Bad Tax Could Halt New Homes

Heather Powell, a Partner at Blick Rothenberg.

The building of new homes could be badly affected if  developers and planning permission taxes to  pay for the removal of cladding are not administered fairly, says Heather Powell at tax and advisory firm Blick Rothenberg.

Details of the proposed taxes, due to be introduced in 2022, have not announced.

 

 “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.”

– Heather Powell 

Partner, Blick Rothenberg

 

Pay for cladding

“The housing minister has announced that developers will face two new taxes to contribute to cladding remediation works. The tax will be payable by the largest property developers," continued Powell. "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.”

 

Planning permission tax

Powell added: “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 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.”

 

Don't punish the ethical

Powell  is also of the opinion that some developers have undertaken the cladding remediation work required on high rise blocks built by them and should not be penalised twice: "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?” she asked.

“The  government must ensure the delivery of homes for 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.”

Picture: Heather Powell, a Partner at Blick Rothenberg.

Article written by Cathryn Ellis
24th May 2021

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