URGENT - Responses needed to planning gain consultation

[Maxey L.]

Dear All, 

 

The UK Government is proposing to introduce a tax on 'Planning Gain'
(crudely this is the money developers gain when land gets planning
permission). Whilst some might argue this is simply another attempt to
raise more money, as the proposals stand they could seriously undermine
attempts at more sustainable development. Please take the time to email
Paul Martin: planning.obligations at communities.gsi.gov.uk and
julie.dufty at hmrc.gsi.gov.uk  by 28th February.

 

Experience shows that the more responses they receive the more they
listen. A major flaw in the UK consultation process is that many people
do not hear about the consultation and do not have the time to wade
through the relevant documents. In this case they really are rather long
and technical. So if you cannot spare the time to read them and write
your own response, please feel free to simply cut and paste (and/or
adapt) either the longer or shorter responses drafted below.

 

Please forward to anyone who may be interested.

 

I am happy to hear from anyone on this matter, many thanks for you time,


 

Larch Maxey 

L.Maxey at swan.ac.uk

 

 

Shorter Response

 

Response to UK Government consultation on Planning Gain

 

Responses to Paul Martin, planning.obligations at communities.gsi.gov.uk
and julie.dufty at hmrc.gsi.gov.uk 

 

Deadline 28 February.

 

I am responding to the current consultation on the following documents:

Changes to Planning Obligations
(DCLG);http://www.communities.gov.uk/index.asp?id=1504924

Valuing Planning Gain (HMRC)
http://www.hmrc.gov.uk/consultations/value-planning-gain.pdf

Paying PGS (HMRC)http://www.hmrc.gov.uk/consultations/paying-pgs.pdf

 

These documents raise connected concerns, so my response is addressed to
all three.

 

I submit that Planning Gain should NOT be applied in the cases of: 

 

*	Low Impact Development

 

*	Affordable housing

 

*	Tied Agricultural Dwellings

 

*	Responsible Development where profits are channelled to social
and environmental benefits

 

Exemptions from Planning Gain should be allowed where profits from
increased land values are ploughed into the provision of affordability
or other social or environmental benefits for the wider community -
provided that these benefits are secured by a condition or a Section 106
agreement.

 

If the condition or legal agreement (e.g. Section 106) is removed and
the property sold at full open market value Planning Gain should then be
payable. This would help to make these conditions and agreements more
robust. This combination of exemption and Planning Gain levying would
provide incentives for developers to come up with more socially,
economically and environmentally sustainable solutions.

 

I look forward to hearing you views on this response, 

 

Yours sincerely, 

 

Name:

 

Contact:

 

 

 

Longer Response

 

 

Response to UK Government consultation on Planning Gain

 

I am responding to the current consultation on the following documents:

Changes to Planning Obligations
(DCLG);http://www.communities.gov.uk/index.asp?id=1504924

Valuing Planning Gain (HMRC)
http://www.hmrc.gov.uk/consultations/value-planning-gain.pdf

Paying PGS (HMRC)http://www.hmrc.gov.uk/consultations/paying-pgs.pdf

 

In my view these papers raise a series of interlocking themes, so my
response is addressed to all three papers.

 

Response Summary

In summary, my response to the proposed changes is that the introduction
of a Planning Gain framework as set out in the documents holds the
potential to support overarching policy commitments to sustainability
and climate change amelioration, affordable housing and rural
diversification, restructuring and regeneration. However, in its current
form the policy framework is in danger of directly compromising these
wider policy commitments. This can easily be amended by allowing
exemptions from planning gain in key areas outlined below and ensuring
these exemptions are waived should circumstances change and the property
enter the open market.

 

Response in detail

The concern which runs through the heart of this response centres on
Question 1 of Chapter 8 of Paying PGS, where it is stated that the forms
of development exempted from Planning Gain Supplement (PGS) include
small-scale home improvements, development carried out under the GPDO
and possible other small-scale non-residential thresholds.

 

I submit that there are certain classes of residential development where
it would be counterproductive and/or inequitable to impose a PGS; and
that planning authorities, appeal inspectors and the Secretary of State
should have the discretion to exempt a residential development from the
charge where a case for exemption has been substantiated. Without this
discretionary power to grant exemptions, the PGS becomes a "blunt
instrument" whose impact in some circumstances could directly conflict
with other key policy goals.

 

The following are some classes of developments where in my view an
exemption is essential to avoid such conflict:

 

(1) Affordable housing. I appreciate that (as stated in Question and
Answers No 5 on page 33 of Valuing Planning Gain) the PGS for affordable
housing will be lower than the amount levied on market housing, because
the Planning Value (PV) valuation will be reduced. However, I question
the value of raising any PGS on housing that is destined to be
affordable, particularly that which is not delivered through developers'
contributions, but through a rural exception site scheme or a self-build
scheme.  The provision of affordable housing is one of the main
objectives of the overall planning gain programme, so I contend that
such housing should be exempt from the proposed Planning Gain charges. 

 

Even without a levy, and where land has been acquired at less than
market price, it often remains difficult to provide housing at an
affordable rate, as I know from my own experience working with Housing
Associations and other socially driven developers. Much of the housing
now classed as affordable, is still beyond many people's budgets. Some
people find themselves excluded from any mainstream housing and resort
to extra-legal housing, while in other situations it is still ultimately
paid for by the taxpayer through housing benefit. There seems little
point in extracting a tax on affordable housing which will either serve
to make it less affordable, or else have to be paid for through another
form of taxation.

