When purchasing a property or undertaking a development project in the UK, you may come across the term Community Infrastructure Levy (CIL). While often overlooked, CIL is a crucial financial consideration impacting property transactions and development costs. This article aims to provide a clear and comprehensive understanding of CIL, who it applies to, and how it affects homebuyers and property owners.
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What is the Community Infrastructure Levy (CIL)?
The Community Infrastructure Levy (CIL) is a charge imposed by local authorities on new developments to fund infrastructure improvements in the area. Introduced by the Planning Act 2008 and coming into effect in 2010, CIL is designed to help local councils finance the additional infrastructure demands created by new developments, such as roads, schools, healthcare facilities, and public transport.
Who Has to Pay CIL?
CIL generally applies to developers and landowners when carrying out new building projects. However, its implications can also affect homebuyers if there are outstanding liabilities attached to a property. Here’s who might be responsible:
- Developers – If they construct new buildings or create additional floor space beyond certain thresholds.
- Landowners – CIL liability runs with the land, meaning that unpaid charges could be passed on if a property is sold.
- Self-Builders – Some exemptions exist for individuals building their own homes, provided they meet specific conditions.
When Does CIL Apply?
CIL is not applicable to all developments. It generally applies when:
- A new building is created and has 100 square metres or more of gross internal area.
- A new dwelling is built, regardless of size.
- A change of use increases floor space or changes the purpose of the property significantly.
How is CIL Calculated?
CIL is calculated based on the gross internal area (GIA) of the development and the charging schedule set by the local authority. The rates vary depending on the council’s assessment of infrastructure needs and development viability in the area. Factors influencing the charge include:
- Type of development (residential, commercial, retail, etc.).
- Location (some areas have higher charges than others).
- Size of the development (larger developments incur higher charges).
Most councils publish a CIL Charging Schedule, detailing the specific rates per square metre applicable to different types of developments.
Exemptions and Reliefs
Certain types of developments can be exempt from CIL or qualify for relief, including:
- Self-build projects – Exemption is available for individuals constructing their own homes.
- Social housing – Developments intended for affordable housing may be eligible for relief.
- Charitable developments – If a charity is developing a property for charitable purposes, CIL may be waived.
- Minor developments – Those below the 100 sqm threshold (unless they involve the creation of a new dwelling).
How CIL Affects Homebuyers
If you are buying a property in a new development, it is crucial to check whether there are any outstanding CIL liabilities. While developers are usually responsible for paying CIL, unpaid liabilities can transfer to the new property owner, creating unexpected financial burdens.
Before purchasing a property, buyers should:
- Review the local search results – The local authority search will reveal any existing CIL charges.
- Confirm with the seller/developer – Ensure that any outstanding liabilities have been settled.
- Seek legal advice – A solicitor or conveyancer can help clarify whether any unpaid CIL obligations could affect your purchase.
What Happens if CIL is Not Paid?
Failure to pay CIL can lead to serious consequences, including:
- Financial Penalties – Local authorities can impose surcharges for late payments.
- Stop Notices – Councils have the power to halt construction until outstanding amounts are settled.
- Legal Action – Persistent non-payment may result in court proceedings or enforcement measures against the liable party.
Key Takeaways for Property Buyers and Developers
- CIL is a local authority charge levied on certain new developments to fund infrastructure improvements.
- Liability is usually with the developer, but unpaid amounts can transfer to future owners.
- Always check local search results when buying a property to ensure there are no outstanding CIL charges.
- Reliefs and exemptions exist, particularly for self-builders, social housing projects, and charitable developments.
- Non-payment can lead to significant legal and financial consequences.
Conclusion
Understanding the Community Infrastructure Levy is essential for anyone involved in property transactions or development in the UK. Whether you are a developer, homeowner, or buyer, being aware of CIL obligations helps you avoid unexpected costs and ensures smooth property transactions. If you are unsure about CIL liabilities on a property, always seek professional legal advice to clarify your position and obligations.
By staying informed, you can navigate the property market more confidently and avoid potential financial pitfalls related to CIL liabilities.