The Cost of Planning Permission – The Community Infrastructure Levy Regulations 2010

For many years, local authorities have been able to demand additional obligations from developers before granting a planning consent. Developers have also volunteered obligations as a means to winning a planning consent. These obligations are set out in planning agreements often called section 106 Agreements. The law establishing this regime has not changed greatly since 1990.[1] A substantial change has been introduced by the new Community Infrastructure Levy Regulations 2010.

The Regulations introduced a concept known as the "community infrastructure levy". Local authorities do not have to establish one, but it is anticipated all will.

The Regulations make it possible for local authorities to charge a levy on developers as a contribution towards funding local infrastructure; and, modifies the existing law so that this is achieved through the infrastructure levy as opposed to the old regime of planning agreements.

To make this work, a mandatory test has been introduced which local authorities must apply when considering planning obligations. That test requires that a planning obligation should be:

• necessary to make the development acceptable in planning terms;
• directly related to the development; and
• fairly and reasonably related in scale and kind to the development.

As a result of this mandatory test, it is expected that the range of obligations and the circumstances under which they have been required will be reduced. Developers are now expected to be in a stronger negotiating position when discussing the level and type of obligations required under any planning agreement. At least where a local authority has opted to use the community infrastructure levy.

The Regulations give local authorities the opportunity to start putting together their policy for the community infrastructure levy. A number already have a scheme, of sorts, in place. The new levy will, however, be subject to greater scrutiny.

It is expected local authorities will introduce levies before 2014 as, at that point, additional restrictions are placed on how the local authority uses money raised under planning agreements for infrastructure funding.

The provision of affordable housing does not fall under the community infrastructure levy regime. This will continue to be dealt with under planning agreements.

Charities also have certain exemptions from a community infrastructure levy.

Purchasers of property where a levy has been imposed must check that the levy has been paid. The Regulations include some of the widest enforcement powers yet seen with the option for the local authority to have a non payer committed to prison.

For further information on this topic please contact John Duffy on JDuffy@faegre.com.