Out-Law / Your Daily Need-To-Know

Research shows CIL can be threat to schemes

Out-Law News | 23 Jan 2014 | 2:46 pm |

New research from estate agent Savills has warned that local authorities are setting CIL rates too high, pushing new schemes to the edge of viability and diminishing the provision of affordable housing.

As part of the research Savills considered large greenfield sites, which are substantial contributors to the housing land supply. They are also subject to section 106 and other contributions to mitigate the impact of any development on the locality, as well as affordable housing policies. The research showed that in order to make schemes viable, significant trade-offs are required between these three aspects, often to the detriment of affordable housing.

Savills revealed that developers need to allocate between 20% and 30% of a scheme's land value in order to pay CIL and section 106 contributions. However, where councils require more than 30% of affordable housing within a scheme, this capacity drops to zero.

Where sale values are below £250 per square foot, lower levels of affordable housing would affect the ability of developers to cover the financial contributions required. For example, at a sale value of £225 per sq ft, affordable housing would need to be set at 10% to give developers the ability to pay any CIL or section 106 amounts, it found.