Property developers infuriated by the impact of the Government’s controversial Community Infrastructure Levy (CIL) on land values will face an uphill struggle in challenging the will of local authorities following a landmark High Court decision.

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The CIL was introduced by the Planning Act 2008 and enables local planning authorities to raise funds from the development of land in their areas to pay for infrastructure of various kinds. The levy was seen as a fair and effective means of financing essential infrastructure, but encountered fierce opposition from landowners who viewed it as an unwelcome and unnecessary tax on development.

Fox Strategic Land and Property Limited (Fox) owned substantial land-holdings in central Lancashire and mounted a judicial review challenge to Chorley Borough Council’s adoption of a CIL rate of £65 per square metre in respect of new dwelling houses. The same rate was subsequently adopted by two neighbouring councils.

The rate had been approved by an independent examiner following an inquiry process; however, Fox argued that such a high level of CIL would threaten the viability of housing developments across central Lancashire. The company submitted that the examiner had misunderstood evidence in respect of the size of dwellings, density and the cost of development. His assumptions as to the likely value of residential land in the region were also said to be irrational.

However, in dismissing the challenge, the Court found that, in striking a balance between the need to fund new infrastructure and the likely effects of CIL on the viability of development, the examiner had been entitled to conclude that the local authority had taken an appropriately measured approach.

The Court emphasised that its role was limited to considering the lawfulness of the procedure followed and the rationality of the examiner’s conclusions, rather than the merits of the underlying debate. The examiner had had to contend with a range of variables and unknown factors and his recommendations to the local authority could not be characterised as perverse or otherwise flawed.