Why would Any Rational Planning Authority not Zero CIL Rate any Large Brownfield Sites?

After the governments announcement today of a CIL exemption for brownfield sites.  Im just asking, they would be crazy not to if the site has large infrastructure requirements like new schools.

The problem is CIL is the dominance of the large national housebuilders.

They have a portfolio of sites with options agreements and forward purchase agreements.  Naturally these firms will build first those sites in areas without CIL, which is why CIL authorities have seen much lower housebuilding rates.

In theory CIL comes off the price of land – in the long run – however we here are talking of the short run.

It seems to me that outside a few areas such as London CIL is failing.  It cant fund infrastructure and neglects large housebuilders portfolios. After the election I suspect some kind of review of property and land taxation whoever wins.  However even if we get a rational land value taxation you still have the problem of housebuilders with zombie porfofolios of sites which put them in the red at current valuations.  Either as a nation we want house prices to go up or down.  Only if we want house prices go up can those portfolios survice, otherwise housebuilders will ration release of those portfolios keeping house prices high.  So either they are forced to sell and liquidiate them and/or they get some kind of break which allows them to build and sell them at a tax break. Exempting CIL is a short term measure as the infrastructure will need to be paid from general taxation anyway.

Currently if a housebuilder gives up land (say for affordable housing) it simply means less revenues.  If they had a corporation tax discount on such I think this would do the trick. Im inspired here by the system of ‘aqaf’ housing in the middle east where there is a religious requirement to give to the poor even in non tax regimes.  As a result a healthy flow of land comes forward for new schools, ‘gift’ housing and so on.


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