The main aim of introducing CIL was to ensure that the cost of infrastructure was spread across all development, as highlighted by the DCLG CIL Guidance (2010), which commented that “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.” However, since its introduction, the list of exemptions, exceptions and relief from CIL has gradually increased (see Relief from CIL below).
The most notable change to the CIL Regulations in this respect was the decision to make self-build exempt from CIL. A policy priority for the Government, the amendment was made to assist the self build industry, which is estimated to provide approximately 8,000 new homes per year in England and Wales.
However, the potential cost of this move is significant. Assuming an average house size of 120 sq m and applying the average maximum implemented residential CIL rate (£132 per sq m) indicates a potential lost CIL income in the region of £127 million per annum (£15,840 per dwelling), before considering the impact of Government intentions to expand self build volumes.
Similarly, the knock-on effect of the Regulation 14 “balance test” is that a large amount of development has been zero rated or excluded entirely from CIL on viability grounds, to ensure that it is not stifled. Similarly, regeneration proposals pay a reduced level of CIL as they have the ability to offset existing lawfully occupied floorspace against any CIL liability.
The result is that only the London Borough of Redbridge and the London Mayoral CIL have applied rates to all development, as illustrated by Graph 4 which shows the burden of infrastructure is left to fall on those developments that are most viable.
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