By Neil Driver, Director at Davis Grant
Consultation on the introduction of a new Residential Property Developer Tax (RPDT) has ended.
This would introduce a new tax that would help to fund safety improvements in rented and leased accommodation following the Grenfell inquiry.
The Residential Property Developer Tax would be part of the new Building Safety Package, which would:
- Pay for the removal of unsafe cladding for leaseholders in all residential buildings 18 metres (six storeys) and over in England.
- Provide a finance scheme for leaseholders in lower rise, lower risk buildings – those between 11 and 18 metres (four to six storeys) – to help pay for cladding.
- Introduce an industry levy and a new tax on residential developers, to ensure developers play their part and make a fair contribution.
These proposals would help to bring an end to unsafe cladding, provide reassurance to homeowners and support confidence in the housing market, according to the Government.
To help pay for these interventions the government is introducing two revenue-raising measures:
- A new Gateway 2 levy, which will be applied when developers seek permission to develop certain high-rise buildings in England.
- A new tax on the residential property development sector.
The tax would be time-limited and apply to the largest residential property developers involved in UK residential development. It would be introduced in 2022 and seek to raise at least £2 billion over a decade.
The Government says it will help to support confidence in the property market with interventions on stamp duty land tax and the mortgage guarantee scheme.
Therefore, given the significant costs associated with the removal of unsafe cladding, the Government believes it is right to seek a fair contribution from developers in the residential property development sector.
Further details of this new tax and how it will operate are expected imminently and we will try to update you once they have been released.
If you are concerned you may be affected by the introduction of the RPDT, please speak to our team today.