Philip’s Advice: Beware the Dangers of Community Infrastructure Levy!

Wednesday, August 29, 2018

Community Infrastructure Levy

Applying for CIL exemption is one of the many legislative headaches we have to deal with in our projects. But how can a fee that most of our clients aren’t liable for in the first place cause so much trouble? Here are the dangers of CIL, and how you can avoid them.

What is the Community Infrastructure Levy?

Community Infrastructure Levy (CIL) evolved out of Section 106 agreements, which are obligations attached to planning permission by local authorities which require the developer to compensate or mitigate for any impact their development has on the local area.

Much of the original scope of Section 106 is now included and simplified within CIL, which is used by local authorities to fund infrastructure in their area, with the justification that it offsets the impact of the development.

The idea of CIL comes from a good place. Should a giant property developer apply to build 50 homes on the edge of a small town, the local authority uses the levy to pay for improvements that the town would require to accommodate the new homes.

For example, roads might need to be built or improved to provide access to the new development, there may be a need for new schools and doctor’s surgeries, or existing infrastructure might not be able to handle the strain of 50 new homes.

But CIL doesn’t just apply to large-scale commercial housebuilding; it applies to any development that adds more than 100 sqm to a building, or divides a single dwelling into multiple. This puts many of our clients in the firing line.

Community Infrastructure Levy exemption

Is my development liable for the Community Infrastructure Levy?

No matter the scale of your development, you will have to fill out a CIL questionnaire when you submit your planning application if your local authority has a CIL in place.

If your development is under 100 sqm and doesn’t subdivide the property in question, you will receive a letter saying that there is no CIL liability. But if your development is over 100 sqm you will be sent a demand – which, in the case of our projects, may be hundreds of thousands of pounds.

Luckily, there’s a full Self-Build Exemption in place for those who intend to live in the property for more than three years after the development has completed. This exemption separates home-improvers from the property developers that the CIL is intended for.

Great! So I don’t have to worry about CIL?

Unfortunately, it’s not that easy.

The procedure for applying for the CIL exception is a complex and cumbersome piece of local authority bureaucracy.

Firstly, the exemption won’t apply if it isn’t sought prior to the commencement of development. If you only found out about it after you started work, you’re out of luck.

Then there are seven (yes, seven!) forms in total which need to be completed prior to, during and following the development – each with strict timings. Miss the deadline for a form and, again, your eligibility for exemption is snatched away.

The amount of evidence you need to supply is also onerous. Council tax payments, title deeds, building warranty certificates, completion certificates, passport copies – it’s a dizzying amount of paperwork to gather.

Fulham House garden

Large-scale extensions like Fulham House above are the type of projects that are likely to fall afoul of CIL without help from a professional.

Why does planning law make CIL exemption so difficult?

When legislation is put in place, the lawyers writing it need to make sure that the law can be enforced should they ever need to fight in court. So, strict deadlines and requirements are put in place, written out in detailed legal jargon.

However, in the case of CIL, I feel that the procedure is unnecessarily complex and too much of a burden for homeowners who shouldn’t be targeted for CIL in the first place, and the pit-falls are potentially horrendous!

In our projects, we take on the responsibility of tracking the progress of the CIL exemption procedure, but even us experienced architects can find ourselves in trouble… This architect admits to having more than one sleepless night over CIL procedure in the past.

Local Authorities are often rearranging (and merging) their departments and a moving around their staff, which, in the age of click and forget, has the potential for forms going astray.

We recently had to track down a ‘missing’ form which had landed on the wrong desk, but in the time until it was found we were threatened with a large bill of over £100,000 – and the council weren’t being nice about it either. That’s a lot of additional stress for clients who might already be under a lot of financial pressure, and a lot of stress for us too!

If we can run into such issues, I shudder to think what situations people who go the Design & Build route find themselves in, or worse, the homeowners who decide to manage their development themselves.

The current situation, where a simple procedural error of an incorrectly filled out form could lead to a £100,000+ bill is an entirely unbalanced situation and needs to be changed.

What can I do about CIL?

Personally, I’m not sure whether any court in the land would find in favour of the council in a case where an obvious error has been made. It would seem ludicrous if they did. But with Local Authorities so strapped for cash, it doesn’t seem too far-fetched that they might see this as a punitive way of raising funds. If that was the case, it would be a travesty.

I’ve heard lots of anecdotal stories of people falling foul of the procedure and being landed with big bills, but I’m not sure any such case has made it to court. If you know of one, please get in touch.

Perhaps a Freedom of Information request on ‘unjustified’ CIL demands collected by the Local Authorities might be in order?

If you’re as concerned about the impact of CIL to homeowners developing their properties, you should write to your local MP or contract your local Head of Planning.

Hopefully, the procedure for CIL exemption will be improved, but in the mean time, it’s another example of why it’s so important to work with experienced architects or, at the very least, a bonafide project manager when you’re developing your home.

Having someone else with familiarity of CIL legislation take on the burden of filling out forms and gathering evidence will simplify your project paperwork and reduce your risk of being landed with a massive CIL bill.

If you have any questions about CIL, feel free to get in touch with us at [email protected]

Philip Jones-Lloyd

Image via Flickr by Images Money