What Are CIL Payments & Why Are They Important?
At our last member meeting Jon McDermott talked about planning and several times, mentioned CIL payments and each time, someone asked what a CIL payment was….
This short article attempts to explain what they are and why they are so important.
The Community Infrastructure Levy (CIL) is a planning charge, introduced by the Planning Act 2008 as a tool for local authorities in England and Wales to help deliver infrastructure to support the development of their area. It came into force on 6 April 2010 through the Community Infrastructure Levy Regulations 2010.
Most new development which creates net additional floor space of 100 square metres or more, or creates a new dwelling, is potentially liable for the levy. There is a CIL calculator to help you assess how much your development will need to pay here.
It is clear that some developers go out of their way to avoid CIL payments in an attempt to maximise profits and whilst this may 'feel good" it is a very short-term view. If you have a sparkling new build in a tatty, run down area it is not going to appreciate in value or attract the sort of tenants that the same building would have in a thriving and vibrant community.
As an example of how much is collected and how it is spent, in Portsmouth in the fiscal year ending 1/4/2016, the fourth year of operation of the levy, £4,258,023 was collected. In 2015 - 2016 CIL funding was used on the Education Sufficiency Programme Phase 2 and Tipner Motorway Junction and Park and Ride. CIL money is collected into two 'pots' of money, Infrastructure CIL and Neighbourhood CIL. During this monitoring year, 80% of the money collected was Infrastructure CIL.
Since 25th April 2013, 15% of all CIL collected has to be retained as the 'neighbourhood proportion', i.e. to be spent on Infrastructure projects in the neighbourhood in which it was collected. As there are no Parish Councils in the city, this proportion is allocated at the Ward level, with Ward councillors working with their communities to decide on neighbourhood infrastructure projects.
The spending of the neighbourhood proportion in 2015 - 2016 was:
• Central Southsea - dropped kerb for pedestrian access at Cornwell Court, Haslemere Road
• Drayton & Farlington - £83k on improvements at Drayton Park, £43k on a new roof at the Drayton Centre
• Milton - £18.9k at Milton Skate park, £9.1k on area around the community centre, £3k on a new kitchen at Milton Village Hall and £6k on 3 public access defibrillators at Fratton Park, Eastney Community Centre and Milton Village Hall
Full details of what is being collected and spent in your area is held in your local authority monitoring report (google it - here is the Portsmouth one used for data for this article https://www.portsmouth.gov.uk/ext/documents-external/lplan-amr-2016-final-version-for-publication.pdf ) - check your ward or parish, many do not use the funds that are available - you should actively encourage councillors to use all available funding to improve the areas in which you have property. Havant raised £855,327 in CIL payments in the same period.
And next time you undertake a new development, factor in the CIL charge and don"t begrudge paying it - sometimes you can use the rules to avoid it, and it is legal in the same way it is legal to fly your private jet to the Isle of Man to register it for VAT - as is often the case, following the letter of the law rather than the spirit may give short term benefit for the individuals concerned but that does not make it right.
I know most of us resent the constant negative press that landlords face but here is one area where we can set an example - in all of the wards or parishes where you have property, check what CIL funds are available, make recommendations to your local councilors on what it could be spent upon to improve the area and if you undertake development don't take measures to avoid the levy - it may pay for the defibrillator that you or someone you know desparately needs sometime in the future.