The Community Infrastructure Levy (CIL), a levy that councils can charge on new developments to deliver infrastructure improvements, came into force in 2010 to help councils deliver local infrastructure such as transport, schools, parks and playgrounds.
Introduced as part of the Planning Act 2008, the broad aim of CIL was to largely replace the system of ‘Section 106’ developer contributions and was intended to be fairer, faster, and provide more certainty for developers.
But as we start to witness CIL revisions and rises across the UK, the reality is proving to be very different.
CIL rates are set using viability information and take into account local circumstances. Under Section 106, developer contributions could be negotiated depending on the nature of the development, but this isn’t the case for CIL, which is fixed.
Developers now face a fixed levy, which although independently assessed before implementation, can prove to be a great deal higher than what they would otherwise have paid under Section 106.
Whilst developers have no qualms about paying their way when it comes to contributing to the local community in which they are investing, they need certainty around the amount and when they will need to pay.
Ordinarily, such certainty is provided through the publication of CIL rate schedules, which outline what councils are proposing to charge, along with timescales for the implementation of the rates.
However, there are now examples of draft CIL tariffs with no accompanying timetable for implementation.
It’s an incredibly difficult time for local councils – the purse strings have never been tighter and they are having to deliver more for a considerable amount less.
But, to provide certainty to both councils and developers when new or revised tariffs are proposed, it is beneficial for all to know when the updated rate will apply.
Combined with almost endless revisions to the regulations, this is not the faster and more certain system that it was envisaged to be.
Given that many developers plan their investments from 2-5 years, or more, ahead, councils should do more to communicate their CIL implementation timescales.
Without this, there could be possible delay or stagnation, due to viability concerns, as developers await clarification on associated costs before investing in a site.
For advice in relation to any of the issues discussed in this blog, don’t hesitate to get in touch.