Development taxes continue to push property prices up

Property Developer Richard Carr believes development taxes such as Community Infrastructure Levy (CIL) and s106 payments are the reason behind the increasing house prices in the UK.

Increases

Richard Carr comments on rising house prices

Is development tax a reason for increasing house prices?

The average price of a home in England and Wales has now surpassed £300,000 for the first time ever and Richard believes there are two main factors for this:

  1. Development Taxes
  2. Demand outweighing supply

On the first point, he doesn’t understand the government’s current process. Developers are charged large amounts of CIL and s106 by local planning authorities which means that the price of the finished product is increased.

The government has therefore had to introduce a number of Help to Buy schemes to help first time buyers, using money funded by development tax!

For many years the country has been heading towards a housing shortage with demand far outweighing the current supply of homes. Thankfully, the recent initiative to help train new house builders could help increase the supply of homes over the coming years and ease the demand.

Six figure increase

The property portal’s monthly report showed the pressure that both buyers and sellers are under with a 50% increase of house prices in the past ten years being experienced. This means that new seller asking prices have increased by £100,000 since March 2006.

“While the start of 2016 has seen an encouraging but modest uptick in the number of properties coming to market, demand and momentum have combined to push prices over £300,000,” said Miles Shipside, Rightmove director and housing market analyst.

“On average 30,000 properties have come to market each week over the past month, up by 3% on this time last year, but there are insufficient numbers of newly listed properties in many parts of the country to meet demand.”

Solutions

As mentioned above, the new training initiative for house builders will help ease the supply problem, whilst a reduction in development taxes will allow property developers to bring cheaper homes to market