Property developers face tax charge to offset cladding remediation

The Housing Secretary has announced plans to introduce a new tax, the ‘Gateway 2’ developer levy to offset some of the costs of replacing dangerous cladding on high-rise buildings

The proposed levy will be targeted and apply when developers seek permission to develop certain high-rise buildings in England. There are also plans to introduce a tax for all developers which is likely to come into force from 2022.

In addition, a new tax will be introduced for the UK residential property development sector. This will raise at least £2bn over a decade to help pay for cladding remediation costs.

The tax will ensure that the largest property developers make a fair contribution to the remediation programme, reflecting the benefit they will derive from restoring confidence to the UK housing market.

The government will consult on the policy design in due course.

National Housing Federation chief executive Kate Henderson said: ‘We are supportive of anything that aims to recover costs from those responsible and will look forward to seeing the detail of a new development levy. It is important that any levy does not simply get passed on, increasing the cost of affordable homes that not-for-profit housing associations purchase from developers, and future homes bought by individuals on a shared ownership basis.’

The government will protect future generations from similar mistakes by bringing forward legislation this year to tighten the regulation of building safety and to review the construction products regime to prevent malpractice arising again.

The measures will mean people living in homes which they have been prevented from selling, or re-mortgaging, through no fault of their own, will now be able to move on with their lives.

Housing Secretary Robert Jenrick MP said: ‘This is a comprehensive plan to remove unsafe cladding, support leaseholders, restore confidence to this part of the housing market and ensure this situation never arises again.

‘Our unprecedented intervention means the hundreds of thousands of leaseholders who live in higher-rise buildings will now pay nothing towards the cost of removing unsafe cladding.

‘Remedying the failures of building safety cannot just be a responsibility for taxpayers. That is why we will also be introducing a levy and tax on developers to contribute to righting the wrongs of the past.’

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