Housebuilder Top Tip: CIL in a time of COVID

Published 29 May 2020

In these challenging times, cash conservation is high on the agenda of most businesses. With housebuilders the payment of a Community Infrastructure Levy (or CIL) on a site can translate into a considerable dent in cash flow which is compounded by the Covid-19 measures that have seen sites closed and re-opened with limitations to accord with safety guidelines. These restrictions inevitably will push out construction time frames increasing expenditure and postponing cash collection.

While living in a time of Covid housebuilders would welcome an abatement or postponement of CIL and the government has outlined its intention to amend the regulations albeit in a limited way as set out below.

To re-cap, it is the implementation of development as defined in section 56(4) of the Town and Country Planning Act 1990 that triggers the payment of CIL and this cannot be reversed. Typically a developer will provide a notice of commencement which will trigger the issue of a demand notice which will set out what is payable and by when.

The government has stated its intention to amend the CIL regulations to allow authorities to defer CIL payments, temporarily disapply late payment interest on CIL and permit discretion to authorities to return mandatory interest on late payments. These measures are intended to apply to developers with an annual turnover of less than £45 million and their application confined to a limited period until the economic situation has recovered.

Given these limitations and pending enactment into law, it is worth considering the existing flexibilities that may assist housebuilders now:

1. Authority’s power to implement a new instalment policy

A CIL authority can bring into effect a new instalment policy for payment of CIL at any time under Regulation 69B of the CIL Regulations. The policy will only apply to chargeable developments commencing after the policy comes into effect so though it will not assist those that have commenced development and triggered the payment of CIL on a single phase development, it can assist in multi-phased development as each phase is a separate chargeable development. One might also be encouraged to hold off implementation until such a policy is in place (bearing in mind the time frame for implementation within the planning permission).

2. Enforcement powers of an authority

Housebuilders should prevail on planning officers to be flexible here, for example on the imposition of surcharges which are discretionary, as is the power to serve a stop notice until outstanding CIL money is paid. Ensure that any dialogue around the application or agreement to apply such discretion is documented. Note that interest on late payment will still be payable as its application is currently mandatory.

For any queries on CIL and all other planning matters please contact the planning team at DAC Beachcroft.