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230329 IL Technical Consultation - launch event.pptx

  1. Infrastructure Levy Technical Consultation 29 March 2023 Planning Advisory Service Webinar Event
  2. Why do we want to reform the existing system? Section 106 agreements (planning obligations):  can be uncertain and opaque;  are subject to negotiation (and can be subject to subsequent renegotiation);  can lead to substantial delays in the granting of planning permission. CIL is more transparent and predictable, but it is inflexible in changing market conditions. • Contributions from developers play an important role in providing the infrastructure needed to support development. • Developer contributions worth a total of £7bn were agreed in 2018/19, of which £4.7bn was in the form of affordable housing contributions. • Section 106 agreements are negotiated with developers, whereas the Community Infrastructure Levy (CIL) is a fixed charge levied on the floorspace of a new development. Policy context
  3. The Levelling Up and Regeneration Bill makes provision for a new Infrastructure Levy (IL).  The IL will aim to capture land value uplift at a higher level than the current system.  It will be a locally set, mandatory charge, levied on the final value of completed development. • Primary legislation provides the overarching framework, based on Part 11 provisions of the existing Planning Act 2008. • We are seeking responses on elements of the Levy’s design that will be delivered through regulations. • There will be a further consultation on the draft regulations once they have been developed, utilising feedback from stakeholders. • Implementation will be phased through a ‘Test and Learn’ approach What are we consulting on?
  4. Consultation outline 1. Fundamental design choices 2. Levy rates and minimum thresholds 3. Delivering infrastructure 4. Affordable housing 5. Charging and paying the Levy 6. Other areas 7. Introducing the Levy
  5. 1. Fundamental design choices Definition of ‘development’ for the purposes of the IL. Integral:  required for the scheme to function  delivered by developers outside of the Levy charge. Levy funded:  delivered by local authorities using Levy receipts (or by borrowing against Levy proceeds). Core: Delivery Agreements used to secure integral infrastructure where needed, and in some other limited circumstances Infrastructure in-kind: large and complex sites, where a negotiated approach is justified. The value of any contributions towards infrastructure must equal or exceed what would be secured through the Levy. Section 106-only: minority of developments, such as those do not meet the definition of development. Scope Types of infrastructure Section 106 – routeways
  6. Charging schedules (tested through examination)  Current revenue from developer contributions  Levels of affordable housing  Viability of development  Infrastructure Delivery Strategy 2. Levy rates and minimum thresholds • LPAs will set a minimum threshold (as £ per m2 of the gross internal area), below which IL will not be charged. • The Levy will be charged as a percentage of the GDV of the completed development above the minimum threshold. • The minimum threshold and Levy rate will be set out in a charging schedule. LPAs will be able to set different rates and/or thresholds for different development uses and land typologies/locations – aiming to capture more value whilst maintaining viability. Evidence will be required to demonstrate levy rates are set with regard to the desirability of maintaining affordable housing at levels that equal or exceed the levels provided through planning obligations during a previous time- period.
  7. 3. Delivering infrastructure Infrastructure Delivery Strategy (IDS) • LPAs will set out how they intend to use Levy proceeds alongside other funding sources • This will involve engagement with other relevant bodies  Part One: Baseline infrastructure and anticipated growth  Part Two: Approach to funding through the Levy and other sources  Part Three: Strategic Levy spending plan • The IDS will replace the Infrastructure Delivery Plan in the current system, supporting both the Local Plan and Levy charging schedules. • Part three of the IDS will be subject to an independent examination Timely delivery of infrastructure • Specified upfront payments for certain items of infrastructure? • LPAs will be able to borrow against future Levy receipts
  8. 4. Delivering affordable housing Right to Require Existing system The Government is committed to IL delivering at least as much – if not more – on-site affordable housing as developer contributions do now.
  9. 5. Charging and paying the Levy Indicative liability: calculation • Submitted with planning application • Based on knowledge of floorspace and assumed values in charging schedules • Levy liability registered against development site as local land charge Provisional liability: calculation and payment • Post-commencement but prior to first occupation of the scheme (or of a phase of the scheme) • Independent valuation of anticipated GDV per m2 may be required • Land charge removed once provisional payment is made Final adjustment payment • Post-completion or once development is sold • Adjustments to provisional liability payment to reflect actual market value • Penalty fees for late payment 1 2 3
  10. 6. Other areas Neighbourhood Share • Proportion of funds that are passed on to a town or parish council • Considering arrangements in non-parished areas Administrative share • The proportion of Levy funds that will support transition to the new system and ongoing administrative costs Reduced rates and exemptions • The primary legislation retains the charitable relief under CIL. • Regulations can set out further exemptions and/or reduced rates. • Residential annexes and self-build housing • Approach to small sites • Treatment of publicly funded infrastructure Enforcement • Imposition of local land charge • Stop Notices • Financial penalties
  11. 7. Introducing the Levy • Test and Learn  IL will be introduced in a small number of LPAs once regulations are made  We will monitor, evaluate and improve the operation of IL  National roll-out will take place over the course of a decade • Transition  Sites permitted before the introduction of IL will continue to be subject to their CIL and s106 requirements  Retention of Mayoral CIL in London • Equalities  Understanding the impacts of proposed changes on people with protected characteristics
  12. Key information • The consultation will be open until Friday 09 June. • Responses encouraged to use Citizen Space. • Questions should be directed to: InfrastructureLevyConsultation@levellingup.gov.uk
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