Government gifts developers by reducing affordable housing commitments

On Richard Carr’s blog today, he looks at the recent news reported by the Guardian that property developers have been allowed to reduce affordable housing commitments by the government.

Westminster council set to lose £1bn

The government has introduced a new vacant building credit, which has been described in some quarters as ‘insane’. The Westminster Council have also heavily criticised the plans as they estimate they could lose up to £1bn in affordable housing payments.

Richard Carr Mayfair London

Mayfair, London

At the moment, the only people opposing the policy are the housing developers who could gain hundreds of millions of pounds in windfall profits. It is believed that in some cases, developers won’t have to make a contribution to affordable housing at all.

Since December 2014, the government has tried to encourage developers, both foreign and in the UK, to regenerate vacated buildings across the country. They have exempted anyone who turns an empty building into private housing from paying for further affordable units.

Foreign investors benefitting

The Abu Dhabi investment fund, who are currently redeveloping luxury apartments in Mayfair, have profited from the new policy and it is likely that Qatar’s ruling family also will on their £3bn development of Chelsea barracks.

There’s a deep worry that the policy will only worsen the country’s current affordable housing crisis.

James Murray, executive member for housing at the London borough of Islington, said: “The real impact of this is to increase landowners’ and developers’ profits at the expense of the affordable housing we desperately need.”

However, Brandon Lewis, the Conservative housing minister, countered saying the policy removes a “stealth tax” which hindered regeneration and saw a rise in empty properties.

“It was crazy to be levying a tax on empty and redundant buildings being brought into productive use,” Lewis said.

“Such stealth taxes hindered regeneration and encouraged more empty properties. Our changes will help deliver more housing at no cost to the taxpayer in both London and across England.

“This is part of a package of measures by the government to reduce the number of empty buildings across the country, which is good for both the environment and for society.”

CIL is causing just as much damage

Commercial and Residential Development Consultant Richard Carr believes that Community Infrastructure Levy (CIL) is the tax that is killing development.

He believes that a relief on affordable housing tax wouldn’t be needed if CIL, a dressed up ‘development land tax’ was repealed.

In his opinion, CIL was a socialist idea of the last Labour Government that is very harmful and will continue to harm development, as it makes it uneconomical in many cases.

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