You are viewing 1 of your 1 free articles
SMEs, build-to-rent and affordable housing should be exempt from Scottish Building Safety Levy, SPF says
The Scottish Property Federation (SPF) has called for urgent exemptions from the new Building Safety Levy (BSL) for small and medium-sized enterprises (SMEs), the build-to-rent sector and all affordable housing, to avoid worsening the supply shortage.
The Scottish Property Federation has called for urgent exemptions from the new Building Safety Levy for SMEs, the build-to-rent sector and all affordable housing, to avoid worsening the supply shortage #UKhousingThe SPF warned that the tax risked stalling Scotland’s already-weak housing delivery pipeline by making more residential schemes unviable to deliver.
The real estate trade body argued that the industry was already contributing to cladding remediation through tax and voluntary means. This was in addition to tax and regulatory contributions via planning obligations to affordable housing, transport, education, water, community and other necessary infrastructure.
Read more
With construction and financing costs remaining high, the SPF said the cumulative impact of the BSL on top of existing contributions would undermine the ability of the sector to bring critically needed residential development forward.
The levy is intended to help fund the Cladding Remediation Programme, which addresses building safety concerns linked to unsafe materials. The tax would apply on all forms of new residential development.
The Building Safety Levy (Scotland) Bill will introduce a tax on the construction of certain residential properties, in line with equivalent legislation in England.
A new forecast predicts that fixing cladding in Scotland could cost the public at least £1.7bn, and potentially £3bn, over the next 15 years.
The SPF warned that when the levy was combined with policy uncertainty around measures such as rent controls, it could lead investors to choose development locations outside Scotland.
Concern about the impact on affordable housing centres on the fact that the proposed exemption only covers developments that are publicly funded, ignoring the role of private capital in housing delivery.
The build-to-rent sector could also be disproportionately affected, because it generates no upfront sales revenue to offset costs, making the charge harder to absorb.
Robin Blacklock, interim director of the SPF, said: “While we naturally support measures to improve building safety and tackle some of the legacy issues associated with cladding remediation, the blanket application of this proposed levy during a declared housing emergency, at a time when development viability is already under severe strain, risks seeing many new homes being delayed or cancelled, thus worsening the supply shortage across all tenures.
“Given the disproportionate impact, we are urging the Scottish government to exempt SME house builders, the [build-to-rent] sector and all forms of affordable housing, including mid-market and discounted rent model (provided by the private sector), from the BSL to avoid disincentivising critical parts of the housing market.
“With construction and financing costs continuing to be high, the cumulative impact of the levy on top of the range of existing contributions will undermine the ability of the sector to bring forward critically needed new homes and could lead investors to choose locations outside Scotland where development is deemed to be more viable.”
Last week, the Scottish government announced plans to invest up to £4.9bn over the next four years to deliver 36,000 affordable homes by 2030.
Related stories
