where “it is sensible for a developer to provide infrastructure [as they] may be best placed to deliver [it] in a timely and cost-effective way."
Current vacancy test
The regulations allow vacant floorspace to be offset against levy liability. Buildings that have been vacant for a certain amount of time but are being refurbished or redeveloped often fall foul of the current vacancy test. The consultation proposes abolishing this test, which states that the building must be in continuous use of at least six of the past 12 months.
The levy would still be payable, however, on buildings where the use has been abandoned or vacant buildings being redeveloped with an increase in floorspace.
Section 278 agreements
The government is examining the use of section 278 agreements. It is considering limiting the ability of local authorities to combine the use of section 278 agreements as a way of funding improvements to the road network in addition to payments under the levy.
There is concern that unreasonable requirements could be placed on developers if a section 278 agreement is required for a project which is included on the list of infrastructure and intended to be funded through the levy.
Also worthy of note are proposals to allow local authorities who have not yet adopted the levy a further year to continue seeking pooled planning obligation contributions and proposals to ensure that, where planning permission is phased, levy payments are also phased to help get development underway as soon as possible.
Overall the proposed changes should be welcomed. They will introduce greater flexibility into the levy regulations. It remains to be seen, however, which proposals will be transposed into law.
The closing date for responses to the consultation paper is 28 May 2013.
John Bosworth is a partner and head of the planning team at Ashfords Solicitors