The Community Infrastructure Levy (CIL) is a charge made by local authorities and councils on new developments in their area. The payments help the local authority or council to meet the additional demands on a community. This includes the need for roads and schools that arise due to the new development.
Not all local authorities make this charge, and some exemptions exist for specific property types. However, it is something that all developers need to be aware of whether they are a sole self builder or a larger company building commercial properties at scale.
The charge only applies in areas where a local authority has consulted on and approved a charging schedule. This sets out its levy rates and will be published on their website.
Does the CIL apply to self builders as well?
The levy applies to anyone building their own home or anyone who has commissioned their own home. It doesn’t matter who is doing the bricklaying!
For example, East Suffolk Council charges a levy for new developments. The cost is £300 per square metre for developments in prime locations and reduces for other areas.
A typical three-bedroomed house has a floor area of around 100m2. So, this could add £30k to the cost of a modest self build property in Orford or Walberswick. The larger the property, the greater the levy. A grand seven-bedroom property with a floor area of 317m2 would need to pay £95,100.
We’ve used these examples from Suffolk as it’s where we are based but the levy is payable in many local authorities and councils across England and Wales. The levy charged varies greatly with some London boroughs charging up to an eye-watering £750 per square metre.
Self build exemptions
It is possible to receive an exemption from these charges if four specific steps are followed within a set timeframe. Crucially, the exemption must be applied for before any work begins. In addition, the owner must live in the property as their main residence for at least three years after the work is completed.
Detailed information about the four steps can be found on the government’s web page. This explains which forms must be completed, submitted and returned and in what order. See Paragraph: 082 Reference ID: 25-082-20190901.
A self build exemption can also be withdrawn in certain specific circumstances. This could be in relation to the property itself, failure to submit final evidence on completion of the building, or if the property is let or sold within a three-year time frame. If such events occur, the owner is not only charged the levy but a surcharge of 20% (or £2,500, whichever is the lesser) is added to the bill.
Purchasing land for a self build project
Many self builders purchase land that already has planning permission granted on it. In these circumstances, it’s important that the buyer and seller (or their solicitors) agree who is responsible for the CIL. Buyers should also be aware that a levy is payable if any building work has taken place, even if it wasn’t under their watch.
In short:
- The levy is payable on all new developments – self build properties included.
- Self builders can receive an exemption if they apply before they start work and stay in their property for three years after the build is complete.
- The paperwork to receive the exemption is complex and timings are important.
- Self builders buying land with planning permission already agreed need to determine whether the buyer or seller will be responsible for the CIL.
Don’t be put off by the CIL but bear it in mind during the early stages of a self build project. If you are at all concerned that you might not receive an exemption, then it is better to have contingency funds available. Your mortgage provider may also ask you for evidence that you have budgeted for this.
