Developers face new tax to fund Crossrail

So, it has been decided. Developers will face yet another tax on future projects.

The government concluded today that the community infrastructure levy, which will apply to all types of development, will come into force on 6th April 2010.

Funds recouped in London will go directly towards the cost of Crossrail and could see the mayor well on his way to the £200m he needs to have plucked from developer's wallets for Crossrail to be up and running by 2017. However, official figures today revealed that the UK has remained in recession as the economy unexpectedly shrank by 0.4% during Q3, despite initial predictions of growth by 0.2%. Could yet another burden on the property industry further stifle economic recovery?

Tim Smith, partner in planning and environment at commercial law firm Berwin Leighton Paisner seems to think it could, especially he says, as developers won't be able to negotiate the levy on grounds that it will render development unviable. It could mean that projects currently on hold stay that way, which won't help the economy or the funding of Crossrail. So while the tax may work in theory, the reality could cause a slight conundrum for the mayor.

Picture: CGI of Crossrail station at Canary Wharf, from Crossrail