The Mayoral Community Infrastructure Levy 2 (MCIL2) will come into force on 1st April 2019. The revised charging schedule will supersede the current Mayoral Community Infrastructure Levy (MCIL1) and the associated planning obligations/S106 charge scheme applicable in Central London and part of the Isle of Dogs. The new charge will raise funds to help support the construction of Crossrail 2. Whilst Crossrail 2 is still to be formally endorsed by the Government, the Mayor has previously confirmed that should the project not proceed, MCIL2 funds will be used to support alternative strategic infrastructure projects in London.
The current MCIL1 rates for new development range from £20-£50 per sq m depending on which London Borough the development is located in. The new MCIL2 adopts a similar three band approach for most new development with rates increased to between £25-£80 per sq m. In addition, the current ‘Crossrail S106’ is replaced by a special increased MCIL2 rates which applies to office, retail and hotel floorspace in Central London and parts of the Isle of Dogs (with new charges of £185 per sq m for office; £165 per sq m for retail and £140 per sq m for hotel). As is currently the case, certain types of development remain exempt from the levy including developments for medical or education purposes.
Developers should be aware that projects in London approved on or after 1st April 2019 will be liable to pay the new MCIL2 charges, which in many cases will be notable higher than current rates. The increased charges will also need to be taken into account in assessing the viability of a scheme and may have a knock on effect in terms of its ability to contribute towards local s106 costs including affordable housing.
A link to the new MCIL2 charging schedule can be found here. If you have any queries about the Mayoral CIL, please feel free to contact one of the Firstplan team.