Business group warns over Croydon levy plans

Business lobby group London First has voiced its concern over the methodology used by the London Borough of Croydon to set the proposed rates for its emerging Community Infrastructure Levy (CIL).

Croydon’s proposed CIL charging schedule includes charges of £0-£120 per square metre for residential development, £0-20 per square metre for offices and industrial warehouses, and £120 per square metre for retail and leisure facilities.

But London First has written to the council’s spatial planning service to object to the schedule on the grounds that Croydon’s CIL viability assessment – carried out by BNP Paribas Real Estate – uses development sites’ "current use value" rather than their "market value" when making calculations.

London First claims that the use of "current use value" in the viability assessments rather than "market value" is inconsistent with a recent Royal Institution of Chartered Surveyors (RICS) guidance note on financial viability in planning, as well as best practice on conducting viability assessments produced by mayoral agency Transport for London.

The business group also claims that, in some cases, inspectors have rejected core housing strategies that use "current use value".

London First’s head of planning Faraz Baber said: "Current use value is based on the value of the day, but values can go up as well as down so this is not appropriate as it could be out of sync with development values."

He added: "It could end up with the viability assessment not being accurate – when setting individual tariffs, it’s important to have the right viability assessment."

A spokesman for the London Borough of Croydon said: "London First’s representation is one of a number of representations the council received.  All the representations will be considered and responded to as part of the formulation of the CIL draft charging schedule, which will be consulted on in the New Year, subject to the council’s cabinet approval in December.  

"At this stage, it would be inappropriate and premature for the council to comment on London First’s representation specifically."

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