AliG, on 21 September 2015 - 08:28 PM, said:
As an aside what do people think about a planning uplift tax? As far as I can see planning permission is a public good that is bestowed upon landowners by our elected representatives. Why should landowners get random massive gains through the planning process. Maybe if the gains accrued to the local community who are giving the planning permission then we would see more houses built and lower prices for land and houses. It is about time people saw land and houses as somewhere to live and not an investment. The next generation are being priced out of owning houses due partly to the hoarding of land and property - Rant over.
I'll bite briefly - things to do.
We already have about 15 Planning Uplift taxes (normally called Planning Gain), which come off the land vale (say 80-90% of it) and developer margin (the rest - they have been squeezed from about 20-25% to 15-18% or so over 20 years).
There's jam, but not the pot of jam at the end of the rainbow that some people want to believe in.
The added costs (eg education contribution for school places, local green spaces, 10% open area in the estate, social housing) would be about 50k on an average new house. Less in some areas, more in others.
Aruond here an estate with 2-4 bed houses from terrace to detached would have sale prices between about 90k and 230k, and a landowner of a decent sized easy to develop plot with PP in place at Outline and trouble free access no major unquantified risks which might require big groundworks, pumping stations, slope engineering, bats, newts, deep foundations, complex traffic junctions etc would expect to receive £30-£35k per plot tops.
The social support (S106) payments would just be sliced off the price as part of the estimate and would have come off before the £30-35k figure is arrived at.
Any extras (eg the pumping stations and so on mentioned) would come off that, or be clawed back later.
So the site owner will receive their say £1.2-1.8m for a 50 plot site depending on the market.
They will have had to spend perhaps £50k on fees to get planning, plus their own time, plus the cost of holding the land for x years and any financing costs, while they do the gubbins, plus whatever they paid for it, plus any costs of access (eg buying ransom strips or houses to turn into roads at 100k to 250k per pop if you have alternatives). If there is only one route to your site the owner can expect 25-30% of the net site value.
Some of that is wasted if the planning is rejected, or another 10-20k in fees if it goes to Appeal. That is part of the risk.
On what they have left they will pay around 30-40% in tax. For a holding company that is 20% profits tax plus 18% cgt. For an individual tax that is 28% cgt plus perhaps stamp duty etc of some sort. There may be allowances if they immediately reinvest which will rollover the tax until later.
And the places where you can apply are heavily determined by the Local Plan - and people there expect more because it is suddenly "developable", plus you can argue about viability of proposed social contributions.
AFAIK the only taxes that can really be avoided are CGT if you develop your own garden (ie buy a big one and move in), or CGT (I think) for active farmland
I wrote more about the detials of the process from then developer / landowner side here:
Edited by ferdinand, 22 September 2015 - 01:46 PM.