Community infrastructure levy

Community Infrastructure Levy and London Boroughs - developers take note! The current London Mayoral Community Infrastructure Levy (CIL) is intended to fund a shortfall of £300m for the Crossrail project in London. The Mayoral CIL generally applies to developments of over 100 square metres of new floor space within the London Boroughs. The councils are required to collect the levy on behalf of the Mayor. The Mayoral CIL ranges from £20 to £50 per square metre. Bromley has been fixed nearer the high end at £35 per square metre.

The current London Mayoral Community Infrastructure Levy (CIL) is intended to fund a shortfall of £300m for the Crossrail project in London. The Mayoral CIL generally applies to developments of over 100 square metres of new floor space within the London Boroughs. The councils are required to collect the levy on behalf of the Mayor. The Mayoral CIL ranges from £20 to £50 per square metre. Bromley has been fixed nearer the high end at £35 per square metre.

Local authorities can also elect to charge a further CIL on new developments in their area. The money raised can be used to support development by funding infrastructure in the local community. Some boroughs have rejected a CIL on the basis that it is too expensive whilst others have introduced a levy of up to £575 per square metre!

A charging schedule must be drawn up for consultation before a local authority can charge CIL. Bromley council has not yet announced a CIL consultation; however this is likely to change within the coming year. From 6 April 2014, whilst local authorities are not compelled to charge a further CIL, there will be restrictions on using the existing Section 106 planning obligations to fund new community infrastructure. It is, therefore, likely that local authorities will adopt a charging schedule before this date.

Bromley Council will first consult on their infrastructure needs and the viability of introducing a levy, before considering the levy itself. The CIL will subsist alongside the existing planning obligations and Section 106 Agreements used to address site specific impact of developments. The planning obligations cannot, however, be used for any infrastructure intended to be funded by a CIL, and CIL will be treated as a credit against Section 106 payments, effectively preventing any duplication of charges.

Once introduced, there will be potential for a two-fold levy in addition to all other planning obligations. The new CIL will be non-negotiable. In the current market it will be difficult to pass on the extra costs to the landowner or end purchaser. CIL should therefore be an early consideration for developers when assessing the commercial viability of a scheme.

It is worthy of note that the additional CIL may only be charged when the planning permission for the development is granted after the date on which the approved charging schedule takes effect so it would seem prudent for developers to submit their planning applications before the CIL consultations start in boroughs which have yet to charge a CIL.

For more information contact Yildiz Betez.