CIL Charitable Relief for University student accommodation - Public forum - Planning Advisory Service (PAS)
CIL Charitable Relief for University student accommodation
Hi all,
I was wondering whether anyone has come across a situation where a university, as a charitable organisation, has sought a significant amount of charitable relief from CIL.
In this case, the student accommodation is being let at full market rent, resulting in a CIL liability running into several million pounds.
I have been reading up on the Subsidy Control Act 2022 and noted that Minimal Financial Assistance for Services of Public Economic Interest (SPEI) is capped at £315,000. Am I right in thinking that this would limit any relief to £315,000, with the remaining liability having to be paid by the developer? Or are there other subsidy control considerations or exemptions that might apply in these circumstances?
Any thoughts, experience, or expertise on this issue would be greatly appreciated.
Thanks in advance.
Hi,
I suspect that you need to go back and review the charitable purpose of the development and the relief being claimed.
Under the CIL regs the mandatory charity relief neds to meet 2
Reg 43.(1) An owner (C) of a material interest in the relevant land is exempt from liability to pay CIL in respect of a chargeable development if—
(a) C is a charitable institution; and
(b) the chargeable development will be used wholly or mainly for charitable purposes (whether of C or of C and other charitable institutions).
Additionally MHCLG guidance states the following
Under the mandatory charitable exemption, the chargeable development must be used ‘wholly or mainly for charitable purposes’ once it is completed. This is a similar formulation to that used for business rates charitable relief.
There is no statutory definition of this requirement. However, the courts have held ‘mainly’ to mean ‘more than half.’ The chargeable development must be used to ‘directly facilitate the carrying out of the charitable institution’s charitable purposes’ – or those of itself and other charitable institutions.
Use of a chargeable development for trading could qualify but is unlikely where the link to furthering charitable purposes is purely through raising money. Qualifying use could also include a charity using the chargeable development to house its employees, under certain circumstances.
I would suggest that a universities charitable purposes is unlikely to be the housing of students, especially if they are charging full market rent. So I would be expecting the claimant to show how they thought they qualified for mandatory charitable relief in the circumstances that you have described before I started to worry about Subsidy control.
As to SPEI, MHCLG guidance states
A public authority can only award a subsidy for the delivery of a SPEI if it does so in a transparent manner and it is satisfied that the value of the subsidy is restricted to what is necessary to deliver that service. Public authorities should take into consideration the cost of delivering the service and what would be a reasonable profit for the enterprise delivering the task when deciding the value of the subsidy.
I would be looking to my legal team for advice on this and its impact on the case you have if the situation met the Reg 43 criteria and you were looking to grant relief.
Cheers
Neal