MCIL2 update – in force 1 April 2019

Last week, we published a post (see here) noting that the Mayoral Community Infrastructure Levy 2 (‘MCIL2’) was due to come into force on 1 April 2019, setting out details of the new charges, which developments would be affected and the implications for developers. By a letter dated 28 February 2019, the Greater London Authority (‘GLA’) has now confirmed that the Mayor of London has formally adopted the MCIL2 Charging Schedule and that it will indeed be brought into effect on 1 April. Two modifications have been made to the final version of the Charging Schedule, the most important of which is that the Elephant and Castle Opportunity Area is not part of the Central London Charging Area for office, retail and hotel development; the second modification clarifies the definitions of hotel, office and retail uses. The GLA has also confirmed that MCIL2 will be used to fund both Crossrail 1 (the Elizabeth Line) and Crossrail 2, and that the MCIL2 Charging Schedule will supersede both the 2012 Mayoral CIL Charging Schedule (‘MCIL1’) and the 2016 Section 106 Crossrail Funding from Planning Obligations Supplementary Planning Guidance (referred to in our previous post as the ‘s106 Crossrail Charge’). Continue reading

In force soon – Mayoral Community Infrastructure Levy 2 (MCIL2)

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.

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Real Estate EP5: The future of planning – Matthew White and Ghislaine Halpenny in conversation

British Property Federation (BPF) director of strategy and external affairs, Ghislaine Halpenny, sits down with Matthew White, partner and head of UK planning, to discuss planning, its ever-changing nature and the direction it is taking.

 

Also published on the BPF soundcloud for the BPF Futures network, a networking and development group for junior professionals working in all areas of UK real estate.

For further information please contact:

Matthew White
Matthew White
Partner and Head of UK planning, London
+44 20 7466 2461

Closing the “viability loophole”? A return for the developer must be taken into account when setting local plans

The Government is recommending that viability is assessed in detail by the local authority at the stage of setting its development plan and allocating land for certain uses, and that specific assumptions should be made at that stage regarding land value and what is a reasonable return for a developer – using the ‘existing use value plus’ (EUV+) land valuation method and assuming a return of 20% of gross development value (GDV) for the developer in appropriate circumstances.  It could then be more difficult for a developer to re-open negotiations on viability at a later stage.

The Government’s new Draft Planning Practice Guidance for Viability sets out more detail on the new proposals, as we explain in this post.  This draft guidance is one of a raft of new publications which the Government have released, including new draft National Planning Policy Framework (NPPF) and a consultation on developer contributions including Community Infrastructure Levy (CIL) which are all aiming to increase the supply of housing, provide certainty for developers, capture land value more effectively and improve and speed up the planning process.

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Brexit: some indirect implications for development and planning

Author: Matthew White, Partner and Head of Planning, Real Estate, London

There are many briefings on what Brexit means for real estate and I don't intend to repeat them in this blog entry. There are only so many ways of saying that the outlook remains uncertain and some transactions are likely to be put on hold until the situation becomes clearer.

Instead, I want to consider some of the indirect implications of last Thursday's vote. I have spent the last week talking to clients and contacts about their concerns, many of which are less obvious than the headlines would suggest. It would be unfair to identify whom I have spoken to, but equally I cannot claim all the credit for these thoughts either.

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Planning Update: office to residential conversion rights made permanent, Mayor’s advice to local authorities on avoiding these rights, Mayor’s viability disclosure requirements, and CIL and mezzanine floors

Authors: Matthew White, Partner and Head of Planning, and Lucy Morton, Professional Support Lawyer, Planning, London

Today's post is a planning update, summarising some of the recent and forthcoming changes to planning law and policy.

Please contact us for more information on any of these topics.

1.    Office to residential conversion rights made permanent

2.    Mayor's advice to London authorities on avoiding the office to residential conversion rights (new SPG for the Central Activities Zone)

3.    Mayor calls for more transparent viability information (new Housing SPG)

4.    Community Infrastructure Levy (CIL), mezzanine floors and multiple planning applications

5.    Coming soon…

 

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What to look forward to in 2016: Planning changes on the horizon

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Herbert Smith Freehills' real estate development team are monitoring a number of areas of law likely to change during 2016.  Here is a summary of some key areas of change we expect in the field of planning (from a development perspective), highlighting some opportunities these changes may present. 

For more information please contact Matthew White or Lucy Morton at Herbert Smith Freehills.

1. Office-to-residential conversion rights to be made permanent

2. Housing and Planning Bill due to become law

3. CIL Review Panel to report on whether CIL is meeting its objectives

4. Government's response expected on the National Planning Policy Framework consultation (including changes to green belt and affordable housing policies)

5. Affordable housing renegotiation provisions to expire on 30 April 2016, unless extended

6. Government due to respond to the Airports Commission Final Report (which recommended Heathrow expansion)

7. International property measurement standards changing

8. Carbon offsetting requirements expected to be amended or abolished

9.  National Infrastructure Commission to report at Budget 2016

 

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Indexation calculations for Community Infrastructure Levy (CIL)

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In areas where a Community Infrastructure Levy (CIL) charging schedule has been adopted,  the formula in the CIL Regulations must be used to calculate the CIL charge payable on a new property development.  Indexation is part of the formula used to calculate the CIL charge and the wording in the regulations has been causing concern to some local authorities and developers.

The concerns arise due to the definition of the "index figure" for a given year, which according to the CIL regulations is: "the figure for 1st November for the preceding year in the national All-in Tender Price Index published from time to time by the Building Cost Information Service of the Royal Institute of Chartered Surveyors".  Some local authorities are taking the start of the 'preceding year' to be 1 January, while others are taking it to be 1 November. This affects the indexation calculation for those permissions granted between 1 November and 31 December of a given year.

 

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Community Infrastructure Levy (CIL) credits and offsets

Amendments made to the CIL regulations in 2014 changed the qualifying test for offsetting the floorspace of existing buildings against CIL liabilities for new development. During the three years before the time that the planning permission first permits development (the "start date"), part of the existing building must have been in lawful use for a continuous six month period to qualify. Uses under a temporary planning permission will not count.

The "start date" for a simple detailed planning permission is the date the planning permission is granted; and for a simple outline permission it is the date of the final approval of reserved matters. The position is more complex in relation to phased permissions, where:

• the start date for any outline phase is the date of final approval of the last reserved matter associated with that phase or, if agreed with the collecting authority before development commences, the date final approval is given under any pre-commencement condition; and

• the start date for any other phase is the date final approval is given under any pre-commencement condition associated with that phase or, where there are no such pre-commencement conditions, the date planning permission is granted.

Note that a building must still be situated on the land on the start date in order for any floorspace to be offset. This means that demolition works in advance of the start date could have serious financial consequences and should not be carried out before considering the potential impact on CIL liability.

For more information please contact Ben Hazenberg, Lucy Morton or Matthew White at Herbert Smith Freehills.

Ben Hazenberg
Ben Hazenberg
Senior Associate, Planning, London
+44 20 7466 7581
Lucy Morton
Lucy Morton
Professional support lawyer, Planning, London
+44 20 7466 2626
Matthew White
Matthew White
Partner and Head of Planning, London
+44 20 7466 2461