The hard pressed development industry may soon be hit by further costs following Housing Minister Yvette Cooper’s announcement of how the new Community Infrastructure Levy (CIL) is to work. 

The CIL is the replacement for the previously proposed Planning Gain Supplement.  It is intended that the CIL will be used to fund infrastructure projects but Section 106 agreements (legal agreements between local authorities and developers) will still be used to fund site specific requirements and included in the Planning Bill which has just begun its committee stage in Parliament.

The purpose of the CIL is to ensure that costs incurred in providing infrastructure to support the development of an area can be funded wholly or partly by owners of land when land increases because for development has been granted.

The CIL will give councils the power to set charges to pay for infrastructure when a new development takes place and is hoped to unlock hundreds of millions of pounds more for local infrastructure and services at a cost to be met by developers.

Under the current system, only 14 per cent of all residential planning permissions make any contribution to the cost of supporting infrastructure, and these generally cover the largest schemes. CIL will apply across the board and affect even minor developments.

The new powers will allow councils to set a CIL for their area following an assessment of local infrastructure needs and consultation with their local community. Different types and sizes of development would pay different amounts depending on local needs to help ensure the new infrastructure needed to maintain sustainable growth is provided.
The details include key steps which will be used to raise the CIL and include authorities producing lists of the infrastructure needed to support development in the area. The details will also include charging schedules - the aim being that developers will know from the outset how much they will have to pay and for what infrastructure the CIL is paying.
The CIL proposal comes at the same time as key changes to other planning policies on Affordable Housing under Section 106 Planning Agreements.  The new Affordable Housing guidance will shift the requirement from minimum requirements for a site to a percentage target, with targets being set as high as 50 per cent and developers being “challenged” to meet these as part of their applications. Also, the threshold for the application for Affordable Housing policies will drop from sites of 25 units and move down to as few as 15.  

In introducing both these changes at the same time in the current economic climate, there is real concern that their dual impact will make developers look at the spiralling costs of developments and consider whether their future projects are in fact now viable if the new rules apply.  The effect of this could be to put a brake on the Government’s plans for housing growth.

SPARC, a group acting on behalf of Chamber members, is being consulted on the policies and will be lobbying for an urgent rethink.