The Infrastructure Levy was introduced by the Levelling Up and Regeneration Act 2023. HRJ Foreman Laws Solicitors, discusses the legislation and what it means for property developers.

07 May Understanding the Infrastructure Levy

Posted at 00:00h in Commercial Property Law by

Property developers in England, particularly those navigating the planning process for new projects, need to be aware of the Infrastructure Levy. What does it mean and how is it different from the Community Infrastructure Levy (CIL), which it replaces?

What is the Infrastructure Levy?

HRJ Foreman Laws Solicitors, discusses the legislation and what it means for property developers.

The Infrastructure Levy was introduced by the Levelling Up and Regeneration Act 2023.

It will replace the Community Infrastructure Levy and eventually may replace Section 106 financial contributions.

It seeks to provide a more consistent way for local authorities to “tax” new development projects.

The funds raised will be used to build schools, roads, transport, and open spaces. It will also contribute to additional childcare facilities and affordable housing.

Key Differences Between Infrastructure Levy and Community Infrastructure Levy

  • Mandatory vs. optional – Unlike the CIL, which local authorities could choose to adopt, the Infrastructure Levy is mandatory.
  • Charges: Local authorities will set a minimum threshold based on a price per square meter. Developments below the threshold will not be charged. Charges for applicable projects will be calculated on the final gross development value at completion. The first charging schedules are expected as pilots in 2025, with a wider rollout in 2026.
  • Exemptions: While the CIL offered exemptions for affordable housing, the Infrastructure Levy offers a cumulative discount. There might be full exemptions for projects meeting a certain percentage of on-site affordable housing. Additionally, reduced rates are likely for sites with fewer than 10 homes.

Potential Benefits for Developers

  • Streamlined planning process – The Infrastructure Levy aims to simplify securing planning permission by consolidating infrastructure contributions into a single levy, potentially eliminating separate negotiations under Section 106 agreements.
  • Transparency – Local authorities will be required to publish a clear strategy outlining how Levy funds will be used, providing developers with greater certainty about the impact of their contributions.
  • Improved planning – By providing greater clarity on infrastructure needs, the Infrastructure Levy can assist developers in tailoring their projects to better integrate with the surrounding area, hopefully leading to the creation of sustainable and well-equipped communities.

Looking Ahead

The Infrastructure Levy is still in its early stages. Developers should stay informed about its implementation and potential project impact. We might see some flexibility in how local authorities set charging schedules.

While Section 106 Agreements may be being phased out, they will  continue to be used for complex developments requiring additional infrastructure. More information is needed on how exactly it will be adapted.

If you have questions before your next development, please contact our commercial property legal team for advice.

  • Email info@hrjforemanlaws.co.uk
  • Call Hitchin 01462 458711, Welwyn Garden City, 01707 887700, Old Harlow 01279 709100
  • Complete our contact form here

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