CIL came into force in April 2011. DCLG intended it to “provide a new, flexible local levy on new development which local authorities in England and Wales can choose to introduce to fund infrastructure in their areas”. In other words, it’s a tax on development in order to fund community projects.

CIL will be charged on most types of new development requiring planning permission. There are some exemptions (e.g. domestic extensions), but not many.

In general, it is payable for the creation of all new buildings or works to an existing building where the net additional floorspace created is 100 sq m or greater (unless the development constitutes a dwelling). 

The levy also applies to changes of use where the building has been vacant for over six months in the 12 month period before permission is granted. 

The circumstances in which relief from CIL may be sought are very limited and non-negotiable.  There are some exemptions which broadly relate to charities, some social housing relief, and Crown land. These are all subject to a series of limitations and controls making it difficult to claim relief.

This issue is still causing confusion.  

CIL is intended to differ fundamentally from S106 Agreements.  CIL funds collected are not tied to a specific development or the provision of specific infrastructure. CIL funds can be used flexibly by the LPA to fund pretty much any infrastructure as defined within the Regulations.  Whereas infrastructure provision necessary to mitigate the impact of a particular development through S106 Agreements should be used solely for that specific purpose.

In essence, the CIL Regulations are designed to scale back and restrict the operation and use of planning obligations secured through Section 106 Agreements.    Fine in theory but only time will tell if this is the case, or indeed we end up with ‘double-costing’. 

It’s not exactly up there with ‘horse’ burgers.  However, in the property world it’s been causing quite a stir for some time and tensions are set to rise as an increasing number of local authorities opt to impose it.

Amidst the worst economic conditions in living memory, CIL is generally viewed by property developers as a threat to viability.  Bluntly, developers can expect a significant increase in the cost of development which limits their returns.  In the good economic times CIL may be more palatable.  Here and now, it is most certainly not.

The effects on the ground are limited so far, principally because most local authorities have been slow off the blocks to adopt CIL ‘charging schedules’ to impose on developers.  However, there are growing signs that more and more cash-strapped local authorities see CIL as a future device for funding infrastructure schemes which were previously thought unviable. 

Whilst local authorities can choose whether or not to charge the levy, it is anticipated that by 2014 around half of all councils in England and Wales will be imposing it.

As with everything in life, there are pros and cons to CIL.    

Of course, we should all consider the potential income stream generated by CIL and the flexibility to fund infrastructure programmes across the community rather than merely site/development related. We can all see the wider benefits of this provided it is done in a fair, transparent and consistent way.  The problem is that aligning the community infrastructure ambitions of local authorities with the needs of landowners/property developers to make a reasonable return will be extremely difficult to reconcile in practice, and particularly so in the current economic climate.  

The ‘timing’ of CIL is simply all wrong.  We remain in the grip of an unprecedented economic nightmare.  We already have the perfect storm of double/triple dip recession, considerable planning red-tape, s.106 Agreements and lack of bank funding to contend with.  Surely common sense should prevail.  

The roll-out of CIL on a more widespread basis should be held back at least until we have sustained economic recovery.  On current forecasts this could be at least 2014/2015.  It could take longer, but so be it.  The fact is that without development viability, nobody wins and CIL will be counter-productive for all concerned.  We are already seeing this with the existing use of S106 Agreements which are either stalling development indefinitely, or requiring complex and time-consuming renegotiations to make development schemes viable again.  Why compound the problem through CIL?  Put simply, if CIL is introduced too soon in many areas across England and Wales, it risks further choking off economic recovery.

Andy Frost

Managing Director 
Frost Planning Ltd

Andy.Frost@frostplanning.com
01625 827 331
http://frostplanning.com/

As featured in the Jewish Telegraph 8th February 2013....

And a week later, oops!, we've caused controversy in the Jewish Telegraph with this letter to the editor....

Following the 2013 Architects Journal Women in Architecture survey, we were asked for comment...

This issue used real people instead of last years cover featuring Barbie.

Iain Johnston, Planning Partner at law firm Brabners Chaffe Street and a nationally-recognised expert on HS2 warns organisations and individuals with property along the high speed rail route from Birmingham to Manchester and Leeds to review how it may impact on landowners and businesses.

Phase 2 of HS2, the proposed line between Birmingham and Manchester/Leeds, was announced today. Economic forecasters have indicated that HS2 will bring an increase in economic activity at those cities with HS2 hubs, ie Manchester, and the new infrastructure and stations will act as a catalyst for further growth. However, HS2 will have an adverse effect on land and properties in the way of the proposed route.

Generally the route from Lichfield is as follows – east of Cannock Chase – east of Stafford – the route then crosses the M6 near Stone and runs west of the M6 to Maddley – north then to the east of Crewe – west of Middlewich – then crossing the M6 north of junction 19.  At this point the route splits – one branch runs north east of Lymm and west of Partington – crossing the M62 at Holton Moss – south of Culcheth – east of Goldbourne and stops south of Wigan.  The Manchester branch – runs west of Hulsheath south of the M56 – Millington – south of Ashley – crosses under the M56 near Warburton Green – into a new international station to the east of Manchester Airport – at Heald Green the lines goes into a tunnel and thereafter runs under Wythenshawe, Northenden, Withington, Rusholme, Longsight and then into Manchester Piccadilly.

The route and map can be found at https://www.gov.uk/hs2-phase-two-initial-preferred-route-plan-and-profile-maps

The proposed route will have an immediate blighting effect on properties within the immediate corridor required and will impact on a wider area. Blight in practical terms means that those parties with land and property in the vicinity of the route will note a marked devaluation in the market place. Residential property owners trying to sell their properties will encounter difficulties.  Businesses seeking to move or expand may find it hard to do so or to obtain suitable finance. Commercial tenants with only a short period of time left on the lease term may encounter problems in renewal and landlords difficulties in promoting properties with only a short term lease available. 

Businesses should take note of how this will impact on forward business plans and should start planning now to protect the value of the property and factor in provisions that will assist compensation claims in the future. 

When acting for clients in the Midlands, it has been a common theme that estate agents are unable to generate potential buyers for properties within a quarter of a mile to half a mile of the proposed route and that properties only sell if a substantial  reduction in price is involved.

The recent Government consultations on Phase 1 indicate an enhanced compensation scheme for parties up to 120m from the line of the route in rural areas. Unfortunately, if you are, for example, 200m away you will get little, if any, compensation and you will have difficulty in selling your property at a realistic market price. There is some limited compensation that may apply regarding noise and disturbance but that only applies one year after the opening of the line.

Businesses that may be affected are advised to start planning now on how the route will impact on future business plans, for example, should a company go ahead with planned substantial investment or not?  Businesses should keep up-to-date and accurate records of business performance and plans so that future compensation claims can be substantiated by documentary evidence. If businesses do not start to plan now then any claims in the future may be compromised.

Brabners Chaffe Street and BNP Paribas Real Estate are holding a seminar on the proposed route through Staffordshire, Cheshire and then into Manchester on 25 February 2013.  The event will be of interest to organisations, businesses and landowners concerned about the effect that HS2 will have on their properties and business. To register your interest please email bcsnewsandevents@brabnerscs.com 

For further information please contact:
Deborah Ascott-Jones, Director of Business Development & Marketing
Brabners Chaffe Street LLP
DD (M/c) 0161 836 8899
DD (Lpool) 0151 600 3021
Mobile 07736 792332