We are very much open for business. Please click here for our full message.
Since the Grenfell Tower disaster of June 2017, successive governments have struggled to develop an effective plan to deal with the many buildings in the UK which feature the same kind of highly flammable cladding.
In June 2020, a report published by the Housing, Communities and Local Government Committee (HCLGC) produced an estimate which stated that the cost of fixing ‘all serious fire safety defects’ in high risk residential buildings could amount to as much as £15bn.
The government has faced pressure from a number of sources, including thousands of leaseholders facing ruinous bills for replacing the dangerous cladding on their building.
The government response to the pressure was to announce a new fund in February 2021, which pledged £3.5 billion in cash grants for cladding remediation, and loans offered to those living in affected blocks under 18 metres high.
This announcement was greeted with some dismay by Tory backbenchers, 40 of whom signed an amendment asking for freeholders to be barred from passing the cost of removing cladding or other fire safety work on to leaseholders.
Consultation on radical change to funding
The latest suggestion from the government to deal with paying for cladding remediation, takes the form of a consultation document on the introduction of a Residential Property Developer Tax (RPDT) on corporations.
The consultation period was launched by HMRC on 29th April 2021, and will run until 22nd July 2021. As outlined in the document, the RPDT is intended to be time limited and designed to raise a minimum of £2 billion over a decade.
The document states that this amount represents a “fair contribution” to the overall cost of the cladding remediation programme, and that it will be targeted at the “largest corporate undertakings that make money from UK residential property development activities”.
When will Residential Property Developer Tax come into force?
Although many details of the RPDT, including the rate at which it will actually be set, have yet to be established prior to the consultation, there are some details in place:
Model 1 – all of a company’s profits, including those from commercial property development will be taxed, if that company’s activities included a more than “insignificant” amount of residential property development. The threshold for what represents an “insignificant” amount has yet to be determined.
Model 2 – the tax would be payable by any company which undertakes UK residential property development, but would only apply to profits directly generated by residential property development.
The consultation ends on 22 July 2021, and so those engaged in residential property development in the UK should have their say now, and ensure they help determine how any RPDT might affect their activities in the future.
If you have any concerns or questions regarding the RPDT please contact Jonathan Rowley of the Commercial Property team here at Ansons on 0121 716 3716 or by email at email@example.com
If you would like to be kept up to date with Ansons news please follow us on Facebook, LinkedIn or Twitter.