Property specialist Richard Carr believes that the number of taxes placed on developers is affecting the number of homes being built and is now pleased to see that the Federation of Small Business (FSB) has spoken out about the issue.
Costing the economy
A report commissioned by the FSB explains that local planning authorities could be costing small house building firms millions of pounds in revenue. Like Richard, the FSB believe taxes such as the Community Infrastructure Levy should be blocked to prevent viable housing projects not being built at a time when the country has a big void to fill.
Small firms typically take on projects of 10 units of less and compared to larger developments they had significantly higher basic building costs. The FSB’s report found that the council wasn’t taking this into account when working out the level of CIL to be paid by developers.
By BCIS calculations, small building firms are being overcharged by £100,000 per project by local authorities, which is potentially adding millions of pounds across the sector.
Richard Carr believes the government needs to address the issue fast as it will have a knock on effect when it comes to meeting their 2020 target of 275,000 homes being built per year. It’s also having an effect on their aim to get more brownfield sites regenerated, as the CIL payments are pushing much-needed urban brownfield housing projects beyond viability.
John Allan, Federation of Small Businesses National Chairman, says:
“We are deeply concerned that an inflexible approach by local authorities could be preventing smaller house builders from taking on otherwise viable projects. It’s a lose-lose situation for everyone – smaller developers, local authorities and those in desperate need of local affordable housing.
“When considering whether to make use of the levy, councils should take a more flexible approach. They should consider the size of the proposed project when deciding how to set the levy, and ensure small house builders aren’t overburdened with unaffordable costs.
“This approach will help to deliver the houses we need in the places we need them. It will also support local small businesses and their suppliers which are at the heart of our local communities.”
Richard Carr argues that CIL is a blunt Instrument dreamed up by the last Labour government, which is fundamentally flawed and should only be implemented on Greenfield sites that are inherently cheaper to develop.
It stops social housing as it adds such a large cost to all development thus eliminating any surplus to the standard developer profit.
Why are we waiting abolish it now!