Social housing relief from the levy and its clawback

CIL social housing relief is mandatory for qualifying affordable dwellings, which means the collecting authority has no discretion to refuse it once the claim is properly made. The catch is in the word properly. Relief must be claimed, granted and recorded before development begins, it is calculated on floor area rather than unit numbers, and it is clawed back if the qualifying use ends within the period set by the Community Infrastructure Levy Regulations 2010.

Most disputes about this relief are not about eligibility. They are about timing, apportionment and what happened three years after the scheme was occupied.

Mandatory relief and the qualifying tenures

Regulation 49 sets out the mandatory relief and defines the dwellings that qualify. The categories have been amended more than once, and the current definitions cover the familiar affordable tenures: dwellings let by a local housing authority or a private registered provider at social or affordable rent, shared ownership dwellings, and certain intermediate rented products.

Read the definitions rather than assuming. A tenure that the local plan calls affordable housing is not automatically a qualifying dwelling for levy purposes, and the two definitions have drifted apart in several authorities. First homes, discounted market sale and rent to buy products need checking individually against the regulation as it stands.

Where a product does not qualify for mandatory relief, it may still qualify for discretionary relief.

One more definitional point. The relief attaches to dwellings, so ancillary accommodation, a management suite or a commercial unit in the same building is charged in the ordinary way even where the whole block is operated by a registered provider. Specialist accommodation that is not a dwelling in the planning sense needs its own analysis.

Discretionary relief and why it is patchy

The regulations allow a charging authority to offer discretionary relief for discount market sale housing, provided it has adopted and published a policy first.

Some authorities have done this. Many have not, and there is no obligation on them to do so. The practical consequence for an appraisal is that the same mix of tenures carries a different levy cost in neighbouring boroughs.

Find out before you fix the mix. The authority's CIL page will say whether a discretionary relief policy exists, and if the page is silent, ask the CIL team in writing. That answer belongs in the appraisal alongside the figures in your Viability Assessment, because a levy charge on the affordable units changes the residual land value.

How the relief is calculated across a mixed scheme

The relief is apportioned by floor area, not by unit count.

The chargeable amount for the development is calculated first. The qualifying gross internal area is then expressed as a proportion of the total, and relief is applied to that share.

Two points catch developers out. Affordable units are frequently smaller than market units, so relief as a proportion of the charge is usually less than the affordable percentage quoted in the planning obligation. And communal space, plant and circulation are apportioned, so the figures need to come from the area schedule rather than from the heads of terms.

Get your quantity surveyor and your planning consultant to agree the area schedule once, then use the same schedule in the levy forms, the section 106 agreement and the Affordable Housing Statement. Inconsistent schedules across those three documents generate queries that take weeks to resolve.

Claiming before development begins

The sequence is the same as for other reliefs and it is unforgiving.

1. Someone assumes liability for the levy in writing.
2. The relief claim is submitted on the prescribed form, with the supporting evidence.
3. The collecting authority grants the relief and issues a revised liability notice.
4. A commencement notice is served before the first act of development.
5. Work starts.

A claim made after work has begun is too late, and the full charge becomes payable. There is no discretion to backdate it, and the sums involved on a large scheme are substantial enough to change the outcome of the development. That is the single most expensive mistake in this area, and it usually happens because an enabling works contract started on site while the paperwork sat with a solicitor.

Where the affordable provider has not been appointed by the time work needs to start, take advice early. Options exist, including claiming on the basis of the approved tenure mix and notifying changes later, but they depend on the authority's approach and on the precise facts.

Disqualifying events and the clawback

Relief is conditional. If a qualifying dwelling stops being a qualifying dwelling during the period set by the regulations, currently seven years from the day development begins, the relief is withdrawn in respect of that dwelling and the levy becomes payable.

The events that trigger it include a qualifying dwelling being sold on the open market, a change of tenure outside the qualifying categories, and a transfer to a body that is not a private registered provider. Statutory disposals such as those under right to buy or right to acquire schemes are treated differently, so check the current regulations rather than assuming either way.

There is a duty to notify the collecting authority when a disqualifying event occurs, and the deadline is short, measured in days rather than months. Diarise it at practical completion and pass it to whoever will hold the asset, because the developer who claimed the relief is often long gone by the time a tenure change happens.

Evidence, records and the provider who joins late

Collecting authorities ask for the section 106 agreement, the area schedule identifying each qualifying dwelling, confirmation of the registered provider, and the tenure of each unit. Some ask for the transfer documents after completion.

Keep a single file containing the liability form, the relief claim, the grant of relief, the commencement notice and the area schedule. Hand it over on sale. The buyer's solicitor will ask, and unpaid levy sits as a local land charge against the land rather than against the person who should have paid it.

Where a registered provider joins the scheme after permission, or replaces an earlier one, tell the CIL team in writing at the time. A change of provider is not usually a disqualifying event in itself, and the authority's records need to match reality when the seven-year period is running. The wider picture of how levy receipts are reported locally is covered in the note on infrastructure funding statements, and specialist tenures raise their own questions, set out in the piece on student accommodation and planning contributions.

This is general guidance, not legal advice. Check the position with your local planning authority or a qualified professional before relying on it.

Draft the affordable housing and viability documents for your scheme on PlanScope, then have the levy position checked by your adviser.

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