Draft Regulations to exempt First Homes from Community Infrastructure Levy
The draft Community Infrastructure Levy (Amendment) (England) (No 2) Regulations 2020 (2020 Regulations) were laid before Parliament on 29 September 2020 and proposes to make amendments to the Community Infrastructure Levy Regulations 2010 (CIL Regulations 2010). The regulations provide that First Homes Initiative properties will be included within the Social Housing category and will benefit from CIL Social Housing Exemption Relief. The regulations, if approved, will come into force on 16 November 2020.
Exemptions and reliefs from liability to pay CIL
The CIL Regulations 2010 has a number of provisions for charging authorities to give relief or grant exemptions from the levy. Some types of relief are compulsory, and others are offered at the charging authority’s discretion. Regulations 41 to 58, of the CIL Regulations 2010 sets out the exemptions and reliefs from CIL. Regulations 49 and 49A provides that a chargeable development is eligible for relief from liability to CIL where it comprises or is to comprise “qualifying dwellings”. A qualifying dwelling is one which meets at least one of the five conditions set out in the CIL Regulations 2010.
The 2020 Regulations adds a sixth condition to Regulation 49. In order to be a qualifying dwelling by virtue of this condition, the first sale of the dwelling must be for no more than 70% of the dwelling’s market value. Further, a planning obligation under section 106 of the Town and Country Planning Act 1990 must have been entered, which ensures that any subsequent sale of the dwelling is for no more than 70% of its market value.
The 2020 Regulations also make amendments to the discretionary social housing relief under regulation 49A of the CIL Regulations 2010.
For a dwelling to qualify under regulation 49A:
- It must be sold for no more than 80% of its market value
- It must be sold in accordance with a relevant policy published by the CIL charging authority
- Liability to pay any CIL in relation to the dwelling must remain with the person granted relief under regulation 49A
The 2020 Regulations provides, as an alternative to the last of these criteria, a requirement that a planning obligation has been entered into which ensures that any subsequent sale of the dwelling is for no more than 80% of its market value.
The 2020 Regulations also amends the definition of “clawback period”, where relief is granted under:
- Condition 6 as set out in regulation 49(7B), it will be withdrawn only if the dwelling ceases to qualify before being first sold in accordance with the criteria in that paragraph.
- Regulation 49A, and a planning obligation has been entered into, it will be withdrawn only if the dwelling ceases to qualify before being first sold in accordance with the criteria set out in regulation 49A(2).
Self-build exemption under Community Infrastructure Levy lapsed due to failure to follow correct procedure
The appellants had been granted a self-build exemption. The alleged breaches were the failure to assume liability and the failure to submit a commencement notice prior to commencing the development. The appellants didn’t dispute that the works had begun, or that the commencement notice was not submitted.
Under regulation 54A of the Community Infrastructure Levy (CIL Regulations 2010), self-build housing is eligible for an exemption to pay CIL. The procedure for claiming a self-build exemption is set out in Regulations 54A to 54D of the CIL Regulations 2010.
The planning inspector noted that, in the declaration section of the self-build exemption application form, the appellants had ticked the box and signed a declaration which said “I understand that my claim for exemption will lapse where a commencement notice is not submitted prior to commencement of the chargeable development to which this exemption applies.”
In the appeal decision notice, the planning inspector said that he appreciated the appellants argument that because they had received information that no further action was required and didn’t receive the Council’s reminder, they did not believe they needed to submit any further documents. However, the signed self-build declaration appears to show that the appellants were aware of the action required of them in order to keep the exemption, and of the consequences of failing to do so.
Whilst the planning inspector had sympathy with the appellants situation, it was a matter of fact that they failed to submit a commencement notice before works began on the chargeable development. There was no evidence that an assumption of liability notice had been submitted. The planning inspector had no option but to dismiss the appeal.
