Community infrastructure levy will now come into force next April so housing industry can recover

The government has delayed the introduction of its planned levy on new developments receiving planning consent by six months in order to help the housing industry recover.

Yesterday's budget documents said the introduction of the community infrastructure levy (CIL), contained in last year's Planning Act, will now be delayed until 6 April 2010. The government has previously said it would come into force on the 1 October “at the earliest”.

The documents said the move was a “first step” in identifying “the best regulatory and policy framework to support the government's long-term housing objectives.” The levy will allow councils to charge developers a set fee per home planned in return for receiving a permission, in order to pay for local infrastructure.

However, the industry has been campaigning to have the levy delayed alleging it would make it more likely that housing sites would remain not economically viable.

The moves were in addition to the £600m package of support for the housing sector. This included:

  • £400m to unblock stalled sites, through paying up-front for local infrastructure, administered by the HCA. Building predicted this measure would be introduced as part of the Budget in March.
  • £100m to fund a new wave of building directly by councils. It is not clear how this will be administered, but in advance of the budget numerous sources predicted the measure would involve freeing up councils to bid for affordable housing grant for the first time.
  • £80m for the government's shared equity scheme Home-Buy Direct, in which the government and housebuilders team up to take a joint 30% equity stake in homes

In addition the government said it was extending the temporary reduction in Stamp Duty Land Tax on homes under £175,000.

Michael Chambers, director of regeneration and development at the British Property Federation, said the delay to CIL meant it was now “extremely uncertain” if the measure would ever go ahead. He said: “Obvioulsy we are likely to have an election around next April or May, and what the Tories' priorities would be is very unclear.

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