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Land Owners and Developers Await Outcome of Proposed Charge on New DevelopmentsLand Owners and Developers Await Outcome of Proposed

Charge on New Developments

Posted on: 5 February 2010
                        » Posted by: Barry Challender
                        » Service area: Commercial Property

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In addition to the economic downturn that has had a depressing effect on new development, landowners and developers alike now face uncertainty as to how the new Community Infrastructure Levy will affect them.

What is the Community Infrastructure Levy?
It is a tariff which local planning authorities will have the option to impose on most forms of development.

How much will be charged?
Local planning authorities will be allowed to introduce their own rates for their own areas so each authority will have to consider such factors as to what effect the charge will have upon the economic viability of the particular development. Different rates for different types of developments may be set but some charges will be standardised. Rates will be based on gross internal floor area. The charge will be subject to indexation from the date the charging schedule is adopted.

What developments will be affected?
You may have thought that it would only apply to large scale developments but this is not the case. There are some exceptions however eg:
  • Development by a homeowner where the number of houses is not increased
  • Development up to 100m˛ gross internal area on non-residential development
  • Change of use within the Use Classes Order
  • Charitable exemptions

Who pays?
Anyone can assume the liability to pay so it will be down to negotiation between the landowner and developer. In the event of payment default the ultimate responsibility will fall on the landowner. Landowners and developers will be involved in tough negotiation on this issue. As payment will be due on commencement of development, a land owner who has granted an option or has entered into an agreement conditional upon the granting of planning consent with the developer will be particularly concerned to ensure that the developer does not commence development before the disposal of the land has been completed.

Who enforces the charge?
Local planning authorities will have new powers and will be able to impose interest and surcharges for late or non-payment. Non-payment could lead to the issue of a “stop notice” and failure to comply with it will be a criminal offence.

When does the charge come into operation?
The local planning authority must first have an up to date development plan and adopt a charging schedule which will be based on a formula set out in the draft CIL Regulations which will be finalised by 6 April this year. The charging schedule will be subject to public consultation in the same way as a development plan. Once adopted it becomes part of the local development framework.

If you wish to discuss any issues arising from this article please contact Barry Challender at our Blackburn office on 01254 297912.

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