The CIL – a non-negotiable charge enabling authorities to raise funds for local area infrastructure – is set to replace the existing section 106. However, with LPAs taking up to two years to implement the new charging schedule, and with only seven months to go, it is unlikely that the remaining 31% will be able to make the changes in time.
To comply with the relevant legislation, the LPA has to submit a draft charging schedule to the independent planning inspectorates, who then determine whether the planned charges are appropriate. But of the 58 LPAs that have undergone the CIL examination process, half have seen a reduction in either their maximum residential or retail fees; by 29% and 39% respectively. Some even found that both figures were marked down.
I believe that this clearly shows that LPAs still do not understand the driving factors and viability of commercial property development, and are being over-zealous when applying these charging rates.
Furthermore, it’s my opinion that the level of engagement at the first consultation, Preliminary Draft Charging Schedule (PDCS) and the second Draft Charging Schedule (DCS) is questionable because even where representations are made, the LPA thinks their view is correct. Their attempts to close the funding gap through CIL is quite frankly, too aggressive.
That’s why I am pleased that an independent examination process is in place. Not only will it will keep LPAs in check, but from the evidence, it would seem the planning inspectorate examiners are better informed on how the commercial property market works, which local market conditions prevail – and what charges are relevant to maintain development viability.
For those developers planning to build in areas where the CIL has not been introduced, caution needs to be taken as there is the danger that LPAs will impose unlawful Section 106 agreements. They could also face significant delays in progressing development as lawyers seek to find an interim mechanism by which they can secure the funds required to deliver planned infrastructure projects. In turn, any delay in new housing developments could restrict choice and force prices to increase as a result of high demand and insufficient supply.
With hindsight, it would have been better if LPAs had promoted the changes more widely with the general public and not just interested parties, because this would have provided a more rounded view of how local communities wanted to promote development, secure infrastructure improvement and source funding for it.
However, going forward the focus must now be on ensuring all planning authorities have an approved charging structure in place, and that they deliver the projects they have levied charges for.
Do you think CIL will be a fairer system? What action can be taken to ensure all LPAs have the CIL in place?