Councils may need to reconsider CIL rates following deletion of small site exemptions, expert warns

The government announced in November 2014 that housing developments with 10 units or fewer, or that were smaller than 10 square metres in area, would be excluded from affordable housing levies and tariff-based contributions. A lower threshold of five units or fewer was applied to developments in designated rural areas, National Parks and Areas of Outstanding Natural Beauty. The High Court ruled last month that the exemption was unlawful and the government deleted it from its planning guidance documents.

Research from Planning Magazine has revealed that councils across England had reacted to the November announcement by setting higher rates in their CIL charging schedules for smaller sites benefiting from the exemption than for larger sites whose viability would be affected by affordable housing requirements.

The research showed that Babergh District Council (DC), Mid Suffolk DC and the Vale of the White Horse DC had each modified their draft charging schedules following the November announcement to apply differential rates for large and small developments based on the new affordable housing thresholds.

Bournemouth Borough Council, whose draft charging schedule has been submitted for examination, and South Gloucestershire Council, whose charging schedule was adopted in March, also expressly set differential rates based on the national planning policy changes, the research found.

Planning expert Jamie Lockerbie of Pinsent Masons, the law firm behind Out-Law.com said: "This is unsurprising news. When setting community infrastructure levy rates an LPA must, as a matter of law, strike an appropriate balance between the desirability of raising funds for infrastructure from CIL and the potential effects of the imposition of CIL on the economic viability of development across its area."

"If smaller residential sites were expected to be subject to a higher rate on the basis that they wouldn’t be exposed to affordable housing levies, then as a result of the change in government guidance the rate proposed may now render those smaller sites unviable," said Lockerbie. "An LPA in this situation would be wise to re-consider its rate for smaller sites in order to demonstrate that it has struck the appropriate balance'".