Payment in Kind as part of a CIL Liability. - Public forum - Planning Advisory Service (PAS)

Yes Simon, you are correct. Regulation 73(7)(b) specifically says that the agreement to pay in kind can not form part of a s.106 planning obligation. An agreement to pay in kind does however have to be enterd into before the chargeable development is commenced. Such an agreemnet would take the form of a contract to transfer the land. You would need to talk to your legal staff re the details of such an agreement.

Cheers Tony Reg 73 it is then...saved me some reading! :) Simon

A different question on the same topic.. the payment in kind refers to the land being valued by an independent valuer, but for what use? Is it the use before PP is granted, is it the use for which it is going to be put (eg for a school site or open space) or some other use? Cheers, Simon

James, an LPA can't ask for payment in kind. A person liable for a CIL payment may ask to pay their liability, in whole or in part, in kind. The wording of Reg 73(1) is permissive and therefore it seems that an LPA can refuse to accept an offer of payment in kind.

I suppose it is just about conceivable that the LA might have a use for land in lieu, most probably in connection with the need for a site for a school to serve a wider area but also perhaps for a facility that is thought desirable but which is not a planning requirement. The issue of valuation is key. Sadly, I put this to DCLG during the CIL startup phase in 2010 and got a blank look. I am unaware of any clarification since.

Hi James As Tony says...payment in-kind can be accepted (at the discretion of the CA) in-lieu of a CIL 'cash' payment. I would suggest that there is an appetite for this amongst some developers (we have had representations supporting the ability to pay for a CIL liability in this way). It could also prove useful for CAs if they need space for a school (as Michael suggests) or for Public Open Space, for example. In fact, many developers appear to want CAs to accept a payment in this way by default...however...as you point out...there is no point in accepting a payment in land if the CA/LA doesn't need/want it...i.e. they need the money instead. Simon raises an interesting point. How does one actually instruct an independant valuer to value the land? Is it EUV? What about planning uplift etc? Unless it is clear one cannot value the payment in-kind??

James, if land received in lieu of cash can't be used for a "relevant purpose" then it can be used for any other purpose by the LPA, but in those circumstances the LPA must place an equivalent value of cash in its CIL "pot" (see Reg 73 (5) (9) & (13)). Remember that the offered land could be anywhere (even outside the LPA's area) and therefore may not fit with any infrastructure planning policies. It will therefore be important to carefully consider the practically of accepting the offer of land in lieu of cash. Payment of CIL by transferring land should not be looked upon in terms of mitigating the impact of the development itself.

I can see why developer's would offer it! They are basically trading a near-term cost for a long term receipt which should, all other things being equal, give rise to an improvement in their annual return on capital. (i.e. a better IRR). The problem is that all other things are rarely equal and in this case the problem might well be that they will be looking for the valuation to reflect their previously intended use of the land. This is what prompted my question to DCLG.