This week the Secretary of State for Housing, Robert Jenrick announced two new taxes on UK property developers to help pay for the Government’s efforts to remove unsafe cladding from high rise buildings post-Grenfell.
One levy will be aimed at large UK property developers applying to build new high-rises, while another is set to tax all developers in the industry from 2022.
The minister said the new taxes would be to, “ensure the industry takes collective responsibility for historic building safety defects,” with the tax bill expected to be more than £2bn.
Leaseholders in blocks that are between four and six stories will benefit from a financing scheme to help them remove unsafe cladding from their properties at a cost of £600 a year.
Although it has been over three years since the Grenfell Tower fire for the Government to tackle the issue of remediation costs the minister said the works taken together mean the Government “is providing more than £5bn, including a further £3.5bn today, plus the significant cost of the very generous financing scheme.”
“The taxes will ensure the largest property developers make a fair contribution to the remediation programme in relation to the money they make from residential property, reflecting the benefit they will derive from restoring confidence to the UK housing market,” he said.
Statistics from the Association of Residential Managing Agents found around 274,000 flats in the UK still have dangerous cladding, which equates to more than 650,000 people.
The Knowledge Leasehold Partnership commented: “The proposal to issue grants of £3.5 billion to remediate cladding on high-rises (above 18 metres) and loans for low-rise blocks of flats (less than 18 metres) is unfair to those living in low rises.
“Its justification is based on the exceptional risk of high rises.
“It could also be argued that it will help affluent leaseholders, particularly in London, who live in higher buildings compared with poorer leaseholders living in lower buildings throughout the country.
Quoted in CityAM Kate Henderson, Chief Executive of the National Housing Federation, said: “We are supportive of anything that aims to recover costs from those responsible and will look forward to seeing the detail of a new development levy.
“It is important that any levy does not simply get passed on, increasing the cost of affordable homes that not-for-profit housing associations purchase from developers, and future homes bought by individuals on a shared ownership basis.”
It is hard to see how developers can do nothing more than add the cost of the tax onto the price of their new builds in future.
Whether developers believe it is fair that they have been singled out to help pay for cladding remediation through an ongoing tax, in all likelihood the public will see this as wholly justified.
As ever, if you would like to discuss any of the points raised in this article, please do get in contact by emailing leasehold@bishopandsewell.co.uk
At Bishop & Sewell, we have more than 40 years’ experience in property with a particular focus on Landlord & Tenant. If you are thinking of buying a leasehold property, or if you already own a leasehold property and you have a question about obtaining a consent to alterations that you are planning please call 020 7631 4141 and ask for a member of the Property team, or email leasehold@bishopandsewell.co.uk.
The above is accurate as at 12 February 2021. The information above may be subject to change during these ever-changing times.
The content of this note should not be considered legal advice and each matter should be considered on a case by case basis.
