Drove the Chevy to the levy: is the infrastructure pot running dry?

The cost of contributing towards local infrastructure is set to rise again, with the Community Infrastructure Levy (CIL) index increasing by 3% from 1 January 2027.

 

The RICS CIL Index, prepared by BCIS, will rise from 400 in 2026 to 412 in 2027. While 3% may not sound significant on its own, it adds to a growing list of costs that developers must factor into their schemes.

 

CIL helps fund infrastructure such as roads, schools and flood defences. The charge is generally calculated using the relevant local authority rate, the chargeable floorspace and the applicable index.

 

For a straightforward comparison, a scheme with a CIL liability of £100,000 in 2026 could face a charge of £103,000 in 2027, assuming the same floorspace, charging schedule and other circumstances.

 

The cumulative cost of development

 

The latest increase is part of a longer-term trend. The CIL index has risen from 332 in 2022 to 412 in 2027—an increase of around 24% over five years.

 

Danielle Lawrence, Head of Development Viability at DHA Planning, said:

 

“The 3% increase may appear relatively modest, but CIL is just one of several costs that developers need to account for. Alongside inflation, construction and finance costs, affordable housing, other planning obligations and regulatory burdens, we have also seen the introduction of the Building Safety Levy last month and the Future Homes Standard which comes into effect in March 2027 – both of which will further affect relevant residential developments. The cumulative impact of these costs can make a real difference to whether a scheme is viable.

 

Understanding these costs early is essential, particularly where a site is already facing complex delivery challenges.”

 

Is the pot running dry?

 

New developments need to be supported by infrastructure, and communities rightly expect the facilities and improvements necessary to accommodate growth.

 

The increase in the CIL index reflects construction tender prices; it does not, on its own, mean that infrastructure funds are empty. It does, however, highlight the pressure on both sides: infrastructure is becoming more expensive to provide, while development is becoming more expensive to deliver.

 

Alex Hicken, Managing Director of DHA Planning, said:

 

“We all recognise the importance of delivering the infrastructure that communities need, but we also need to be realistic about how much development can fund.

 

“If the cumulative cost of contributions and other requirements makes a scheme undeliverable, we risk losing both the development and the funding it would have generated. The focus must be on finding the right balance so that we can deliver growth and the infrastructure needed to support it.”

 

For developers and landowners, the message is clear: understand your potential CIL liability early and factor it into viability from the outset.

 

If you would like to discuss the viability of your site or development, please get in touch with our Development Viability team.