As the consultation closes on the Department for Levelling up, Housing and Communities (DLUHC) proposals for a new infrastructure levy, the British Property Federation (BPF) is urging the government to reform existing planning contributions rather than introduce a new levy.
The BPF highlights that pursuing an entirely new system of developer contributions will add new challenges and do little to alleviate existing difficulties experienced under Section 106 (s106) and Community Infrastructure Levy (CIL).
The new levy will create a more complex system that slows the development process and undermines the timely delivery of associated infrastructure, resulting in increased uncertainty throughout the planning system.
The BPF has raised several concerns with the new levy. These concerns include:
+ The difficulty local authorities will have setting viable levy rates, particularly for brownfield and urban development sites, due to land values and build costs varying site by site and by land use.
+ The negative impact the new levy will have on affordable housing provision. Under a single more rigid levy the mechanism for calculating affordable housing contribution will raise less, because it is not site-specific.
+ The need to elevate the Infrastructure Delivery Strategy to the same importance as the new levy to ensure that infrastructure is being delivered efficiently and the benefits of new development are felt locally.
+ The challenge for local authorities in implementing a new levy and charging schedule given how under-resourced local authority planning departments currently are and the additional skills required for this work.
+ The proposal to use GDV as the primary measure through which a developers’ levy liability is calculated will cause uncertainty for developers, funders and local authorities due to changes between valuations and affect scheme viability, especially for commercial and mixed-use projects.
Ian Fletcher, director of policy, British Property Federation, commented: “The idea of bringing in a new infrastructure levy is to remove the complexities experienced under the current system of contributions, but the new levy has fundamental structural challenges and will do little to reduce complexity. We are incredibly concerned about the impact the new levy would have on the timely provision of new infrastructure, the delivery of new affordable homes, and the uncertainty it would create in the market.
“It will take time for a new levy to be introduced and during that period local authorities and developers will have to continue to rely on s106 and CIL, which will not be reformed under the current proposals. We urge the Government to reform the current contribution systems, rather than press ahead with an unnecessary overhaul of the entire system. It is undeniable that CIL and s106 can be improved, but we would like to work with Government to share our expertise and work towards a scenario where the existing system is enhanced and simplified.”
Section 106 and Community Infrastructure Levies (CIL) are designed to make developers compensate local communities for their actions. Bring in 500 new people to an area on a new estate and they have to be catered for with extra capacity for schools, doctor’s surgeries shops etc, maybe a new road, roundabout or bridge is needed to cope with increased traffic.
Developers hate this. They resist all attempts that are made to get them to provide infrastructure up front claiming they need the money from the house sales to fund the infrastructure so houses come first. Then when the houses are built and sold they claim the development did not generate enough profit to fund the infrastructure often employing specialist companies whose sole job is to help developers wriggle out of their obligations. All hapless local Councils can do is stand by helplessly wringing their hands as they don’t want to get into legal battles with experts (at least that’s what they do round here). So the developer walks away, local infrastructure is not improved and the community suffers.
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How does a community suffer with the introduction of new homes? They are developed in areas where there is demand and at the end of the day… what the hell are we paying taxes for if not for the improvement of infrastructure?
I’m not a developer by any means, but I have a distinct disdain for s.106 and CIL. Why the hell should developers, the only people who are ACTUALLY building more homes (because the government sure as hell isn’t) picking up the bill when we tax payers are already paying for it?
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While developers might be building, they are certainly not building the houses that a large part of the population need (unless there is a shortage of 4 bed mock Tudor detached houses and luxury city centre flats). They are building for profit, even the so called affordable stuff they are sometimes compelled to build to get planning permission are not affordable. So they stick out for prime Greenbelt sites in affluent area that are easier to develop than Brownfield sites that require remedial work and are nearly always in run-down areas where there is no price premium for them. If the market stalls and sales drop they just stop building and hunker down until demand and prices rise again which according to pages like these some are doing already.
The PRS houses a large number of low earning and benefit tenants in older properties and is slowly being regulated out of business making selling up a good landlord choice. Where are all these displaced tenants going to live? Their rented homes might be at the lower end of the housing market but they can’t afford buy them. The market for these houses once empty of tenants will not crash as they will be snapped up as starter homes for upwardly mobile couples with a leg up from the bank of mum and dad. With all the cheap hotels already full the Government had better get building to house all the poorer displaced tenants that are going to appear.
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