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New rules in the UK mean that developers will no longer be charged twice when they amend an existing planning application says commercial property agent Prop-Search. However, there still remains a sting in the tail.
Changes to the Community Infrastructure Levy (CIL) - under Section 73 of the Town and Country Planning Act 1990 - puts an end to councils charging developers twice when making even relatively minor changes to an existing planning consent.
Whilst this is good news, there remains concern within the industry with regards to Community Infrastructure Levy as Section 106 agreements are not being scaled back and replaced as originally thought. Instead this is now viewed as an additional tax of development - so called ‘double-dipping'.
The logic for the levy is that the cost of new infrastructure necessary to support development is calculated across a whole authority and then worked back to a per square metre figure for any new development. As it is levied on a much wider range of developments, it spreads the cost of funding infrastructure and allows developers to calculate - at the outset of a project - exactly what costs they will incur. It was the intention that this fixed levy would be fairer, faster and more certain and transparent than the traditional route of planning obligations, known as Section 106.
Simon Toseland, a Director at Prop-Search, says: “So surely knowing what the costs are up front is a good thing? Yes: ultimately, CIL will help clarify whether new schemes are viable more easily. But there are real concerns about the level of charges being levied which are likely, in some instances, to be much higher and on top of Section 106 payments. And the time it takes for increased costs to filter down into land values, as costs go up and viability goes down, something has to give.”
Any local authority can chose to charge CIL on new developments in their area from April 2014. These charges are set by each council, based on the size and type of new development.
The Borough Council of Wellingborough has now produced its draft CIL Charging Schedule which sees residential development being charged at £50.00 per sq m in Wellingborough and its immediate surrounding villages; town centre retail development at £60.00 per sq m; and retail warehouse/superstores and retail parks over 280 sq m at £125.00 per sq m. Other areas of development such as offices, hotels, care homes, industrial and warehouse would initially be exempt from the levy - so for now Section 106 agreements would still rule.
The development industry's original support for this concept was entirely conditional on the levy largely replacing Section 106 planning obligations agreements, so that the net burden on large developments was not significantly increased, and on there being a flexible and practical approach to applying the levy.
Simon concludes: “We are entering the realm of unintended consequences; a community infrastructure levy which could actually reduce the provision of local infrastructure and badly needed new commercial development and housing.”
Further information or advice can be obtained from Prop-Search - Tel: 01933 223300 or its website: www.prop-search.com