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London property developer contributions to Crossrail top £1bn

Daniel Garrity

Property developers in London have forked out more than £1bn in levy payments to fund Crossrail, it can be revealed.

Developer contributions have been made through the first and second incarnation of the Mayor’s Construction Infrastructure Levy (MCIL & MCIL2) as well as from Crossrail S106 agreements, which effectively work as a tax on any new property developments in the Capital.

Under the original Crossrail funding agreement with government, Transport for London (TfL) needed to raise £600M by 31 March 2019 from developer contributions towards Crossrail.

However, papers released ahead of TfL’s next Finance Committee meeting reveal that Crossrail has received more than £1bn raised through developer contributions.

Over the last three years annual returns have steadily increased each year from £109M (2017/18) to £135.9M (2019/20).

TfL’s papers add that “it is likely that receipts would have continued to increase in 2020/21 if it was not for the coronavirus pandemic”.

Nonetheless, despite the pandemic, the 2020/21 annual return of £121.9M is the third highest return since charging commenced.

The MCIL and MCIL2 has been levied on new developments within London since 1 April 2012, with its purpose being to raise funds towards the delivery of infrastructure projects in the capital.

Local planning authorities in London must calculate MCIL charges and collect the payments on behalf of the mayor. The charge is calculated once a planning application is submitted to the local planning authority.

Money raised through MCIL2 was originally earmarked to fund other infrastructure projects such as Crossrail 2 but a large portion of money raised has been diverted to funding Crossrail after the initial delay and cost overrun was announced in August 2018.

Ian Fletcher, Director of Real Estate Policy, British Property Federation director of real estate policy Ian Fletched told NCE that the industry supports MCIL payments on the whole. However, Fletcher said that the lack of commitment for Crossrail 2 from MCIL 2 was cause for concern.

He added: “The whole basis of CIL is that it is supposed to be structured around infrastructure plans, so developers know what they are contributing towards. Nowhere is that clearer than in London, where the real estate sector is contributing a significant amount to the cost of Crossrail via the Mayoral CIL (MCIL) and S106. Transparency is key.

“Developers knew the money they paid to MCIL went directly into a single, big piece of kit that would not only help the London transport network from buckling under considerable population growth, but also support their own developments.

“With no real commitment yet to Crossrail 2 however, developers will fear that MCIL2 is simply turning into another form of taxation, where there is no link between what is being paid in and what is being delivered”.


Department of Civil Engineering