What does the new Infrastructure Levy mean in practice for planning and development?
The Infrastructure Levy (IL) is intended to enable local authorities to impose a 'tax' on development used to fund traditional infrastructure such as roads, transport facilities and open spaces, as well as additionally defined infrastructure such as childcare provision and affordable housing.
Proposed by the UK Government in order to create a mandatory and locally determined contribution by developers, the proposals will allow charging authorities to determine contributions according to the local context, measured against the Gross Development Value (GDV) of the completed development.
The impact on developers and landowners
The introduction of the IL is likely to significantly impact both developers and landowners. Whilst the IL is intended to reduce the need for Section 106 agreements and cut some of the red tape surrounding the planning process, in reality, it is likely to increase administrative burdens and the time it takes to achieve consents.
This could have financial impacts on both landowners and developers. In addition, the IL is intended to capture more land value uplift. However, the charging rates that local authorities set will only be able to represent a broad picture of actual development costs and existing land use values, thereby creating potential viability concerns and meaning land buyers are likely to be cautious with offers.
We look into how the IL differs between the current Community Infrastructure Levy and Section 106 process, and what this will mean for landowners, developers, and those with an interest to develop property.
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