On 8 June 2011, the Mayor of London published the Draft Charging Schedule which sets out the latest proposals for the creation of a Community Infrastructure Levy (CIL) which will be charged on most new developments within Greater London.
What is the Community Infrastructure Levy?
CIL is a planning charge which was introduced by the Planning Act 2008 and came into force in 2010 through the Community Infrastructure Levy Regulations 2010. Within Greater London, the Mayor of London has the final decision on whether to charge such discretionary levy on the majority of new developments across all of the capital's boroughs. The Mayor has elected to charge CIL and it has been estimated that the levy will raise in the region of £300 million by 2018-2019 and will form part of the Mayor's contribution to fund Crossrail (the planned east to west rail link in London which is under construction and once complete will run from Maidenhead in the west to Shenfield in the east).
Before the Mayor can charge CIL on developments, two rounds of public consultation on the proposed charging schedule must be carried out. The first public consultation took place in January of this year when the Preliminary Draft Charging Schedule was published and received 105 responses. Responses were received from, amongst others, London borough councils, developers and individuals. The recently published Draft Charging Schedule constitutes the second and final round of the required public consultation process and the opportunity to comment closes on 8 July 2011.
The Draft Charging Schedule sets out that CIL will be payable on most buildings which have a gross internal floor space of at least 100 square metres or involves the construction of a dwelling (even where the gross internal floor space is less than 100 square metres). The charge will be levied in pounds sterling per square metre of floor space. It is intended that CIL will be charged at three different rates (according to the "Charging Zone") depending upon the London borough in which the development is situated. Zone 1 will be charged at £50 per square metre, Zone 2 at £35 per square metre and Zone 3 at £20 per square metre.
Development for any medical, health or education purposes will not attract CIL and other exclusions from the charges are affordable housing and charity owned developments (where the property is used for charitable purposes). The Mayor of London holds the additional power to elect to allow relief for developments held by charities for investment purposes. However, in the Draft Charging Schedule it has been proposed that this relief will not be made available on the basis that it would further complicate the administrative aspect of calculating and enforcing CIL.
Once the current public consultation has closed, the Mayor of London has to appoint an independent examiner to carry out a public charging schedule examination. The examiner will then report back to the Mayor who should take into account the examiner's recommendations in coming to a final decision on the CIL rates to be charged on developments.
CIL will be payable on developments that receive planning permission after the date the Charging Schedule comes into force. The full CIL amount requires to be paid when the development begins, with the money being collected by London borough councils on behalf of the Mayor. At present, the Mayor is having discussions with the London borough councils about allowing payments to be made in instalments.
It is anticipated that the Mayor will receive additional responses on the proposed charging arrangements contained in the Draft Charging Schedule, on the basis that this will be the final opportunity for any concerns to be raised. Developers may view CIL as a further obstacle, and the Mayor will be endeavouring to balance the charges on development against the potential loss of development in particular areas. Given the speed at which the second public consultation has been published, it could be the case that the Mayor will have complied with the legislative requirements in time for CIL to be charged on the majority of new developments that receive planning permission from Spring 2012.