Developers oppose new levy system

Developers are currently expected to pay local authorities a community infrastructure levy (CIL) and for Section 106 (s106) planning obligations. Now the government is consulting on a new method to take money off developers.

But developers says that planning authorities will not be able to cope with a new system and they fear that the whole system will ground to a halt, bringing the construction industry down with it.

As the consultation closes on the Department for Levelling up, Housing & Communities (DLUHC) proposals for a new infrastructure levy, the British Property Federation (BPF) – the developers’ lobby group – is advocating reform over revolution.

The BPF says that pursuing an entirely new system of developer contributions will bring new problems and do little to alleviate existing difficulties experienced under s106 and CIL.

The new levy will create a more complex system that slows the development process and undermines the timely delivery of associated infrastructure, the BPF reckons, resulting in increased uncertainty throughout the planning system.

In its response to the DLUHC consultation, the BPF warns that:

• local authorities will have difficulty 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 new levy will have a negative impact 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 BPF argues.
• local authority planning departments do not have the resources to implement a new levy and charging schedule.
• 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.

 British Property Federation director of policy Ian Fletcher said: “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.”

Got a story? Email news@theconstructionindex.co.uk