The London Mayor has published a new CIL Preliminary Draft Charging Schedule for consultation. The consultation period ends on the 7 August.
The current Mayoral CIL (MCIL) levy has been used to collect money to fund Crossrail. In place since April 2012, MCIL is expected to meet its target of £600 million of developer contributions by March 2019. Therefore, it is proposed that a new levy will be put in place from April 2019 – referred to in the consultation as Mayoral CIL 2 (MCIL2). The money raised through this levy will be used to help fund Crossrail 2 which is a strategic priority to support the growth and development of Greater London.
The Preliminary Draft Charging Schedule sets out proposed new MCIL2 rates. The draft Charging Schedule takes the same approach as the current one in terms of identifying three different groups of Boroughs each with a different levy rate. The only change from the current groupings is that Waltham Forest and Enfield move from the lowest value band to the middle-value band, while Greenwich moves from the middle to the lower band.
The changes to the Levy rates for each group are shown below. The current MCIL rates are shown for comparison (excluding indexation).
Proposed MCIL2 charging rates for all development in London (*)
As with the current MCIL, health and educational uses are nil rated. The levy rates would apply to all other types of use, subject to the exemptions and reliefs that are set out in the Regulations.
A further change is proposed for a new office, retail and hotel uses that are located within a defined Central London area. In these areas, higher levy rates will apply as shown below. The boundary of the Central London area is shown in the Draft Preliminary Charging Schedule.
This change will mean that the current GLA SPG on Crossrail will be withdrawn. At present this SPG means that payments for Crossrail may be collected via S106 agreements from office, retail and hotel developments that are located within a defined Central London area. These payments act as a "top up" to MCIL and MCIL liabilities are off set against the calculated S106 payment (so there is not a double payment).
MCIL2 will supersede the current Crossrail S106 charge which will be brought to an end simultaneously with the start of MCIL2.
Proposed MCIL2 rates for Central London area and the Isle of Dogs
The figures in both the tables above are not a direct comparison because the effect of indexation on the current MCIL and S106 rates is not shown. However, the rates all increase apart from the rate for office development in the Isle of Dogs.
The documents that support the Draft Preliminary Charging Schedule include a viability assessment that has considered the ability of development to absorb the levy.
It is expected that there will be a second round of consultation later in 2017, followed by an examination of the Charging Schedule in 2018, with adoption planned for April 2019.
The consultation documents explain that there is no agreed funding package for Crossrail 2 at the moment. Should no funding deal be achievable, the Mayor will be able to apply the MCIL2 proceeds to fund other strategic transport projects for which there is a significant funding gap.
If you have any questions about the consultation, please let us know and we would be happy to assist.