New Infrastructure Levy
A new Infrastructure Levy is to be brought in - date TBC.
Currently - Planning applications for development =
- subject to payments for infrastructure and affordable housing provision through S106 legal agreements or
- through Community Infrastructure Levy (CIL).
Currently - Permitted Development Rights (PDR) schemes with Prior Approval (PA) NOT SUBJECT TO s106 BUT can be subject to payments through the Community Infrastructure Levy.
- on the prior approval matters only.
- opportunities to argue against it.
Proposed - Remove S106 and remove CIL.
Proposed - Introduce the Infrastructure Levy.
What is the Infrastructure Levy (IL)?
“a nationally set value- based flat rate charge… set at a single or varied rate across England.”
Government’s method to capture developer contributions.
Pros = you will know the sums before you submit.
Concern = Land Value Capture.
Minister for Housing in June 2021 stated as part of current consultations the Government are:
“looking at whether PDR development could be part of the Infrastructure Levy.”
What does this mean for developers?
1. Planning applications for housing:
(i) Likely greater infrastructure contributions through the Infrastructure Levy required.
(ii) Likely lower threshold for provision of affordable housing in schemes.
2. Permitted Development/ Prior Approval route for housing:
(i) Could be subject to financial payment through the Infrastructure Levy.
(ii) Likely to bring in a requirement for PDR schemes to provide affordable homes.
When will this be brought in?
In June 2021- the Minister for Housing advised we:
“…. would not have to wait too long to hear the proposals.”
What does this mean?
Planning applications or Prior Approval that are in /awaiting determination- likely to be transitional arrangements.
New applications or Prior Approval submissions - subject to the IL.
Costs are unknown - consider when purchasing buildings/land
(i) Future proofing contracts/clauses (ie if the IL then makes a scheme unviable).
(ii) Allow a 10% (at least) contingency (of the costs) for IL .
Act now - move schemes forward as soon as possible!