The VF – Community Infrastructure Levy

Below is an article from the Wilts and Standard On-in News.

The gist is that the developer is upset about an anonymous letter whistle blowing their Community Infrastructure Levy (CIL). The backlash against the CIL underlines the degree of mistrust and anger directed both against the landowner and developer.

This is the letter that has caused the developer backlash in the paper.

REGARDING the Chesterton Strategic Development it is odd that it appears to have been exempted from the Community Infrastructure Levy (CIL) resulting in a significant cost saving for the developer and loss of income to Cirencester.

What is CIL?

A mechanism for developer contributions
It will contribute towards infrastructure needed to support the development of the area
It is a charge per square metre of floor space
It is not mandatory

What is CIL for?

To help pay for infrastructure needed to support new development, but
Not to remedy existing deficiencies unless the new scheme will make it worse
Councils must spend the income on infrastructure – but it can decide on what (and this can change over time)

On the CDC website we have this page which holds a link to the following document and page 12 clearly shows the exemption.

It clearly shows that the Chesterton Strategic Development is, for some reason, exempt (£0 per m2 of development) when a levy of £80 per m2 could have been applied…one can only speculate why….

My main question regarding this would be why this development has been exempted in this way?

Has the Council just not got the spine to apply it?

And also a question for the developer:

Surely if he is considering this project as a “legacy” for Cirencester then is there not a moral obligation to step up to the task and volunteer to pay this levy?

In doing so he could then be leaving an actual legacy (i.e. a useful one) for Cirencester rather than the inevitable legacy of traffic gridlock – unless maybe one of the stipulations would be that the ring road were completed to allow adequate traffic flow around the town?

Maybe an even fatter bank account counts for more than moral obligation in the rarified upper echelons?

Regards, an anonymous Cirencester resident

This is the article:

BATHURST developers planning to build 2,350 homes in Cirencester have slammed an “inaccurate and misleading” letter that questioned why the development was exempted from the Community Infrastructure Levy (CIL).

The anonymous letter published on the Standard’s website on November 30, said that the CIL exemption would result in a “significant cost saving for the developer and loss of income to Cirencester”.

But BDL have hit back at the writer, explaining that it is often the case that major developments like the Chesterton one are excluded from CIL because of “the abnormal and exceptional infrastructure costs associated with delivering these types of strategic sites”.

Instead of paying into a large pot as with CIL, a S106 legal agreement can be used instead, as is the case with Chesterton.

BDL said in a statement: “The S106 legal agreement is far more transparent as the specific costs for the necessary infrastructure can be easily identified and scrutinised.”

The housebuilder explained that it was assumed by Cotswold District Council that the Chesterton development would contribute £32million of S106 costs.

But the current planning application sets out a S106 package of just over £50million which goes towards a range of things including: education, public transport, offsite highways improvements, green infrastructure, parks and open spaces, community an sports facilities, police and broadband.

A further £50m will be required for onsite infrastructure including significant earthworks, drainage and utility requirements.

More than 40 other local authorities have taken a S106 approach to delivering infrastructure for larger strategic sites instead of CIL. These include Central Bedfordshire, East Dorset, Basingstoke and Dean, South Somerset, Mid Devon, Stroud, Cherwell, Vale of Whitehorse and South Oxfordshire.

The Chesterton scheme will however be paying CIL on the retail elements.

The developer added in its statement: “The CIL Charging Schedule was subject to independent scrutiny by an Examiner on December 5.

“The examiner supported the approach set out by the council in zero rating Chesterton, albeit his report is awaited.”

2 thoughts on “The VF – Community Infrastructure Levy

  1. Homeowners caught in service charge nightmare.

    Article found in The Times.

    Developers are slipping maintenance fees into the deeds of new-build freehold properties in a new scandal.

    Homeowners who bought freehold new-build properties from the country’s biggest developers are facing “extortionate” service charges that have risen by as much as 500 per cent in three years and have left them unable to sell their homes.

