In August we published our first blog on the Community Infrastructure Levy (CIL). With four local authorities with CIL either implemented or approved (London Borough of Redbridge, Newark and Sherwood, Shropshire and Portsmouth) and several others with draft charging schedules going through the consultation and approval process, the detail of future developer contributions is now starting to take shape. We have had a keen eye on the development of CIL and, though the full impact on development will not be known for some time yet, there is information available to start to create a picture of the charges anticipated and how they vary between areas.
We reviewed the charging schedules of the four local authorities who are now implementing CIL, together with 11 draft charging schedules (London Boroughs of Brent, Merton, Wandsworth and Croydon, Poole, Greater Norwich, Wycombe, New Forest, Central Lancashire, Exeter, Huntingdonshire).
The following messages are apparent:
- The majority of local authorities have set different rates for different development types within their area, with some also setting different rates for different geographical zones. Of the charging schedules we reviewed, only London Borough of Redbridge charge a flat rate (£70 per sqm) regardless of development type or location.
- Most local authorities do not set a charge for some uses following viability studies. Apart from London Borough of Redbridge, all authorities have some exemptions.
- Some locations, all outside of London, distinguish between small retail and large retail (typically supermarkets) clearly indicating supermarket’s value.
- Residential CIL rates within London have the greatest range (£0-£575). All local authorities have set a CIL for residential development though some areas within Newark and Sherwood, Croydon, Wandsworth and Merton are exempt. However, Wandsworth and Merton also charge the two highest residential CIL rates at £575 (Nine Elms Residential Area A) and £385 (Wimbledon) respectively.
- Offices outside of London have the smallest range (£0-£10). Nine of the fifteen local authorities reviewed do not identify a charge for office development. Eight of these are outside of London.
- The highest average rates are for residential developments (£109 per sqm) particularly in London (£171 per sqm), and supermarkets (£108 per sqm) particularly out of London (£154 per sqm).
- Office (£28 per sqm) and industrial uses (£10 per sqm) have the lowest averages for proposed rates.
While there are a number of emerging messages it is clear that each local authority is giving consideration to the viability of development at different charging rates and as a result are charging different rates for different development types (sometimes also differentiated by specific location or zone). There is no ‘one size fits all’ in the world of CIL.
At Regeneris, we are particularly interested in the ability of local authorities to strike the right balance between achieving economic growth and generating CIL returns. This will be key to the ongoing development of local economies.
Evidence from CLG suggests that Section 106 contributions have historically generated around £5bn in developer contributions on an annual basis. This is a significant figure and, based on our work for some of the volume house builders, is typically split between affordable housing (70%), education (15%) public transport (5%) and open space, leisure facilities, highways, public art and community buildings (5%). We are aware that CLG is commissioning a retrospective review of the value of Section 106 agreements, the degree to which they have impacted on local economic growth rates and a look at their on-going role in planning obligations. As CIL starts to fill Section 106’s stage it will be interesting to see whether the pre-set levy’s will strike the right balance for both developers and local authorities or whether they will serve to inhibit local and national growth agendas.
For more information on our work around the Community Infrastructure Levy and local economies please contact either Darren Wisher or Oliver Chapman in Manchester (0161 2349910) or Amy Gilham in London (0207 608 7200).
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