Review: London CIL Update

Thursday 12th June 2014, City Hall, London

The RTPI’s Community Infrastructure Levy (CIL) update is becoming a regular fixture in the calendar. Since the introduction of CIL powers in the Planning Act 2008 and CIL Regulations 2010 there have been numerous changes in the legislation and associated debates about them. This event provided a useful arena to explore these changes as well as the uptake in CIL by authorities in London.

Kindly hosted by the GLA the first speaker of the event was Alex Williams (Director for Borough Planning, Transport for London) who reviewed the Mayor of London’s CIL and the Crossrail SPG. Alex noted the performance of the CIL and SPG noting that the most substantial CIL receipts were coming from residential schemes with an encouraging level of activity. The CIL-tracking exercise was useful to also show that the most income was confined to a few small geographic areas. Alex reviewed the CIL picture across London and considered that relative to the rest of the UK we were in quite a healthy position with London adapting well to the CIL world.

Keith Holland (Assistant Director for Development Plans & Major Casework, Planning Inspectorate) outlined that a development land tax has been attempted in legislation before under several guises since 1945. CIL is based on the principle that the community is entitled to a share of the resultant uplift in the value of the land following the granting of planning permission predicated on the work of Kate Barker. Mr Holland also expanded on the CIL examination process and what evidence examiners need to consider.

Mr Holland noted that, until more recently, there has been little challenge presented to a charging authority’s proposed schedule, although the development industry is now rising to the challenge in making representations. Charging authorities have tended to propose relatively modest rates compared to what their viability assessments would allow. The inspector’s role when assessing the CIL is not to agree the rates as such (which can vary), it is around ensuring the policy basis and viability evidence is there to support development in the authority’s area. On the major sites where specific infrastructure is required, the continued use of s106 through low CIL charge-setting in this area was encouraged to be considered

Anthony Lee (Senior Director, BNP Paribas Real Estate) discussed the relationship between CIL and development viability. Many have raised concern over that CIL is an additional cost that could prevent development proceeding. However, Anthony outlined that CIL has tended to have modest impact on development viability, typically at less than 5% of total development costs. This percentage is even lower when the proportion of the development which is replacement floorspace is deducted.

Mr Lee went on to suggest that affordable housing has a much greater impact upon development viability than CIL. His analysis has shown that an increase in the affordable housing target from 35% to 50% had a far larger impact on development cost than the introduction of a CIL charge.

In terms of land value, his analysis also showed that Mayoral CIL has had very little impact on land value, while borough CILs have had only a small impact. Anthony noted some challenges on major infrastructure delivery citing the example of the Vauxhall Nine Elms Opportunity Area. Here a s106 tariff was previously charged and this has now switched to CIL within LB Wandsworth, with the suggestion that it has become far less flexible with difficulty in ring-fencing monies or quickly changing the rates charged to developers.

Rory Brooke (Head of Infrastructure, Economics & Planning, URS) examined ways that developments have been double-charged both CIL and S106 and what steps have been take to overcome this issue. However, there currently does not appear to be a mechanism to absolutely ensure that a charging authority spends the money taken from CIL on the things that the developer would like them to spend the money on.

His experience was that he concurred that for large development sites or regeneration areas, greater value can be gain from a development if charging authorities implement a low CIL charge and rely instead on securing planning obligations through a Section 106 agreement. He also outlined that local authorities seem to be unaware how much scope they have to borrow money to fund infrastructural improvements.

A question was raised around the 25% CIL receipts for neighbourhoods and the implications on charge setting / R123 lists. It was recognised that it was a challenge and there may be a need for the R123 lists to be quite flexible in this regard to react to local desires.

Further feedback from the evening can be found on our Twitter feed @RTPI_London using the hashtag #RTPICIL. The presentations are available by emailing london@rtpi.org.uk. Finally many thanks to our Centenary Partners,URS, for making this possible and for the GLA for hosting the evening. A special thanks also to Zenab Haji-Ismail for initiating this event.

Jonathan Waugh / Andrew Dorrian

 

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