The Community Infrastructure Levy (“CIL”) came into force two years ago, but it is only now that local authorities and developers alike are waking up to it.
If you don’t know what this is, the CIL is a charge that local authorities in England and Wales can now charge when granting planning permissions on new developments in their area.
The system is deceptively simple. It applies to most new buildings and charges are based on the size and character of the new development. It has been estimated that the CIL has the potential to raise £1bn a year by 2016. To date, only a few local authorities have adopted it (including in London.) Although it sounds simple, in that a developer can rely on paying to a fixed scale, one possible problem is that the CIL payments are non-negotiable. Under the current s.106 regime, it is possible, if circumstances allow, to negotiate reductions in s.106 obligations. This will not be possible with CIL payments.
Any person can assume liability to pay the CIL but where no-one comes forward, then the levy will be apportioned between those having a “material interest” in the land at the time when development commences.
The CIL does not mean the end of the familiar s.106 planning obligations (which are agreements reached between local authorities and developers.) In theory, the two systems have different purposes and so will run in parallel: the CIL provides cash for infrastructure to support the development of an area, whereas s.106 obligations provide site-specific impact mitigation and will deal with the provision of social housing.
If you have any further questions in relation to this topic, please get in touch with either your normal Matthew Arnold & Baldwin contact, or one of the heads of our Property Development group: David Marsden at david.marsden@mablaw.com, or David Power at david.power@mablaw.com.