It has now been a little over one year since the revolutionary reforms to the planning system were first prescribed in the Planning for the Future White Paper. Despite the Queen’s Speech in May signaling the intention to progress the Planning Bill, with the exception of “building beautiful’ changes within the latest NPPF, it would appear that there is to be a rethink within central Government on just how radical any changes will be. It follows that any reforms to the Infrastructure Levy are on hold as well.
For now and for the foreseeable future therefore, the Community Infrastructure Levy (CIL) remains in force and can be a significant cost on development. With the summer holidays now firmly over and at a time where our clients are reviewing asset strategies and exploring alternative uses to navigate through a post-Covid world, having a sound CIL mitigation plan in place is prudent.
For many, CIL is a one-off calculation based on a set rate per square metre that is undertaken before development commences to establish a liability amount. Whilst this is the end-game, such an approach is unlikely to be commercially savvy leading to missed opportunities for cost savings. Rather, CIL should be considered from the outset when development strategies are being formulated. Thinking at an early stage about matters such as existing building occupancy, development phasing, and the type of the planning permission applied for can all make a significant impact on CIL liability and should not be readily dismissed as immaterial. Early consideration of these matters allows scenarios to be tested and measures put in place to influence the overall CIL liability. The proof is certainly in the pudding and we have saved millions of pounds for our clients by working with them at an early stage and informing their development strategies.
Despite this, the world does not revolve around CIL and it is just one of a number of mitigation matters to consider from a development perspective. In fact, without due care, CIL can directly conflict with other mitigation strategies. For example, a CIL strategy that relies on temporarily bringing buildings back into use to claim a floorspace offset may be a competing force against a strategy that prioritises empty buildings in order to obtain business rates relief. Similarly, it will conflict with the application of Vacant Building Credit – the incentive to promote brownfield development by offering a financial credit equivalent to the existing floorspace of a vacant building that can be used to offset affordable housing contributions. It is essential, therefore, that all mitigation strategies are considered holistically and that clients have the expertise and knowledge available to them collectively in the fields of CIL, business rates and viability.
At Montagu Evans, our sector-based and cross-service-line collaborative approach allows us to help our clients through this web of competing tensions. We are able to undertake sensitivity testing to advise the most commercially advantageous approach when it comes to informing development strategies.
Sam Stackhouse in an Associate specialising in Planning and CIL mitigation.
Josh Myerson is a Partner specialising in Business Rates.
Will Seamer is a Partner specialising in Viability and usage of Vacant Building Credit