New development levy under fire for being unfair

Taxpayers forking out millions in legal costs

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THE levy on new building projects brought in by Portsmouth City Council has been criticised for being unfair.

Money received from the scheme – which replaces the Section 106 agreement – will go to pay for new transport schemes, flood defences, green spaces and community facilities.

From April the new Community Infrastructure Levy (CIL) will be calculated based on floor space – £105 per square metre – rather than after negotiation with developers.

The levy was brought in nationally in 2010 and earlier this year the city council became only the fourth local authority in the country to receive approval for its operation locally.

But the managing director of Southsea-based Bernards Estate Agents, Jason Parker, said the change could have a ‘potentially stifling effect on development’ and could lead to less social housing being built.

He said: ‘These added CIL costs will make development even less feasible than is currently the case.

‘House prices will not go up as a result of the increased costs to developers which will mean that either land values will fall further than they already have or other elements of the development process must be removed which could include provision for affordable housing.

‘In respect of the land value element, it is a fundamental premise that sites must achieve a credible land value and developers a reasonable return on investment, otherwise development will be stifled.

‘Infrastructure costs have to be met from somewhere and arguably the development sector which adds pressure to infrastructure should contribute.

‘My concern is the manner in which the introduction of CIL has been proposed which could be considered unfair to existing developers who have projects under way.’

Cllr Mike Hancock, the head of planning, regeneration and economic development, said the new levy was a good system that will help pay for essential infrastructure like the new junction off the M275 at Tipner.

‘It is not going to stifle development at all,’ he said. ‘It means that when development takes place the whole community benefits.

‘It is a way developers can work with local people. They will always argue they should pay less.’