123ArticleOnline Logo
Welcome to 123ArticleOnline.com!

ALL >> Investing---Finance >> View Article

What Is The Uk Community Infrastructure Levy?

By Author: Chris Westerman
Total Articles: 133

The purpose and implementation of the Community Infrastructure Levy is part of the 2008 UK Planning Act.

The increased burden on infrastructure from new developments is real and should be built into development costs. But is the CIL the way to do it?

The Community Infrastructure Levy (CIL) is a product of the UK Planning Act 2008, enforced since 2010, as a means of making developers pay for the increased burden on infrastructure that comes with new homes and businesses. It is an outgrowth of earlier recommendations in 2003 from economist Kate Barker, who felt that planning gains that went to developers should be partially channelled to overburdened infrastructure features (roads, schools, utilities, etc.) and to increase the stock of social housing.

UK strategic land investors, of course, need to take this into consideration. Infrastructure will make the properties they develop more valuable – but only if funds from the CIL are put to use in ways that materially affect the new developments. Evidence suggests this does not always happen that way.

In its most basic form, the CIL is charged on any building that has some degree of human occupancy (i.e., not parking or warehousing) including residential, commercial and retail space. Only buildings adding or constructing anew 100 square metres or more of floor space (gross internal area) on or after 6 April 2013 are subject to the levy. Changes of (existing) building uses are not liable, nor are structures that are not actually buildings (such as warehouses or wind turbines). Social housing development and buildings owned by charities are exempt as well.

Implementation of CIL has of course met some criticisms, many of which make a legitimate point. Because local planning authorities collect the levy and apply it as they choose – within prescribed parameters, of course – they are instructed to establish charging schedules. This was to be completed as of April 2014 but now is likely extended to April 2015. Those authorities can also set different rates for different sized developments, however they must establish evidence to justify those different rates.

Importantly, a “CIL in kind” provision allows that developers themselves may be best suited to build certain infrastructure components using cost-effective methods. For example, when building a community of 50 homes, the developer or homebuilder might be able to establish water and other utility services with the equipment they already have in place, where they are most familiar with the land and adjoining infrastructure. It could be much more cost efficient than to channel funds through a bureaucracy that then hires a third party to do the work.

A columnist for The Guardian who writes on local government issues took a swipe at the CIL for having a significant unintended consequence. Ian Blacker wrote in October 2012 that the CIL may actually be reducing the number of affordable homes. He cites how in London, the mayor wants to channel CIL funds to the gargantuan Crossrail project, not social housing. Also, that the CIL funds in any planning authority can be geographically used anywhere in that authority, well removed from where the infrastructure needs are increased by new development.

Blacker concludes the CIL is uncharted territory, stating, “we are entering the realm of unintended consequences.” To the developer, joint venture land investment managers as well as the local planning authorities, this may be unsettling news.

But the demand for housing is largely unmet; investors in development still find places to build and where the return on investment makes it worthwhile. Whether or not the CIL cuts into planning gains is yet to be determined; would-be capital growth fund investors are encouraged to consider CIL costs and speak with an independent financial planner to see where real estate investments might fit within a broader investment portfolio.

Total Views: 57Word Count: 622See All articles From Author

Investing / Finance Articles

1. How Long Does It Take To Process An Invoice In Factoring Financing?
Author: Stephen Perl

2. Three Reasons That Indicate This Is Right Time To Invest Your Money In Stock Market?
Author: Anshul

3. The Importance Of A Vat Consultant Cannot Be Understated In Uae
Author: sandeepsharma

4. Secret Of Becoming Billionaire With The Practice Of Stock Trading
Author: Robin

5. Know How Market Indicators In Technical Analysis Impact Your Profitability
Author: Vijay Mathur

6. Free Stock Cash Tips Will Help You Create A Niche For You In This Fiscal Market
Author: Riyanshi Tanwar

7. Net Banking Apps You Need To Download Today
Author: Neha Sharma

8. Internet Banking: Why You Need Ebanking Apps Today
Author: Neha Sharma

9. Reasons Why Imps Transfer Makes A Good Option For Emergency Fund Transfers
Author: Neha Sharma

10. Why Travel Currency Cards Are The New Travel Currency
Author: Neha Sharma

11. How Can You Take Advantage Of The Nro Account
Author: Neha Sharma

12. What Are The Changes In Fd Interest Rates After The Budget 2018
Author: Neha Sharma

13. Know Your Nre Account: 7 Top Features That Are A Must Know
Author: Neha Sharma

14. Loans: A Financial Necessity In Today’s Time
Author: Neha Sharma

15. What Are The Features Of Upi Payment You Should Be Aware Of?
Author: Neha Sharma

Login To Account
Login Email:
Forgot Password?
New User?
Sign Up Newsletter
Email Address: