The Times: John Penrose calls for developers to pay council tax on unused sites

The government should have the power to levy council tax on building sites straight after a developer gets planning permission, a former Cabinet Office minister has suggested, claiming that it would help to speed up the supply of new homes.

John Penrose, a Conservative MP and co-chairman of the all-party parliamentary group on housing and planning, has written a letter to Sajid Javid, the housing secretary, to ask him to change how construction companies are taxed. He said that housebuilders did not have enough incentive to speed up their output, so should face a council tax on any unused land.

“It means that the clock is ticking and it stops developers from being too leisurely,” he said. “There is frequent criticism of the big housing developers ‘pacing’ their development.”

Figures from Shelter, the charity, last year showed that construction companies had “failed” to build more than 320,000 homes for which planning permission had been granted over the past five years.

New powers for councils also could encourage development on brownfield sites, Mr Penrose said. “There is a great deal of concern about some brownfield sites, which have historic planning permission but are now derelict and don’t get charged business rates or council tax, so there is no cost of carry for a long-term investor hoping to capitalise on value of the land,” he said.

Construction companies argued that problems in the planning system meant that permissions could take years to process, especially on larger sites with complex infrastructure requirements. A site for 4,000 homes usually takes a decade to complete because of skills shortages, the builders claimed.

The MP’s letter also pushes for a single development tax. This would set out clearly how much builders will be charged to help to boost infrastructure in the local area.

At present, housebuilders agree on a set amount of affordable housing that they will build, or for which they will provide funding, alongside their own properties for market sale, under Section 106. Councils can charge a community infrastructure levy for new roads or sewers near the site.

However, Section 106 is often renegotiated by housebuilders to minimise costs. A report by the communities and local government committee in April last year said that negotiations over the level of these contributions were a “source of contention, delay and uncertainty for all parties”.

The MP suggested making the community infrastructure levy the main tax for developers. This would be paid on the day that permission is approved and each council would publish how much should be charged, depending on the size of the site.

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