    Property managing agents are typically brought in to maintain communal areas around leasehold properties. However, housebuilders are also offering contracts to such companies for the management of grass verges and small paved areas around freehold properties. Historically, housebuilders would pay a lump sum to local authorities for the lifelong maintenance of these spaces.

    Now freeholders are finding themselves beholden to estate management companies even when their road has already been “adopted” by the local authority. Adopted roads are part of the public highway and maintained at public expense.

    Mike Johnston and his wife, Sue, bought a freehold three-bedroom mews house from Taylor Wimpey in Middlesbrough in 2013. Even though the road was adopted, Mr Johnston was advised that Greenbelt, a management company, had been appointed to look after grass and shrubbery outside the development of 22 houses. The service charge would be £83 plus VAT annually. “We were informed that this was an effort to reduce costs to local councils,” he says.

    The property’s deeds say that the charge should increase in line with inflation, but Mr Johnston says that the charge first more than doubled, to £186, and then this October it was increased to £545.67 per household. “The communal area is minuscule. The management company call it a substantial area, which is ridiculous. This is like paying a second council tax. The housebuilder stuck this on to the deeds, which is disgraceful, especially when I have to pay a fee to sell my house,” he says.

    Greenbelt says the contract requires it to revise the service charge every five years and recoup its losses and that a yearly review would be fairer, but residents have resisted this. Pete Woolston, 43, bought a freehold house in South Yorkshire on a Bellway Homes development of 32 properties. He wants to remortgage, adding his wife to the property’s deeds, and says that Greenbelt wants him to pay £700 for a “release certificate” that shows he is not in arrears with the service charge. Mr Woolston is also in dispute over the service charge. “Homeowners should not be made to go through this experience, especially when the property is freehold. I feel things are going to get considerably worse for homeowners who are stuck with land maintenance companies in their property’s deeds,” he says.

    Greenbelt says it charges between £65 and £130 for the documents required to remortgage, transfer equity, or sell the property. The fees cover a number of administration tasks and the certificate is not always required for a remortgage. The communal area is minuscule. This is like paying a second council tax. It’s disgraceful

    This week the communities secretary Sajid Javid announced that he would give freeholders equivalent rights to leaseholders to challenge unfair service charges. He also announced that ground rent would be banned on new-build properties — flats and houses — to stop builders from selling homes with leases where the ground rent doubles every ten years, making some properties unsellable.

    In October Times Money revealed that housebuilders and councils were failing to take responsibility for road maintenance outside some developments, leaving the owners of new homes living on potholed roads with no streetlights or rubbish collection.

    The service charge rip-off facing freeholders mirrors what has been happening to leaseholders for years. Sally Mills, 56, from Bournemouth, bought a leasehold flat ten years ago in a house that had been converted into five apartments. Initially, the managing agent charged £760 a year as a service charge, but the fee is now £2,000, even though the property has no grounds or garden and is on a main road. “I was selling my flat, but had to take it off the market after an estate agent told me that it will not sell with such a high service charge,” she says. “It is extortion. They seem to be able to charge what they like.”

    Antoinette Sandbach, the Conservative MP for Eddisbury in Cheshire, has long called for proper regulation of this sector. “The lack of transparency by many freehold management companies over charges they levy is disturbing,” she says. “Excessive charges are often levied by the less reputable companies, leaving leaseholders out of pocket often for basic services.”
    Jason Hunter, a partner at Russell-Cooke, the law firm, says homeowners should challenge requests for payment that are higher than those agreed in their property’s deeds.

    Taking legal action would be the next step. He says that, ultimately, homeowners may be able take their case to the first-tier tribunal (property chamber) of the courts, which could decide whether the charges are proportionate. “Service charges have to be reasonable in relation to work that is carried out,” he says, but warns that people who refuse to pay management charges they believe are unfair could be sued.

  2. Jerry, please post on Chatter this is valuable information and will help the community to understand why Residents Unite are contesting the S106 plans from LinBo to make sure they install what was approved and costed to generate the initial £381 maintenance fee!

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