Thinking of taking up the Government's encouragement to build your own house? Beware the CIL. It could make the difference between a Grand Design or a financial ruin.
Back in the dark ages of 2008 a cunning plan was hatching in the minds of the Labour Government to levy a charge on all development to, in essence, extract planning gain in a more formalised manner than negotiations under S.106 Obligations had delivered to date. The Community Infrastructure Levy was born.
The idea was hatched up in the heady days of rising land and property prices when Government thought they could tap into all those seemingly ludicrously wealthy property developers (only a few of which actually existed).
With a target date of April 2010 for its formal implementation the legislation slithered into existence just before the change of Government, with oaths and imprecations ringing in the ears of the draughtsmen that their efforts were to nought. The Tories would abolish it.
But no! CIL is alive and well under the Coalition and coming to a Local Authority near you very soon.
From April 2010, Section 106 agreements are
only permitted if they are directly related to any new developments. By 2014
Section 106 agreements will be scaled back further to ensure they operate
effectively alongside CIL.
A vanguard of authorities have now published their CIL Charging Schedules and interesting (I use that term very loosely) reading they make. To put it simply, authorities are hard pressed for cash and they are looking to the development industry to replenish the coffers.
In the Planning Advisory Service document 'Applying the Community Infrastructure Levy Manual and Case Study' [1] March 2012 it is stated that:
"..most Local Authorities should see increases in revenue after CIL replaces section 106. In addition, the reduction in the number and complexity of section 106 agreements will improve development management performance"
The London Borough of Redbridge (one of the early adopters) estimate that an additional £1m per annum would be generated over that which might have been negotiated via the S.106 route. Yikes!
The adopted charging schedule for Redbridge indicates that for any development exceeding a net area of 100 sq m (based on Gross Internal Area - GIA) a levy of £70 per sq m will apply. This seems to be a typical threshold which appears in other charging schedules around the country.
However, there is no threshold at all for development involving the creation of dwellings. So a 100 sq m dwelling (GIA) will attract a levy of £7,000. (for those of you used to Imperial that is a building of just over 1,000sq ft). This could also apply to permitted development where the 100 sq m threshold is exceeded.
Mind you, in London the pain is not over at that point. The Mayor of London has issued his own CIL Charging Schedule as from 1st April 2012 which applies a further £35 per sq m on top of that applied in Redbridge. The Mayors' Levy varies by London Borough from £20 per sq m to £50 per sq m.
Add to this the pre-application consultation advice charge (Redbridge: £350 for one meeting and a response letter) the statutory planning fee of £335 and your 1,000 sq ft dwelling is going to cost you £7,685 before you even start. And lets not go anywhere near the costs of professional advice in complying with the plethora of validation requirements that extend into the misty distance without apparent end.
Just what exactly are the infrastructure costs involved in a dwelling only marginally larger than a posh residential caravan. Well, none. nada. Nil. Sweet.... anyway. At worst it is going to need a dropped curb to the highway and a link to the drains: both of which will be paid for in the development itself anyway and through Council Tax for maintenance.
In a previous existence the chances are that such a building wouldn't even have featured on the planners radar as a potential S.106 target and this modest proposal would have proceeded unhindered. Now, I think people are going to think twice, thrice and maybe a lot more before committing their hard earned readies to funding the Council's infrastructure wishlist.
Yes, yes I know, there are Regulations and controls and such, but this Levy is really just a means of raising public money other than from the exchequer and if you cannot pass it on to the purchaser (because you're building it yourself) it is going to be an expensive extra for the mortgage to soak up.
CIL is spreading rapidly around the Country as I write, with draft Charging Schedules sprouting from every authority.
And don't think you are safe if you have negotiated a S.106 cost and budgeted on that figure, but haven't done the development yet. On adoption the CIL figure will take precedence.
Grant Shapps MP may be waxing lyrical at the moment about encouraging self-building, but your going to need deeper pockets than ever before.
