COMMUNITY INFRASTRUCTURE LEVY - LEADING THE
CHARGE Daniel Webb BSc (Hons) MRICS MAPM, Lead Director at Watts Group PLC
Daniel Webb is the lead director of Watts’ London-based Project Consultancy Group, which includes the firm’s project management and public sector teams. He is also a member of Watts’ UK management team. As a specialist in project management and integrated project coordination, Daniel has extensive experience in refurbishment and redevelopment projects for investor and occupier clients in the local authority, health- care, education, higher education, office, retail, residential and industrial sectors. He also has a particular experience in complex projects executed in live often safety- critical environments.
daniel.webb@watts.co.uk
Four years on from the advent of the Community Infrastructure Levy, local government is now able to apply the charge to new development. This article looks at the likely impact of CIL and suggests that developers need help to make it work. After April 2014, the government plans to encourage take-up of CIL among authorities by limiting the use of Section 106 agreements for affordable housing.
Property development isn’t what it used to be. Not only do developers have to deal with a new planning regime and an uncertain economic climate, now there is the Community Infrastructure Levy (CIL) to contend with. The new charge, introduced by the previous government in the Planning Act 2008, came into force via the Community Infrastructure Levy (Amendment) Regulations 2011 and has been in place in a number of local authorities across the country since April this year. The charge was designed to partially replace Section 106 agree- ments in order to fund much needed local infrastructure but it is not compul- sory; each local authority has the choice
THE TERRIER - Summer 2012
whether or not to enforce the CIL and to price it at an appropriate level.
The charge can be levied on the majority of buildings and extensions to buildings with more than 100 sq m of floor space. The only mandatory exemptions are for social housing and buildings to be used mainly for charitable purposes. However, local authorities can decide for them- selves to offer exceptional circumstances relief on certain types of development. For example, Shropshire Council – one of the first to have its charging schedule approved – has decided to impose no liability on commercial floor space. Sim- ilarly in Portsmouth, industrial schemes that will boost local jobs will sidestep the charge.
The positive aspects of the CIL are clear. Authorities can generate receipts from building projects which can then be used to provide local infrastructure needed to support that development in the form of roads, schools, flood defenc- es, healthcare facilities, open spaces or leisure facilities. However, it is already becoming clear that the new regime may not be as straightforward as it first appears.
What is the cost?
First, each authority - and even different boroughs within the same metropol- itan area - has the flexibility to set its own charge at the level it feels is most appropriate, so the CIL will not be uniform across the country. Authorities can also decide not to levy charges at all on certain types of development but, again, the same rule will not necessarily be adopted by all. This means that what is a viable project in one area may be considered unaffordable by investors and developers in another, pushing new schemes away from some areas and towards others in greater numbers.
There are also fears over the future cost of providing affordable housing, with residential developers concerned that after the CIL is paid, there won’t be enough money left for the mandatory 35% affordable homes associated with new housing schemes. A recent article in Inside Housing quoted research from Galliford Try, which has identified a significant gap between the historic cost of providing affordable housing and the cost of providing it on top of the new CIL payments.
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