New Building Tax ‘Will Kill Growth’ In Devon and Cornwall

Developers could be put off investing in the Westcountry and affordable housing provision could be reduced if a new “development tax” is set too high.

The Community Infrastructure Levy (CIL) is being introduced by local authorities as a means of securing additional income from developers, which can then fund local infrastructure such as roads and schools.

Councils can set their own level of contribution for different types of development with the idea that they can make it more attractive to build schemes in some areas and gain greater contributions from schemes in more popular areas.

Cornwall Council has just begun a six-week consultation about its CIL, which sees housing developments in large areas of the county, including around Truro, Falmouth, Padstow, Newquay and Lostwithiel, charged at £100 per square metre.

The same rate for residential development has been put forward in Torbay, with a rate of £30 proposed in Plymouth and £80 in Exeter.

Justin Dodge, managing partner of Truro-based CSA Architects, warned that if this higher level came into effect it could have dire consequences for Cornwall’s construction sector.

He said the new tax would make it “totally unviable” to build affordable housing in the county.

“My worry is that if this is adopted you might as well say ‘would the last person left turn off the lights’.

“Residential development is the main sector for our industry, not just architects and estate agents but for planning consultants, builders and sub contractors,” he said.

“This will affect the general public and anyone who is employed by, or has anything to do with, the construction industry. I’ve been speaking to developers and land owners and affordable housing providers and they’re struggling to make schemes viable with the current challenges.

“Developers I’m speaking to are saying that they won’t invest in Cornwall – they will go elsewhere where there is a more realistic level of CIL. That worries me greatly.”

Property lawyer Cameron Caverhill, who works out of the Exeter office of Kitsons, said: “It is causing concern both in the development and construction industries.

“There are three particular concerns – firstly, the impact on the availability of land because if the CIL is set at too high a rate, in the medium and long term it will depress land values.

“Secondly, there is an impact on affordable housing where land has already been acquired or is under development – developers will argue that it is not viable to provide a CIL at that rate.

“Thirdly, if the CIL is set too high it will push development on to greenfield land because that is cheaper to build on.”

Although the CIL does not apply to solely affordable housing schemes, many developers provide a mixture of affordable and open-market homes, effectively subsidising the former with the latter. But there are concerns that if costs rise, the level of affordable housing will fall because it will become unviable.

John Schuttkacker, director of developer Westcountry Land, said: “Ironically, areas with the most need tend to be high-value areas because market housing is more expensive so they are going to be areas that are going to be hit hardest by the CIL because it’s going to make it hard to provide affordable housing.”

Mr Dodge called for housing charges in Cornwall to be set at three tiers of £30, £15 and £5, with scope to increase charges when the economy picks up.

A spokesman for Cornwall Council said: “The CIL is based upon an assessment of viability with £100 per sq m being proposed only for those areas with the stronger housing markets, such as Rock, with a level of £40 for most of Cornwall and zero for communities such as Camborne Pool and Redruth and Liskeard. Importantly, there is no charge for affordable housing anywhere in Cornwall.

“The aim of the consultation on proposed levels is to enable the council to seek views on the appropriate level to ensure that while the CIL contributes to the infrastructure requirements stemming from development, it does not act to unreasonably prevent development.”

Although each authority can set its own level of CIL charges, these need to be ratified by an examiner. Mid Devon District Council has been ordered to reduce its proposed level of charging for housing from £90 to £40. Examiner David Hogger reported: “There is a serious risk to affordable housing provision and thus the overall development of the area.”

From: Western Morning News April 3rd 2013



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