Inspiration and advice for your building project
Mean old levee taught me to weep and moan… Cryin’ won’t help you, prayin’ won’t do you no good.” Lyrics from that classic Led Zeppelin blues-inspired song are admittedly a tenuous reference to the latest financial burden to hit self-builders and extenders, yet somehow they seem to have been written with the Community Infrastructure Levy (CIL) firmly in mind. For the CIL is a potentially crippling, non-negotiable planning charge affecting new dwellings and large extensions (over 100m2) in England and Wales — and cry and pray all you like, odds are it will soon be coming to a local authority near you.
The charge was officially introduced on 6th April 2010 by the Community Infrastructure Levy Regulations 2010, although it was initially established under the Planning Act 2008 — so there have been rumblings for quite some time, albeit under the radar of mainstream media. The CIL was devised as the Labour Government’s preferred method of obtaining finance from developers for new ‘local infrastructure’ – meaning it could be spent on anything to benefit the local area, including safer road schemes, flood defences, schools, hospitals and other health and social care facilities, local parks, green spaces and leisure centres – with estimates it could raise an additional £1 billion a year. While the current Government initially proposed quashing the levy, ultimately it was rolled out across three early-adopting authorities at the end of 2011/early 2012 (Newark and Sherwood, Redbridge and Shropshire Council); meanwhile a number of other authorities have published their draft charging schedules, showing their intended levies and when they hope to implement them.
While the new regulations empower local authorities to impose a levy, they do not actually force them to do so. Some might prefer to persist with Section 106 Agreements, which are individually agreed planning obligations that each year affect a handful of self-builds, geared more towards creating the infrastructure to support large-scale housing and commercial development. However, under the new regulations the scope of these Agreements has been scaled back so as to not overlap with the CIL, making it all too tempting for authorities to introduce the levy. Unlike Section 106 Agreements, the CIL charge is transparent and upfront. It’s levied as a cost/m2 of floor space arising from any chargeable development, including the creation of new dwellings (of any size) and extensions over 100m2 (for replacement dwellings and conversions, the size of the original structure can be deducted from the overall figure in many cases) and is typically payable within 60 days of the commencement of development — when funds are usually pretty scarce. The Government claims that the levy will not apply to the vast majority of household extensions, as they will be less than the 100m2 threshold, however with the average self-built home measuring up at a generous 200m2, it will have a significant impact on many self-build projects.
This begs the question, should we be trimming the fat off our self-build plans to produce a home of more modest proportions, or do we simply stomach the increased cost? The answer rests heavily on where you live: the cost of the levy will vary dramatically across the country, making for an inconvenient added expense to some self-builds while ultimately precluding others. The highest known charge so far is in Nine Elms in Battersea, Wandsworth at a staggering £575/m2, while in urban areas of Shropshire it’s ‘just’ £40/m2, which could still mean an £8,000 outlay on the average self-build project.
So, is there any upside to the CIL or is it all bad news? Well, there is one silver lining: because the cost is transparent, you can take it into account at the outset of the project, enabling you to plan your budget accordingly — far preferable to being hit with a Section 106 Agreement out of the blue (increasingly, self-builders have been affected in recent years by unexpected and highly individual charges under Section 106 agreements, while admittedly just as many have escaped without having to pay anything). Unfortunately, Section 106 Agreements could still be used in some cases, although one of the appeal routes to CIL is where a Section 106 Agreement of higher value is already in place.
Could the controversial CIL even be considered fair? Under the former system, only around 6% of all developments were subject to a planning obligation, yet according to the Government, “Almost all development has some impact on the need for infrastructure, services and amenities – or benefits from it – so it is only fair that such development pays a share of the cost. It is also right that those who benefit financially should share some of that gain with the community which granted it, to help fund the infrastructure that is needed to make development acceptable and sustainable.” However, the fact that a one-off house or large extension is unlikely to impact heavily on the surrounding area suggests that the charges set do seem excessive in most cases.
The rationale behind it is that, in the future, the value of the levy will be knocked off the land price and absorbed by the vendor’s profit. But this is little comfort to the droves of self-builders sitting on plots bought in recent years, innocent of the charges to come. Sadly while many will have to scale back their plans or begrudgingly accept the increased financial burden, some self-build dreams could be rendered unviable.
You have to wonder why at a time when there arguably isn’t nearly enough new development, a levy that could stifle self-build – the trailblazing sector of the housebuilding industry and the future of how our nation’s architectural character will be defined – is thrust upon us. Furthermore, in light of RIBA’s much-publicised recent accusations of building ‘shoebox’ homes, isn’t a levy that punishes larger homes only promoting the concept of homes too small to comfortably accommodate most families? When every square metre of space comes with a high price tag, perhaps the answer for many of us is to think in smaller terms and make every inch count through thoughtful, clever design.