New levy on top of existing developer tax is unnecessary
SME housebuilders are being encouraged to lobby their local MPs to support a campaign for the building safety levy to tax product manufacturers.
- Product manufacturers, especially those involved in the Grenfell Tower disaster, should pay
- Housebuilders constructing schemes of less than 50 homes should be exempt
- Levy will add between half to one per cent on the sale cost of a home
Smaller housebuilders urged to lobby MPs to make building safety levy fairer
SME developers are being urged to write to their MPs to make the proposed building safety levy fairer following the Government’s response to the consultation on the new tax.
The construction industry is furiousmanufacturers responsible for the unsafe cladding materials that led to the Grenfell disaster won’t be liable. They argue SME builders only constructlow rise housingbelow the riskier18 metre heightand should therefore not have to pay the new tax.
National Federation of Builders, NFB,policy and market insight headRico Wojtulewicz said: “Small builders came to the Government with a solution that shared remediation costs across all accountable industries, as well as delivered a ‘polluters should pay more’ principle.”
The NFB is also upset its call to increase the size of housing developments exempt from the levy to up to 50 homes was rejected.
NFB chief executive Richard Beresford described the levy as “anti-growth and anti-SMEs” and would jeopardise the Government’s commitment to building 1.5m new homes by 2029.
It points out that SMEs train 73 per cent of apprentices in the building trade and make a significant contribution to building social and affordable housing.
The Homebuilders’ Federation is also critical of the levy and the financial burden it will place on developers and particularly SMEs.
Last week it wrote to the Chancellor Rachel Reeves raising these concerns and asking why no formal impact assessment has been made to gauge the levy effect on housing supply.
New levy on top of existing developer tax is unnecessary
The construction industry has pointed out that £6.4bn has already been raised for remediation through the residential property developers’ tax in 2021. This levies a tax of four per cent on profits above £25m.
The building safety levy will apply to all new homes and purpose-built student accommodation in England that require a building control application.However, affordable housing, care homes and homes built by not-for-profit registered providers will be exempt.
Rates will be charged per square metre set by local authority area to reflect house price variations with a 50 per cent discount on for developments on brownfield sites. It’s estimated it will average £17 per sq m for brownfield sites to £34 per sq m for greenfield sites.
This means building a 100 sq m home in Kensington and Chelsea could cost an extra £10,000 per unit compared with £1,270 for a similar-sized house in County Durham.
The NFB calculates the levy will addan average between 0.5 per cent and 1 per cent of a home’s sale price, based on the sq m floorspace of a home.
Brokers Hank Zarihs Associates said development finance lenders were worried the levy would lead to more smaller housebuilders leaving the sector.
The tax aims to raise £3.4bn over a decade to fix building safety defects on mid-rise blocks of flats.
LinkedIn Question: Should low-rise and smaller housing developments of under 50 homes be exempt from the building safety levy?
