With the new London Plan dominating planning headlines from City Hall, last week the Mayor’s new Community Infrastructure Levy (CIL) came into force seemingly under the radar. Dubbed MCIL2, the new charges will see nearly all new development in the capital faced with increased CIL charges.
Mayoral CIL is a charge on development applied to net additional residential and commercial floorspace approved throughout Greater London. It applies in addition to local CIL charges and since Mayoral CIL was introduced in 2012, it has raised approximately £600 million towards Crossrail 1.
MCIL2 is the new charging schedule for Mayoral CIL and came into force on 1 April 2019. It has superseded the previous charging regime and also sees the previous Crossrail S106 charge consolidated within the MCIL2 charging schedule.
Despite a few exceptions, the new charging schedule sees increases across all three of London’s charging bands as well as increases for commercial development in central London.
In Band 1, which includes the City of Westminster, City of London and Camden, rates will increase from £50 to £80 per sqm, while in Band 2, which includes Tower Hamlets, Lambeth and Lewisham, rates will increase from £35 to £60 per sqm. Band 3, which includes Bexley, Croydon and Newham, rates will increase from £20 to £25 per sqm.
There has also been a reshuffle in the charging bands. Enfield and Waltham Forest, two boroughs which are set to directly benefit from the Crossrail 2 route, have been moved from Band 3 to Band 2, seeing the Mayoral CIL charge increase from £20 to £60 per sqm. Greenwich, on the other hand, has been moved from Band 2 down to Band 3, and will see their CIL charge decrease from £35 to £25 per sqm.
Commercial development in central London is now to be levied under Mayoral CIL and no longer via the separate S106 Crossrail charge. Offices will see their rates increase from £140 to £185 per sqm, retail uses will increase from £90 to £160 per sqm, whereas hotels will see the biggest increase from £61 to £140 per sqm.
When justifying the increased Mayoral CIL charges at last September’s Examination in Public, the GLA noted that their research indicated that the additional costs would only form a minor part of overall development costs and would have no impact on viability. However, the issue with the GLA’s research is that it followed a broad-brush approach that failed to identify area and site-specific constraints that can influence the viability of developments. It remains to be seen whether these increased costs will jeopardise the Mayor from achieving his strategic target for 50% of all new homes to be genuinely affordable.
Should you have any queries on how the new Mayoral CIL charges will affect your development, Iceni’s Central London Planning and Delivery Teams would be happy to assist.
Iceni have produced a short fact sheet comparing the new MCIL 2 charges to the previous MCIL 1 and S106 charges, which can be downloaded here.