Andy Slaney, Director at Provelio, discusses the possible implications of the Community Infrastructure Levy.
Great discussion about The Community Infrastructure Levy or CIL at Foot Anstey's offices in Bristol last week when I attended this month’s Development Masterclass. This was an interesting subject that was new to many.
CIL is essentially a tax on landowners (excluding Charities and Registered Social Landlords) who are fortunate enough to secure planning permission for development. It covers various types of development, however, the debate concentrated on housing.
CIL is calculated by multiplying the number of square metres approved by the planning permission (or the Gross Internal Area) by the CIL Rate. The tax is collected by the Local Authority on the award of planning permission. The CIL Rate is set by each Local Authority. It can be regularly reviewed and even adjusted for specific sites within a Local Authorities’ area. At this time a CIL Rate of around £130 is a useful rule of thumb. This would generate a CIL payment of around £14,000 for a typical new estate house of around 90 sq metres..
The CIL (tax) is payable on the grant of planning permission. On any scheme CIL payments could run to many thousands of pounds and carefully consideration should be given to how a land owner will deal with this liability.
CIL payments are meant to fund community infrastructure such as schools; however, there is no obligation on a Local Authority to direct funds towards any particular infrastructure project although each Authority is obligated to maintain a list of necessary infrastructure in their district. How portions of CIL Payments are distributed between parish/neighbourhood groups and County Councils is unclear.
Probably the most interesting aspect of the CIL is how it interacts with S106 Agreements. In short CIL payments can be used to offset S106 requirements. An extreme example of this would see all on site affordable housing obligations being quashed.
It has been many years since the UK witnessed the development of sites without on site affordable housing. Sites without affordable housing will undoubtedly be worth more so is this tax a bad thing? On face value, I feel not. If anything at £14,000 per new house CIL payments could be more than offset by increased sale prices.
by Andy Slaney
Director at Provelio
| 09/05/2014 09:31 |comments powered by Disqus