Residential planning consents halve in aftermath of CIL introduction, report says

Out-Law News | 27 Oct 2014 | 4:54 pm | 1 min. read

Research from real estate firm Savills has revealed that local planning authorities are seeing a 49% drop in residential planning consents in the year following the introduction of community infrastructure levy (CIL), resulting in missed housing targets.

In a report entitled CIL: Is It Delivering? (6-page / 657 KB PDF), Savills considered information from the 16 local authorities which have been actively collecting CIL for more than 12 months and have published an annual report detailing CIL income.

The report revealed that these local authorities experienced "a sharp peak in the number of residential units granted full consent" in the month preceding the introduction of CIL, followed by "a sharp drop in consents once CIL is implemented", with the number of consents failing to recover to pre-CIL level in the subsequent 12 months. This contrasted with the trend across England as a whole, where a 32% increase in consents was experience over the equivalent time period, the report said.

The drop in consents was resulting in missed housing targets, Savills said, reporting that the London Borough of Redbridge had delivered only 271 homes in the 12 months following the introduction of CIL, against a target of 760 units per year, and that "all four of the local authorities where CIL was implemented pre-April 2012 failed to meet their annual housing target in the year following CIL implementation".

The report said that CIL was failing to deliver the necessary infrastructure funding to support development. It said that the 16 councils had collected an average of just £300,000, with payments delayed due to the use of policies staggering the collection of the levy over the course of development. None of the authorities analysed in the report had spent any of the money raised, save for the use of 5% of CIL receipts to cover administrative costs and the transfer of around 12% to town and parish councils.

Savills said councils were caught in a "Catch 22", since "the CIL model relies on the delivery of development to raise funds", but "in many cases development cannot commence until the necessary infrastructure is delivered". CIL would "only make up a small percentage" of the shortfall in most local authorities' infrastructure funding, the report said, leaving local authorities reliant on "securing alternative funding sources" and resulting in certain projects being prioritised at the expense of others.

In contrast to CIL collected outside London, the London Mayoral CIL (LMC) was identified in the report as having been "particularly successful". LMC, under which each of London's 32 boroughs is charged one of three, relatively low, flat rates in order to raise funds for the Crossrail project, represented "the majority of CIL receipts collected" and 94% of income receipts in 2013/14, the report said.