London's Mayor Issues Alert: Infrastructure Levy Threatens Affordable Housing Availability

The Mayor of London, Sadiq Khan, has expressed his opposition to the government's proposals for a new Infrastructure Levy, as outlined in the Levelling Up and Regeneration Bill. Khan believes the new levy could have significant impacts on the viability and delivery of affordable housing in London.

Khan suggests that the government should work with councils and the housing sector to improve the current developer contributions system. He urges the proposal to be dropped from the Levelling Up Bill, allowing the development sector to focus on delivering the affordable homes and community infrastructure that Londoners need.

The new Infrastructure Levy, if implemented, would replace the current Community Infrastructure Levy (CIL) and Section 106 agreements in London. However, concerns have been raised about its potential effects. For instance, the new levy would be based on the value generated by the development, necessitating a complex valuation process, leading to greater uncertainty and risk.

Moreover, the new levy restricts the use of Section 106 (planning obligations) agreements, which may prevent off-site mitigation works, employment and training measures, affordable workspace, construction monitoring, or carbon offsetting from being secured. This could exacerbate existing funding shortfalls for affordable housing and infrastructure.

Another concern is the delay or loss of infrastructure improvements. The Mayor's office has published research indicating that the new levy could result in a reduction of affordable homes, with the potential reduction ranging from 4,500 to 10,000 homes. Furthermore, the new levy could make between 10,000 and 30,000 homes of all tenures unviable.

The proposed Infrastructure Levy could also put billions of pounds of investment in community infrastructure at risk, potentially causing delays or preventing their delivery. The CIL had generated approximately £1.43bn for councils to deliver vital infrastructure and support sustainable growth across the capital by the end of 2021/22.

Khan welcomes the government's ambition for more funding for affordable homes and infrastructure, but believes the proposed Infrastructure Levy fails to achieve this. He is concerned that unworkable proposals like the Infrastructure Levy cause uncertainty and consume resources from a planning system already struggling.

Under the proposed changes, developers will pay for infrastructure improvements after a project is complete, instead of at the planning permission stage. This could lead to difficulties in enforcing the payment of contributions after a development has been completed, as councils believe.

The new levy would require councils to set their own rates for different types of development and areas, leading to a complex and labor-intensive assessment and charging system. This autonomy for local governments to determine rates individually per region and development type is seen in cases like Ochtendung, where local council decisions influence the imposition and rates of such levies.

In conclusion, Sadiq Khan, the Mayor of London, has voiced his opposition to the proposed Infrastructure Levy, citing concerns about its potential impacts on affordable housing, infrastructure, and the planning system. He urges the government to reconsider the proposal and work with councils and the housing sector to improve the current developer contributions system.

London's Mayor Issues Alert: Infrastructure Levy Threatens Affordable Housing Availability