The earlier blogs in this Series have explored the pitfalls in the CIL regulations in connection with the self-build exemption (SBE).
After much lobbying the Government appears finally to have listened. The Government’s response on the Developer Contributions consultation confirms that the proposed amendments to the CIL regulations (that were announced as part of the Government’s Developer Contributions reform consultation) will be taken forward to make the SBE process a little easier, fairer and more forgiving.
The draft regulations (laid before the House of Commons to come into force on 1 September 2019) ensure the penalties that result from a self-builder failing to submit a commencement notice before starting development will be softened. Instead of losing the SBE entirely, the developer will only be required to pay a mandatory surcharge equal to the lesser of £2,500 or 20% of the CIL that would apply to the development if not for the exemption (i.e. the penalty is capped at £2,500)[1], and confirm that the SBE to be carried over to an amended permission (i.e. a s73 permission), even if the development has commenced under the original permission[2].
This will not apply to wholly new applications, so careful thought still needs to be given to the potential CIL consequences if a new application is made after works have commenced under the original permission.
In addition to the changes for self-builders, the proposed amendments will also help to correct many of the pitfalls that plague the other CIL exemptions including:
- the failure to give the commencement notice before starting development will no longer (from 1 September 2019 assuming the amendment regulations take effect) result in the loss of charitable relief or social housing relief exemption; and
- the failure to give the commencement notice before starting development will no longer result in the loss of the exemption for residential annexes and residential extensions (from 1 September 2019 assuming the amendment regulations take effect).
However, as for the self-build exemption, the failure to give the commencement notice in advance of starting development will for each of the abovementioned scenarios give rise to a mandatory surcharge of no more than £2,500 (although the draft amendment regulations do not explicitly refer to residential extensions being subject to this penalty).
Unfortunately, the proposed amendments are not to have retrospective effect, so will not address or undo any previous injustices. Part 4 of this Series will address this and what more is needed.
[1] Regulation 6 of the Community Infrastructure Levy (Amendment) (England) (No. 2) Regulations 2019
[2] Regulation 7 of Community Infrastructure Levy (Amendment) (England) (No. 2) Regulations 2019 proposes a new regulation 58ZA
