The Government’s reform of the Community Infrastructure Levy (CIL) should ensure the per square metre tax on property development focuses on economic growth and introduces speed and certainty to the sector, according to the British Property Federation (BPF).
However, in its response to the Government consultation the BPF warned that where local authorities had already set levies, they were often too high and acted as a brake on development, contrary to the Government’s other pro-growth measures aimed at kick starting the industry.
CIL is designed to largely replace s106 obligations, with the money raised spent on a wide range of infrastructure needed to support development. The Government is proposing, among others, to:
- Strike a balance between funding infrastructure and effecting the viability of a development;
- Allow councils that have not yet adopted a levy an extra year to do so;
- Allow payment in kind in lieu of the levy;
- Remove the vacancy test, meaning CIL will not generally be payable on buildings that have been vacant for a period of time.
Liz Peace, Chief Executive of the British Property Federation, said: “We’re pleased the Government has listened to the concerns of the property industry and has sought to amend a policy that would have otherwise have erected another barrier to development.
“Concerns remain that where councils have already set their levy, it’s too high and will only serve to frustrate growth and development. Time will tell, but it would not be a huge surprise to see these councils having to reset their levy at a more realistic rate in the near future. “
Sue Willcox, Head of Town Planning at Sainsbury’s, said: “Despite the proposed changes there are still concerns that some charging schedules are being set too high, particularly for some uses. Local authorities should provide a proper evidence base and assess whether or not their CIL will stifle rather than support growth.”
Margaret Baddeley, Senior Associate Director, Nathanial Lichfield & Partners, said: “While work remains to be done on CIL, it’s reassuring that Government continues to examine the fundamentals and change the details of how the levy is operated. This consultation goes a long way towards ironing out the development industry’s key concerns.
“Particularly important to those seeking planning permission for major schemes are closer ties between infrastructure lists and the timely provision of the infrastructure on those lists. The consultation proposals help in this area. There is still more that could be done however, to ensure a proper balance between the right infrastructure being provided at the right time and it being funded by the right levels of CIL that do not undermine development viability. We are not there yet.”