DWF/HOW: New property tax ‘contradicts’ planning guidance

The forthcoming community infrastructure levy (CIL), due to come into place in April 2010, conflicts with the latest advice to local authorities from the Homes & Communities Agency, according to advisers at law firm DWF and HOW Planning.

Speaking at a planning seminar held this morning in DWF's office on Deansgate, Manchester, Kathryn Jump, associate at DWF, said the HCA was being pragmatic and reasonable by urging councils to reduce section 106 contributions payable by developers as a condition of planning consent.

However, the CIL, effectively a new tax on all developments over 100 sq m, threatens to erode profit and dampen development activity.

Gary Halman, partner at Manchester-based HOW Planning, said the CIL would be optional but not required by local authorities. It must be spent on infrastructure and follow adoption of a new 'core strategy' for spending drawn up by the local authority.

Councils can set different rates for geographical areas and types of uses. The levy will be rated in pounds per square metre for gross internal area and will be index linked against national construction costs.

The HCA has been widely praised since coming into force last December through the merger of English Partnerships and the Housing Corporation. It has set out guidance for authorities to reappraise section 106 payments to make schemes viable for developers during the recession.

Among the HCA recommendations is extending existin consents, granting consents for more than three years, renegotiating existing requirements for affordable housing, and allowing for retesting of viability.

Halman and Jump said the HCA was sympathetic to developers but its work could be undone by the CIL.