A number of London boroughs are presently consulting on Community Infrastructure Levy charging schedules and it is important developers make sure their voice is heard, says Turley Associates’ Oliver Jefferson.
Once CIL charging schedules are formally adopted they will be the basis for Councils to charge financial contributions as a fixed levy on floor area.
In many ways this will be a simpler and more transparent system, but one which is dependent upon the charging schedule being realistic and not a barrier to the delivery of development. Ensuring the charging schedule is fit for purpose is critical.
Developers’ input into the consultation process to ensure realistic and sound levels of financial contribution is advisable.
Current consultations underway include:
Preliminary draft consultation runs until 17 October. Southwark’s proposed charges are the most complex, with four different zones and varied rates for different uses. Residential developments would pay £50-£400 per sq m depending on location. Retail floorspace would pay £0-£250 per sq m depending on location and size. Office and light industrial uses would pay £0 or £100 per sq m, depending on location. Education and health uses will not be charged. As with all borough CILs, Mayoral CIL is also payable in addition.
Preliminary consultation continues until 20 August. There would be a flat rate of £300 for residential and £200 for retail per sq m. Offices in the south of the borough would pay £150 per sq m; in other areas no CIL would be payable for offices. Student accommodation faces a high rate of £450 per sq m, which was anticipated within Islington.
It will be interesting to see how charges in Southwark and Islington develop, given the very different responses to geographic variation in the property market. To date, examinations have tended to favour simplicity over a fine grained approach.
Brent’s second stage consultation has concluded. Residential floorspace would be charged £200 per sq m, as would student accommodation. Retail and office developments would be charged £40 and hotels £80 per sq m. The charging levels in Brent, compared with those in Islington and Southwark, highlight the differences between outer and inner London boroughs in terms of cost and viability.
Draft consultation runs until 7 September 2012. Barnet proposes a flat rate of £135 per sq m for all development. Given the flat rate approach, it is not clear how the viability of non profit-making organisations, such as hospitals, has been taken into account. However, Barnet proposes to provide a grant to effectively reimburse CIL for necessary or critical community facilities, which may go some way to addressing this. Exceptional circumstances relief will not be made available at this time. Where viability is problematic other obligations, such as affordable housing, may have to flex.
Croydon’s Examination is scheduled for 24 September and the Council hopes to adopt its charges by April 2013. There are varied rates within and outside the Croydon Metropolitan Centre.
Wandsworth’s CIL schedule was approved by an Inspector in April and adopted on 11 July. The charges will apply to planning decisions from 1 November. Wandsworth has a high residential rate of £575 per sq m within Nine Elms area A, but also significant variation of rates within the borough. The Council is currently consulting on a Supplementary Planning Document, which seeks to clarify the relationship between CIL and Section 106 payments – based on the SPD we can expect continued use of Section 106 on some sites, particularly where a significant uplift in population is proposed.
Lessons from recent Examinations beyond London
Recent events have shown that developers can influence CIL rates where a concerted effort is made to do so and where the evidence for proposed charges does not bear up to scrutiny.
In Poole, for example, the Examination was adjourned following representations against the differential retail rate for retail units of 3,000 sq m and above. The council re-examined the evidence and concluded there was ‘virtually no capacity for retail development coming forward across the town centre to absorb a CIL rate at the present time’. The charge of £200 per sq m for larger stores was dropped.
Bristol’s CIL schedule was approved on 10 July. This follows changes to the residential charge, which saw three geographical areas excluded from the higher rate charging band (£70 per sq m) after representations were made about the viability evidence by a consortium of house builders.
There is an opportunity to influence rate-setting, particularly where the proposed rates may impact on the viability of strategic sites that are part of a Council’s planned growth, such as large allocated sites, or where (as in the case of Poole and Bristol) there is limited viability evidence supporting varied rates for different floorspace thresholds.
Even where you do not wish to raise issue regarding the level of the charge, we recommend that representations should, at the very least, request an exceptions and instalments policy and a commitment to regular review. Without an exceptions policy, which is optional, no viability discussions can take place with the local authority in relation to individual sites.
Oliver Jefferson is a senior planning in the London office of planning and urban design consultancy Turley Associates. He can be reached by email:email@example.com. Visit www.turleyassociates.co.uk for further information.