Draft regulations setting out neighbourhood CIL published

The draft CIL amendment regulations provide that where a development which is chargeable to CIL is within a parish or community council with a neighbourhood development plan in place, the charging authority must pass 25% of its CIL receipts to the parish council for that area.

If the parish council where the relevant development is located does not have a neighbourhood development plan in place, the charging authority must pass to it 15% of its CIL receipts.

The plans to allocate 25% of CIL receipts to parish councils with neighbourhood plans were announced by Planning Minister Nick Boles last month.

“This Government is determined to persuade communities to accept more housebuilding by giving them a tangible share of the benefits it brings," said Boles in a statement. "By undertaking a neighbourhood plan that makes space for new development, communities can secure revenues to make the community more attractive for everyone.”

Parish councils are required under the draft regulations to apply the receipts "to support development" of its area, including funding towards "the provision, improvement, replacement, operation or maintenance of infrastructure" or "anything else that is concerned with addressing the demands that development places on an area".

Local parish councils that 'misapply' CIL receipts passed to them may be liable to repay the funds to the charging authority.  If the parish council either does not spend the money received to "support development" within five years of receipt, or if it has spent the money for other purposes, the charging authority may request that some, or all, of the receipts are refunded.

Where a development is not within a parish or community council, the charging authority is also required to spend the CIL receipts to "support the development" of the relevant area where the development is located. 

The Department for Communities and Local Government (DCLG) has committed to publish new or revised guidance to clarify how charging authorities should engage with the local community to agree the use of such CIL receipts.

"The headline figures of 15% to 25% of CIL receipts would have been eye-catching last year when expectations were much lower, but they have been trailed effectively by Nick Boles and the DCLG in the past few months,” said Marcus Bate, planning law expert at Pinsent Masons, the law firm behind Out-Law.com. 

“Nevertheless, this still represents a significant reduction in the efficacy and availability of CIL funding for strategic Borough or District wide infrastructure.  Local authorities which have already set strategic CIL funding targets and identified priority CIL projects following infrastructure planning for their Draft Charging Schedules will need to rush to revise their work and ensure that their evidence-base is robust and up-to-date for examination", Bate said.

"The development industry is understandably cautious when it comes to CIL Regulations, given the number and complexity of Amendment Regulations introduced since 2010.  Like the others, the latest Amendment Regulations are not without their flaws.  The most notable of these are the potential for double-charging under S106 and neighbourhood CIL and the excessively wide and unregulated spending powers," he said.

"On the other hand, there are some positive implications.  The introduction of a repayment mechanism for neighbourhood CIL receipts not spent within five years is to be welcomed,” Bate said.

“Many will query why the same sensible provision is not being applied to strategic Borough or District CIL.  And the introduction of a more direct physical connection between new development and CIL spending should enable more local authorities to give weight to this CIL as a 'local finance consideration' when determining planning applications," he said.

The draft regulations also set out transitional provisions for when a Mayoral Development Corporation (MDC) becomes, or ceases to be, a charging authority. These include an entitlement for a charging authority to receive CIL funds where a new charging authority has subsequently taken over control of the area where the chargeable development is located.

The draft regulations further enable the Mayor of London to start preparatory work on a CIL charging schedule for an MDC prior to the MDC becoming a charging authority.

The draft regulations implement proposals were first consulted on in October 2011.  However, they do not specify whether affordable housing is capable of being funded from CIL, despite that being part of the same consultation.

The DCLG has said it expects the draft regulations to come into force in April.