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Taxing developers unfairly could stop the delivery of affordable new homes

The building of new homes could be badly affected if developers and planning permission taxes being introduced are not administered fairly.

Extreme care needs to be taken when devising these taxes, to ensure that they do not kill off the development pipeline of affordable quality new homes for first time buyers and families, as well as those who want to rent.

The Housing Minister has announced that developers will face two new taxes to contribute to cladding remediation works. Details of the proposed taxes, due to be introduced in 2022, have not announced.

The tax will be payable by the largest property developers. Squeezing the profits earned by these companies could mean the mothballing of schemes delivering affordable homes, if profits fall below a level acceptable to the development company.

The second tax announced, a levy payable by developers seeking planning permission for “some” high rise buildings, also needs care in implementation. Careless implementation could bring to a halt the rapid expansion of the ‘Build to Rent’ sector which is delivering new high-quality homes – many in high rise buildings.

A levy payable to get permission to build could make these schemes unviable – diverting investment away from the delivery of new homes.

Some developers have undertaken the cladding remediation work required on high rise blocks built by them. These ethical developers should not be forgotten and should be exempt from paying these taxes, otherwise where is the incentive to do the right thing in the future?

The Government must ensure the delivery of homes that families and individuals with average incomes can rent or buy is not going to falter due to the introduction of these new taxes. Care, and commercial insight into how the industry operates will be required.

Would you like to know more?

If you would like to discuss any of the above guidance, please get in touch using the contact details to the right or through your usual Blick Rothenberg contact.

For any press queries, please contact David Barzilay whose details are to the right.