COVID-19 has proved to be a catalyst for changes to the planning system designed to respond to the rapidly changing economic climate. The government this week published guidance on postponing payments of developer contributions such as planning obligations and CIL in order to alleviate one of the obvious obstacles to development coming forward. What kind of help has been identified and will it benefit all developers?
The government intends to amend the Community Infrastructure Regulations to ease the burden on developers. This will be welcome news in light of developers’ concerns about the effect of the inflexible CIL regime on their ability to deliver developments under the cloud of COVID-19.
Currently there is no scope in the CIL Regulations to change payment due dates. Unless CIL payments can be made in instalments in accordance with the local authority’s instalment policy (if published), payment is due on commencement of development and late payments result in mandatory interest charges.
The government is therefore proposing to introduce temporary measures to allow charging authorities to defer CIL payments and disapply the obligation to charge late payment interest. Furthermore, they propose to give charging authorities 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.
The government’s focus seems to be on helping SME developers. CIL authorities are encouraged to use their discretion in considering any enforcement action in light of the government’s clear intention to introduce temporary legislation. CIL authorities “should take a positive approach to their engagement with SME developers”.
The government hopes that authorities will apply the new discretion widely in cases where the threshold criteria are met.
The proposed changes will not benefit developers with turnovers in excess of the threshold criteria. The government points out that the current CIL Regulations contain a few limited powers available to charging authorities to assist and is encouraging their use. For example, regulation 69B allows for CIL payments to be made in instalments and a new instalment policy can be published at any time. On large scale phased developments, where each phase is a separate chargeable development, CIL charging authorities could introduce new instalment policies for the chargeable development which has not yet commenced. The existing flexibilities around enforcing CIL, including flexibilities over the imposition of surcharges, should be noted by CIL authorities for larger developers.
Under regulation 85, authorities can also exercise discretion over enforcement action for non-payment and whether to impose surcharges.
Whilst there is nothing to compel charging authorities to use these powers, given the high stakes for the local and national economy, the government is encouraging authorities to take a pragmatic approach to assist developers to ensure that development is delivered.
The government has not announced any proposals to assist developers in relation to the payment of section 106 contributions. Local authorities are, however, encouraged to take the current circumstances into account when negotiating planning obligations.
It is not only in the interest of developers that local planning authorities might be willing to renegotiate the delivery of planning obligations. Once a payment is made under a section 106 agreement, it must be spent within a set time, otherwise it must usually be repaid to the developer with interest. Given authorities’ need to focus now on the delivery of essential services and the often complex and lengthy procurement processes before financial contributions can be used, it may be in the interest of the local planning authority to defer payments and other obligations where appropriate to do so.
The government has called for “a pragmatic and proportionate approach to the enforcement of section 106 planning obligations during this period” and it is hoped that local authorities will heed this and be flexible in respect of both planning obligations and CIL.
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