Calling time on Community Infrastructure Levy?
The government’s Housing White Paper published earlier this year announced a statement on the reform of the Community Infrastructure Levy (CIL) in the Autumn Budget, close enough now for possible changes to be on the radar for housing developers.
There have been amendments to the CIL regulations and technical changes every year since the system began in 2010, which along with patchy take-up by local authorities and a failure to raise as much revenue as expected led to the government commissioning a review of the CIL and its future.
‘The only situation where CIL has generally been regarded as a success is the [London] mayoral CIL to fund Crossrail,’ says RIBA Planning Group member Bob Pritchard.
‘It should be noted that in Greater London developers may be obliged to pay Mayoral CIL and also any CIL levied by the London Borough in which the development is proposed. There is also the possibility of CIL being levied by Metro Mayors in the future – this was a planning ‘ask’ put forward by the Greater Manchester Combined Authority last year.’
Meanwhile, the review was finally published alongside the White Paper in February, with the main proposal being the replacement of CIL with a new ‘streamlined low-level tariff’ that would apply to all developments. The new tariff would be set at a lower rate than CIL but would capture far more developments.
Under the present system (see DCLG guidance) local authorities levy a fixed charge per square metre of new floor space. They set their own charges and can vary them by location, size and type of development.
Charges have to be set out in a published charging schedule on the local authority’s website; they can only be adopted by the charging authority after it has gone through two rounds of statutory public consultation and after consideration by an Independent Examiner.
Review group chair Liz Peace says one of the main benefits of the proposed changes would be to sidestep the ‘CIL industry’ that has sprung up to challenge tariff proposals.
The review proposes a twin track developer contribution system comprising the new low-level tariff, calculated on a national formula but based on local values, and the continuation of the usual section 106 agreements for larger sites.
The new system would be mandatory for all local authorities in England and Wales and would capture all developments. The recommendation of the review is that housing developments of ten units or fewer would pay the Local Infrastructure Tariff (LIT), as the CIL would be renamed, but would be exempt from section 106 contributions.
Using a national formula to set charges would, of course, eliminate the need for lengthy consultation and examination processes, allowing the adoption system to be streamlined.
At present, only 138 local authorities in England and Wales have adopted CIL schedules, while nearly 230 have published draft charging schedules for consultation. This leaves around one third of authorities without any published plans for CIL.
Architects who want to check the current status of a local authority’s CIL position can do so through the ‘CIL Watch’ map and data maintained by 'Planning Resource' magazine (requires registration). Architects have a duty to make developers aware of CIL charges in good time, where they will apply, in addition to any section 106 agreement that might be necessary.
'Planning Resource' reports that there has been a marked slowdown in the number of authorities publishing preliminary charges, with little change over the past year. As the review panel noted, there appears to be a large group of authorities with no intention of introducing CIL due to viability concerns.
If the government does take the review panel’s recommendations on board in the autumn – announcing the replacement of CIL with LIT – attention will rapidly switch to transition arrangements. Planning experts have already pointed out that a poorly-handled transition could slow much-needed housing development if developers suspect that they might pay less under the replacement system.
Thanks to Bob Pritchard, principal associate, Eversheds Sutherland.
Text by Neal Morris. This is a ‘Practice News’ post edited by the RIBA Practice team. The team would like to hear your feedback and ideas for Practice News: firstname.lastname@example.org