Developers should pay the price for playing the profit game, says RTPI
Developers slow to build on land for which they have already gained planning permission should be taxed, says the Royal Town Planning Institute (RTPI).
The RTPI believes a ‘land banking levy’ is needed to discourage developers, particularly in the housing and retail sectors, from putting off construction to manipulate the property market.
The organisation is warning the credit crunch and the slowing housing market could lead to developers delaying projects while they wait for market conditions which promise bigger profits.
A recent report by the RTPI revealed that house builders have banks of land with planning permission of close to 14,000 acres, enough for 225,000 new homes.
However, despite having this resource at their disposal, in January the number of homes being started by developers fell by 39%year-on-year.
The RTPI is calling on the government to step in or face the prospect of failing to meet its housing targets.
The Competition Commission recently expressed concern that land holding by some retail developers was restricting retail competition.
The RTPI is calling on chancellor Alistair Darling to introduce a ‘land banking levy’ to discourage developers from deliberately putting off construction for their own financial benefit.
Under the levy developers with planning permission on large scale housing or retail sites would have to enter a covenant with the local authority which obliges the developer to complete a pre-determined number of homes or a proportion of overall construction by an agreed date.
Failure to meet the target would mean the developer would have to pay a levy to the local authority. The size of the levy would be calculated as a percentage of the projected final value of the development.
RTPI secretary general Robert Upton said: “Introducing a ‘land banking levy’ would
go some way to preventing developers from cynically manipulating the housing market and would give more people the opportunity to get a foothold on the property ladder. It would also discourage anti-competitive practices between retailers.”
