Councils must have flexibility over new infrastructure levy to enable delivery of new homes

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Responding to a government consultation on the implementation of the community infrastructure levy, developers will this week call for flexibility around how it is charged.

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The aim of the CIL is to fund infrastructure required as a result of a local development. Local authorities should have absolute discretion as to whether they will accept payment in the form of land or infrastructure on a case-by-case basis.

Essential Living, the first UK firm to design, develop and manage homes for rent, supports the proposal to allow charging authorities to set differential rates recognising the different benefits and challenges certain types of development can provide.

However, the firm, which has $500m in backing from M3 Capital Partners to deliver 5,000 rental units across London and the South East, also believes that the ‘type of tenure’ should be considered.

Scott Hammond, executive director of Essential Living, said:

“Local Authorities should have absolute discretion in setting rates so that they are able to approve developments they feel will best serve their local area. As we are in the midst of a house-building crisis, larger scale projects should be encouraged.

“For example, a development providing 5000 units should receive more CIL relief than a development providing 5 units. Additionally, developers who choose to develop unwanted brownfield sites, which are likely to have more up-front costs around things like decontamination should not be discouraged by a CIL set with regard to the average greenfield ‘build to sell’ development.

“The ‘type of tenure’ offered by a development should also be considered when setting differential rates. Short-term ‘build to sell’ developments recoup initial investment costs more quickly than private rented sector developments providing potentially +10 year tenures, which take longer to recoup their investments; this should be recognised by differential rates.

“We also believe that payment of the CIL, for these types of developments, should be made in periodic installments to recognise this challenge. Additionally, the benefits of certain developments should be considered when setting rates. For example, landlords offering long-term tenancies provide a greater community benefit than ‘buy to let’ landlords, as they offer greater stability for local people and families. It is important that these different factors are considered by the local determining authority and recognised by differential rates.”

Essential Living

Essential Living is a new platform created through a partnership between the owners of Essential Land LLP and London based M3 Capital Partners. The business strategy is to deliver 5,000 units of private rental stock over the next decade across London and the South East.

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