20 May 2020 #Real Estate
On 13 May 2020, the Government published guidance for local authorities on Community Infrastructure Levy (CIL) matters and outlined its proposals to introduce temporary amendments to the Community Infrastructure Levy Regulations 2010.
These measures are intended to ‘ease the burden on developers’ and to provide greater flexibility to local authorities. While it is acknowledged that the Government has put a number of measures in place to help businesses during the COVID-19 outbreak, it is also recognised that smaller developers may need more help. The key changes are out outlined below.
Amendments to the CIL Regulations 2010 will enable local authorities to: defer payments, temporarily disapply late payment interest and provide discretion to return interest already charged where they consider it appropriate to do so for developers that have an annual turnover of less than £45 million. This may also apply retrospectively to any interest that has accrued in the period between the introduction of the lockdown and the regulatory changes coming into effect. However, it should be noted that these amendments will not be open-ended and are only intended to last until the economic situation has recovered.
Before these amendments can come into force they will have to be debated in Parliament. However, it is hoped that the Government’s clear intention to legislate should give local authorities confidence to use their enforcement powers with discretion and provide some comfort to developers that, where appropriate, they will not be charged more for matters that are outside of their control.
There are greater flexibilities within section 106 planning obligations than CIL. As such, Local Authorities are asked to consider whether it would be appropriate to allow a developer to defer payment of financial contributions. Deferral periods could be time-limited, or linked to the Government’s wider legislative approach and the lifting of CIL easements and recorded by Deeds of Variation.
The Government’s proposals are designed to remove barriers for developers and minimise the stalling of sites which will in turn provide a welcome boost to the economy. The recommendation that local authorities should take a positive approach to their engagement with SME developers to ensure CIL liabilities do not cause undue burdens over the period of disruption caused by the coronavirus and to use their discretion in considering what, if any, enforcement action is appropriate will be gratefully received by developers in these uncertain times.
For more information read the government community infrastructure levy guidance