A recent report which stated that over 800,000 new homes would need to be built in the capital by 2021 in order to meet demand has prompted several London councils to join forces and come up with an action plan to tackle the housing crisis, and you guessed it, it involves new forms of taxation. Good news for our construction workers and their tax claims you would think.
The recently revealed ‘London Housing Challenge’ paper highlights a variety of possible policy solutions that could help provide the necessary space and capitol to build the vital homes, including and undeveloped land tax, long term contracts for homebuilders, developing on green belt land and removing the cap on the amount councils can borrow against housing stock.
A group of experts representing all 33 London local authorities, found that the current rate of supply in the city would build a deficit of 559,000 houses by 2012. The paper went on to say that the worrying undersupply could put the city’s status as a global contender at risk whilst adding a ‘huge pressure’ to both individual’s and the government budget.
Amongst the ideas set out, the paper suggests providing more financial stability for large scale builders by offering long term contracts with the opportunity to build more homes. This will in turn allow builders the freedom to expand and develop techniques to improve their speed and efficiency, which could lead to greater investment in the UK construction industry.
According to the paper a tax on undeveloped land, whereby land with planning permission is taxed if less than 5% of the proposed building is started every year, could lead to the construction of an additional 26,000 houses being built over the next five years.
The paper went on to suggest that the ‘artificial cap’ imposed on councils who borrow against their housing stock should be lifted to enable councils to borrow more and build more homes themselves.
The paper explained that developing green belt land in a ten hectare area around 11 railway and tube stations in the city could deliver an extra 7000 homes and help promote ‘sustainable suburban development’. It went on to say that greenbelt land would only be developed where it had ‘failed as a planning tool’ and its status should not be a barrier to developing much needed housing.
Small scale builders could benefit from greater flexibility when paying community infrastructure levy, including making it possible for builders to make payments when a development is complete or within six months of a sale, the paper said.
Mayor of Lewisham and part of the housing supply crisis team Steve Bullock called the result of the paper ‘a scandal’, going on to warn that the future prosperity of the UK’s capital city is ‘on the line’. Bullock explained that the rising cost of housing is a huge hindrance to those wishing to buy or rent in London and asserted that if the problem was not addressed quickly, the costs for London’s economy will continue to spiral out of control and many more families will be forced out of the city.
The London Councils body will develop more detailed policies when responses have been received on the current paper.