The British Property Federation has called on the government to reverse its plans for a new infrastructure levy.
As the consultation on the reform comes to a close, Ian Fletcher, director of policy at the BPF, said: “The new levy has fundamental structural challenges and will do little to reduce complexity.
He added: “We urge the government to reform the current contribution systems, rather than press ahead with an unnecessary overhaul of the entire system.”
The lobby group said the new levy would create a more complex system, adding to the issues experienced with the current section 106 arrangements and the community infrastructure levy.
The BPF said local authorities would have difficulties setting viable levy rates, particularly for brownfield and urban development sites, because land values and build costs vary from site to site and by land use.
It added that the new levy would also have a negative impact on the delivery of affordable housing, and said that a single, more rigid mechanism for calculating affordable housing contribution would raise less, because it would not be not site-specific.
The BPF also had concerns that local authorities do not have the capacity and resources to implement a new levy and charging schedule.
It said the proposal to use GDV as the primary measure to calculate a developer’s liability would cause uncertainty for developers, funders and local authorities, owing to changes between valuations. This would in turn impact scheme viability, especially for commercial and mixed-use projects.
Fletcher said: “The idea of bringing in a new infrastructure levy is to remove the complexities experienced under the current system of contributions. But the new levy has fundamental structural challenges and will do little to reduce complexity. We are incredibly concerned about the impact the new levy would have on the timely provision of new infrastructure, the delivery of new affordable homes, and the uncertainty it would create in the market.”
He added that there was likely to be a scenario where developers would face the worst of both worlds. “It will take time for a new levy to be introduced and during that period local authorities and developers will have to continue to rely on section 106 and CIL, which will not be reformed under the current proposals.”
The BPF has consistently taken the position that section 106 and CIL are reformed, rather than replaced by a new but just as complex system.
“It is undeniable that CIL and section 106 can be improved, but we would like to work with government to share our expertise and work towards a scenario where the existing system is enhanced and simplified,” Fletcher said.
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