 

(2) Low Impact Development. Low Impact Development is an emerging
developmental framework within the UK planning system for development
within the open countryside which provides positive environmental,
economic and social benefit. Indeed, under the new Pembrokeshire Low
Impact Planning Policy (Policy 52 of the Pembrokeshire JUDP, 'Low Impact
Development: making a positive contribution'), the responsibility for
demonstrating these benefits lies with the developer. To levy PGS on
developments which are already obligated to provide and demonstrate
their provision for community benefits on an ongoing basis would, in our
opinion, be inappropriate for such developments. 

 

(3) Tied agricultural dwellings. These are conventionally assessed at 25
to 30 per cent less than market value, but even this is often far too
high to be  paid off by someone working full time in the agriculture
industry. Indeed, tied agricultural dwellings command 70 to 75 per cent
of market price, not because farm workers can afford that much, but
because of the hope value derived from the possibility of getting the
agricultural tie removed - and a lot of buyers of agriculturally tied
dwellings attempt to do just that. Farmers anxious to sell to somebody
who is committed to farming the property would be advised to sell the
dwelling not "at arm's length" but at a reduced price. This,
unfortunately, does not often happen, and many new entrants into
farming, finding that they cannot possibly afford even a tied
agricultural dwelling, buy a bare land plot and apply for a new
agricultural dwelling, which they will be given if they meet the
financial and functional tests in PPS7.

 

This is a deeply unsatisfactory state of affairs which can in small part
be addressed by measures available within the remit of this
consultation, through removing or reducing the 'hope value' of such
properties. I submit that tied agricultural dwellings should either be
exempt from PGS, or else pay at a considerably reduced rate. However,
PGS should then be rigorously imposed if the agricultural condition is
removed and the dwelling acquires its full market value. This may go
some way to keeping the agricultural sector viable and supporting the
broader aims of affordable rural housing for those in the sector.

 

(4) Responsible Development. In residential developments where all, or a
substantial proportion of profits from planning gain are already being
channelled into the provision of socially or environmentally beneficial
infrastructure or activities, levying full PGS will be inequitable
because in effect the tax will be being paid twice. 

 

For example, in the Lowland Crofting schemes in West Lothian, profits
from increased land value went into planting large areas of the Central
Scotland Forest - this planting, secured by a Section 50 agreement
(Scottish Section 106), did not diminish the value of the houses, but it
significantly increased their costs.

 

Similarly, there are a number of highly sustainable developments, such
as the  the Hockerton Housing Project in Newark and Sherwood DC, where
much of the profit from planning gain has been funnelled into providing
highly sustainable and zero carbon developments which cost more to build
than conventional developments.

 

It would clearly be unjust and counterproductive to levy PGS on any
development which already provided community benefits from the profits
derived from planning gain. Indeed reduction of, or exemption from, PGS
is an obvious financial incentive to encourage developers to strive
towards the zero-carbon houses which the government (bravely but
optimistically) wishes to see across the board by 2016! This exemption
fits with the kind of fiscal and policy changes the Government
acknowledges to be essential if the UK is to meet the challenges posed
by sustainability and climate change. Reductions in carbon emissions,
for example, will help reduce the future expense of community
infrastructure designed to address and mitigate the effects of climate
change.

 

A similar dynamic may occur in connection with travel arrangements.
Highly sustainable developments normally formulate travel plans which
impose limits on car use, and provide infrastructure to support this in
the form of car share clubs, collective deliveries, school runs, etc.
There are several examples of this approach already in the UK and there
will no doubt be many more as responses to climate change become a
priority. Indeed, in some years' time larger car-free developments may
provide public transport services made accessible to other members of
the public in the neighbourhood. Again, there may be costs to the
developer associated with developing car-free infrastructure, and at the
same time the reduction in car trips would be reflected in reduced
demand on the community infrastructure. These costs to the developer and
benefits to society clearly need to be reflected in the level of PGS
applied.

 

Question 8 of Changes to Planning Obligations asks "Do you agree that
measures to implement travel plans and demand management measures
directly related to the environment of the development should remain
within the scope of planning obligations."

Indeed I do. The current draft PPS on Climate Change states: "Planning
authorities should engage constructively and imaginatively with
developers to encourage the delivery of sustainable buildings. They
should be supportive of innovation."(para 30).

 

Imaginative and sustainable innovation, if it has to be maintained
continuously as for example a car pool or a bus route does,  must be
secured otherwise it is of little value.  In many cases it is hard to
see what mechanisms could secure these benefits better than a planning
obligation. Such innovations are unlikely to be provided by "the use of
PGS as a revenue stream held by local authorities" however desirable
this stream may be for dealing equitably with mainstream developers who
"impose costs upon the transport network" instead of coming up with
solutions (Changes to Planning Obligations, para 72). Imaginative,
sustainable innovations tend to come in the first instance from
small-scale developers rather than from large developers or local
authorities, because when the development is small the risks are small.
If the Climate Change PPS wants to encourage such innovation it needs to
supply a suitable mechanism to secure them and the obvious mechanism is
a planning obligation. Statutory imposition of a blunt instrument such
as PGS will only act as a deterrent.

 

Conclusion

I therefore submit that exemptions from PGS (or reductions) should be
allowed where profits from increased land values are ploughed into the
provision of affordability or other social or environmental benefits for
the wider community - provided that these benefits are secured by a
condition or a Section 106 agreement. PGS should, however, be payable on
removal of the condition or legal agreement - this would help to make
these conditions and agreements more robust. In this way the combination
of exemption and PGS levying would provide incentives for developers to
come up with more socially, economically and environmentally sustainable
solutions.

 

I look forward to hearing you views on this response, 

 

Yours sincerely, 

 

Name:

 

Contact:

 

Organisation:

 

 

 

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