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The Department for Levelling Up, Housing and Communities has published the long-awaited technical consultation on the proposed new Infrastructure Levy (IL), which seeks to replace the current system of developer contributions – Section 106 planning obligations and the Community Infrastructure Levy (CIL).

 

The consultation runs until 9th June 2023 and includes a ‘regulatory impact assessment’ which we are in the process of reviewing. A quick overview of the key changes proposed are as follows:

 

  • It will be mandatory for all local authorities, but levy rates will be decided by local planning authorities as part of the local plan process and subject to testing at local plan inquiries.
  • The levy will be non-negotiable and seeks to eliminate the negotiated aspect of S106 agreements.
  • The amount developers will have to pay will be calculated once a project is complete (i.e. based on the value of the property at completion per square metre), instead of at the stage the site is given planning permission. This can benefit local authorities by ensuring that if the value of the development increases, IL receipts could correspondingly increase. However, the downside is that delays or shortfalls in IL receipts may result in projects having to be underwritten by a local authority – the timing of IL receipts will be highly variable and dependent on the completion of development.
  • It would apply to most new developments including permitted development (except for custom and self-build developments) unlike current practice with S106’s and CIL – so is likely to generate a higher income. For larger sites, there will be different arrangements through an infrastructure in-kind route-way which will use a combination of S106 obligations and planning conditions.
  • It would require local planning authorities to prepare Infrastructure Delivery Strategies (IDS) which sets out the strategy for delivery of local infrastructure and spending Levy proceeds. This will be informed by engagement with infrastructure providers and the local community.
  • Local planning authorities will be given a ‘right to acquire’ which allows them to dictate how much of the levy is delivered through affordable housing on-site in new developments and how much is given in cash for other infrastructure.

 

In an accompanying press release, it has been advised that the change would be introduced through ‘test and learn’ over a 10-year period, with a small number of local planning authorities implementing the levy initially to test how it operates, before being rolled out more widely.


For any CIL queries, please contact Danielle Lawrence.

 

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