Commercial Property e-Brief – Planning Development Rights

As of 6 April 2013, or when the Community Infrastructure Levy (“CIL”) charging schedule for an area comes into effect it is worth considering the effect that development carried out under permitted development (“PD”) rights may have in relation to a potential for CIL liability.   The regulations provide for a £50 minimum threshold and a gross internal area threshold of only 100m2 so the potential to be caught by the liability is relatively high for most modest commercial or retail developments.

It is incumbent on the developer to serve a notice on the local planning authority termed a “notice of chargeable development” detailing the proposed development and attaching all plans.  The Authority will then acknowledge receipt of the notice and this will be the date on which calculations are based.  The developer will then receive a “liability notice” detailing how much they owe upon commencement of development or in accordance with any instalment plan available.

The penalty for failing to serve a notice on the Authority is a surcharge of £2,500 or 20% of what was due, whichever is the lower.

So, If you are acquiring property or already have property over which you intend to use PD rights our best advice is to firstly check when the CIL charging schedule comes into effect in your area as this may influence the timing of your construction.  Assuming the potential liability for CIL is imminent, the potential liability should be weighted into the decision as to when to start against other factors.  Landowners should also when entering into new leases with tenants include specific provisions ensuring that tenants will be liable for any CIL payable should alterations permitted using PD rights attract such a charge.  Overall, this is not welcome news as not only is there an increased cost potential but the serving of notices and plans somewhat diminishes the advantage of using PD rights in the first place.