Shropshire Council is one of the early adopters of CIL; the unitary authority introduced its levy in January 2012, following Newark and Sherwood’s offering the month prior in December 2011. Two rates have been set within the county: residential ‘development’ attracts a rate of 40/m2 within designated market towns such as Shrewsbury (see map, above), while in rural locations the levy doubles to 80/m2. New homes within the countryside are typically deemed to have a less sustainable impact on infrastructure and this, coupled with the higher average house values in rural Shropshire, formed part of the rationale behind the higher fee. Fortunately, however, objections raised during the consultation period – which took place over summer 2011 – saw the Council reduce the proposed £120/m2 for new rural development.
“The large developers were previously paying a disproportionately high amount in Section 106 Agreements compared to small-scale developers in the county, so the introduction of CIL blends the charges across the spectrum,” explains Shropshire-based architect Carl Huntley, Managing Director of Base Architecture (basearchitecture.co.uk). Indeed, 60% of development within the county between 1998 and 2008 was estimated to consist of sites where five houses or less were built. And, as specified in the Council’s ‘Levy Rationale Background Paper (18th March 2011)’, ‘The Levy offers greatest potential for ensuring that this category of development [of less than five dwellings] in particular contributes to the cumulative effect of development on the need for infrastructure.’
But given this, how much consideration was given to self-build and small-scale development during the formulation of the Council’s charging schedule? The representations made by one district council in response to the draft charging schedule suggest not enough: ‘The Council estimates that small-scale developments of 1-5 dwellings account for 60% of development in Shropshire. Despite this, an insufficient evidence base to accurately measure the viability of small schemes and set an appropriate charge has been produced and subsequently used as the basis for the charge schedule.’
“My initial concern was that the figure of £40/m2 originally derived at was based on Section 106 Agreements collected throughout the county, yet these Agreements very rarely previously applied to small-scale development or self-build,” adds Peter Richards, surveyor and Principal of Shropshire-based land and planning consultancy Peter Richards & Co. (peterrichardsonline.co.uk), who was also involved throughout the draft consultation.
It gets worse. “The real sting in Shropshire is that an Affordable Housing Contribution is also required on the creation of all new homes, in addition to CIL,” says architect Carl Huntley. Affordable Housing Contributions – a form of Section 106 Agreement – are currently set at a rate of 13% of the build cost. (It was previously 20%). “There is, however, a cap on the amount payable on the creation of each new dwelling of £11,700; so this is the maximum a self-builder will pay, however large the house,” confirms Huntley.
“CIL contributions are non-negotiable, but the Affordable Housing Contribution is. So if a self-build becomes unviable due to both contributions, then there’s scope to appeal on the latter. This also means that as a result of CIL, I can foresee Affordable Housing Contributions in the county being adversely affected,” continues Huntley.
One saving grace for the Shropshire-based self-builder or extender is that the Council has introduced a rather more generous proposed instalment policy compared to frontrunner Newark and Sherwood. While 15% of the levy will be payable 60 days following commencement, the remaining 85% is due 270 days later. (So for a new 200m2 home built on a garden plot in rural Shropshire, for example, £2,400 would be payable approximately two months into the project, with the remaining £13,600 due around nine months into the build.)
One potential area where Carl Huntley and Peter Richards both recommend that self-build plans could be scaled back is the garage. Whether detached or integral, garages attract CIL, so excluding one from your initial plans (and perhaps making an application for one at a later date) could reduce the levy for which you’re liable. “If cost-effective, you might also consider a phased approach, making separate applications for, for example, extensions or large outbuildings,” says Huntley. “The Council has been forewarning applicants over the last 12 months about the pending introduction of CIL. But if you already have an existing consent dating prior to 1st January 2012 and hope to make changes to it, go back to the planning department and see what you can do without making a new application, which will ultimately trigger CIL,” adds Richards.
“Short term, I foresee a lower number of residential applications here,” says Richards. “However, in the long term CIL could actually see more plots brought to market; in turn, bringing about a reduction in the price of plots. In Shropshire, 90% of a CIL collected is proposed to be directed back to infrastructure within the district or parish where a development took place. As such, CIL could be used as a mechanism by which the Council encourages the districts and parishes to bring plots to market.”