Author: Ben Hazenberg, Senior Associate, Planning, Real Estate, London

The Mayoral Community Infrastructure Levy 2, or ‘MCIL2’, is a new charging schedule for the Mayor’s Community Infrastructure Levy (CIL) charge. It sets new (higher) rates for Mayoral CIL and is due to take effect on 1 April 2019. (It is technically possible that the Mayor may change his mind about MCIL2 before 1 April 2019, but it should be assumed that he will not.)

This post explains what MCIL2 is, what it means for developments in London and what action developers may wish to take before MCIL2 comes into force.

What is ‘MCIL2’?

Mayoral CIL (‘MCIL’) has been charged on new developments within London since 1 April 2012. Its purpose is to raise funds towards the delivery of Crossrail.
MCIL sits alongside the Mayor’s collection of financial contributions towards Crossrail through section 106 agreements (the ‘s106 Crossrail Charge’), which applies to parts of Central London and the Isle of Dogs. In the parts of London where the s106 Crossrail Charge applies, developers are required to pay both MCIL plus (through a section 106 agreement) the amount, if any, by which the s106 Crossrail Charge sum for the development (calculated in accordance with the Mayor’s published guidance) is greater than the MCIL charge.

MCIL2 is a new charging schedule for the Mayor’s CIL which will replace both the current MCIL charging schedule and the s106 Crossrail Charge. Its purpose is to contribute toward the cost of Crossrail 2.

The MCIL2 Preliminary Draft Charging Schedule was consulted on from June to August 2017 and the MCIL2 Draft Charging Schedule from December 2017 to February 2018. The MCIL2 Examination in Public took place in September 2018 and the Examiner’s report was issued in November 2018. The Mayor of London’s website notes that he intends to proceed towards formal adoption of MCIL2 with the intention that the Charging Schedule takes effect on 1 April 2019.

Which developments will it affect?

Permissions granted on or after 1 April 2019

MCIL2 will apply to all planning permissions for development in London granted on or after 1 April 2019.

Permissions granted before 1 April 2019

Outline and phased planning permissions for development in London granted after 31 March 2012 but before 1 April 2019 may also be subject to MCIL2, depending on the circumstances:

  • Outline planning permission – no phases: MCIL2 will apply to the permission unless all reserved matters have been approved prior to 1 April 2019.
  • Detailed planning permission – phased: MCIL2 will apply to any phase for which there are outstanding pre-commencement conditions as at 1 April 2019.
  • Outline/hybrid planning permission – phased: MCIL2 will apply to:
    • any outline phase (ie a phase which includes reserved matters) unless:
      • all reserved matters for that phase have been approved prior to 1 April 2019; or
      • if earlier and only if agreed in advance with the planning authority, all pre-commencement conditions for that phase have been approved prior to 1 April 2019;
    • any detailed phase (ie a phase which includes pre-commencement conditions but no reserved matters) if there are any outstanding pre-commencement conditions for that phase on 1 April 2019.

Note that for detailed planning permissions which do not have any phases and any detailed phase of a phased planning permission where such phase does not have any pre-commencement conditions associated with it, MCIL2 only applies to permissions granted on or after 1 April 2019.

Implications for developers

Current MCIL rates range from £20 to £50 per m2 depending on which London Borough the development is in, with indexation applied in line with any increase to the All-In Tender Price Index since 1 November 2011.

MCIL2 rates will be higher. For example, in Central London and the Isle of Dogs office uses will be charged at £185 per m2, hotel uses at £140 per m2 and retail uses at £165 per m2. For all other developments in London, MCIL2 rates will vary between £60 and £80 per m2 depending on the Borough.

Developers with planning applications or reserved matters in Greater London that are close to being approved may therefore want to take steps to get a decision notice by no later than Friday 29 March 2019 in order to avoid being caught by the higher MCIL2 rates.

For further information please contact:

Matthew White
Matthew White
Partner and Head of UK planning, London
+44 20 7466 2461
Ben Hazenberg
Ben Hazenberg
Senior Associate, Planning, Real Estate, London
+44 20 7466 7581