The British Property Federation has warned that a new development levy to fund local communities presents significant difficulties to developers in its current state and that it could hold up delivery of new homes and communities.
The community infrastructure levy (CIL) was conceived as a replacement for the universally opposed planning gain supplement (PGS) which sought to tax development based on the uplift in land value.
The BPF is concerned that CIL leaves a number of crucial questions unanswered, particularly where officials outlined that the concept of CIL would be linked to the “actual or expected increase in value arising from planning permission”
Developers have long believed that placing an emphasis on increases in land value distorts the intended purpose of CIL: to raise funds for infrastructure. The BPF feels it ignores factors other than land value that also impact on the viability of a development and the affordability of the CIL payments.
The federation fears that the proposal could allow CIL to be set at a level that delays, and even halts, the creation of new homes and commercial developments. It also gives no indications how the funds provided through CIL would be used to deliver the infrastructure in a timely manner.
The BPF also believes that the CIL charging schedule should be a development plan document. If this were to happen, CIL would not be part of the planning application process, and should there be disputes about CIL, developers would be unable to appeal to the Planning Inspectorate.
The government needs to take onboard the concerns of the development industry if CIL is going to work effectively. Michael Chambers, BPF director of regeneration and development, said:
“We believe that CIL has the potential to offer speed and certainty to the process by which developers contribute to the infrastructure our towns and cities need – but it must be implemented in a sensible manner.
“We welcome the publication of this document but it is clear that a lot more work on CIL needs to be done. The skeleton of a CIL system is in place but we still have concerns about crucial areas of detail, such as how local authorities will assess the viability of a CIL charge and the extent to which CIL will really operate within the planning system.
“We will continue to work with the government on CIL as we need to create a system that meets the concerns of the development industry and also contributes to the much needed infrastructure.”
For immediate comments on Wednesday 6 August contact Jonathan Seager on 020 7802 0126 or call Andrew Teacher on 07968 124545
Notes:
The BPF’s main concerns are:
• CIL should be calculated and levied in a manner which does not halt development. If CIL is set too high then we will not get the new homes and commercial development that are needed to support economic growth. The Bill does not adequately reflect his point. It refers to CIL being set with regard “to actual or expected increase in value arising from planning permission”. Placing an emphasis on increases in land value distorts the intended purpose of CIL - which is primarily to raise funds for infrastructure – and ignores the factors other than land value that impact on the viability of a development and the affordability of CIL.
• If CIL is to work efficiently and effectively then the existing planning system must be used as the structure through which CIL is planned and charged. If CIL is not as firmly rooted in the planning system as it could it might become too blunt an instrument to deal with the unique circumstances that are inherent to every development project. We are deeply concerned about the suggestion not to have the CIL charging schedule as a development plan document. If CIL charging schedule were to be development plan document it would benefit from being a material consideration at the determination of a planning application. This would allow the existing planning appeal system to be used as a safeguard to allow developers to legitimately appeal to the Planning Inspectorate where disputes about CIL have not been dealt with satisfactorily. In the CIL document, the Government has floated the idea of allowing for exceptional cases but has provided insufficient detail about how this would work in practice.
• CIL requires developers to provide local authorities with what is effectively a vast pool of money to spend on infrastructure. We would like to see far more detail about how the government will ensure that this infrastructure is delivered in a timely manner.
www.bpf.org.uk
