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!