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16 Nov
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Development Tax and Retirement Homes

Background

Life expectancy and working age has been on the rise for the last 30 years in the UK.  While policy seems to be focussed on helping first time buyers access the housing market, evidence suggests that we are failing to plan effectively for the older members of our society.

The government do seem to be floating some ideas to help, for instance making pensioners exempt from stamp duty when downsizing to smaller homes, and we anticipate more relevant announcements in the Autumn Statement next week.

National housing policy is also shifting, with further changes expected next year through the Housing White Paper.  The latest consultation, ‘Planning for the Right Homes in the Right Places’ stresses the need for Local Planning Authorities to identify a specific requirement for older people’s accommodation, but it’s not clear how this will be measured and how the information will translate into policy.

Theresa May’s most recent U-turn on a proposed cap on housing benefit for social housing and supported accommodation, which had been blamed for an 85% decline in new homes being built for vulnerable (and primarily older) people, is perhaps an indication that the government are taking the issue seriously.

Unlocking the Market

The think tank Demos has just released new research last week which suggests that development taxes (Section 106 and CIL payments) are stifling retirement home delivery.  This in turn means that housing is not being freed up for younger buyers. Economic modelling featured in the report suggests that only an exemption from these charges will tackle the chronic under supply in light of the huge and growing demand.

Demos’ discussions with developers has revealed barriers to supply which, alongside the existing tax regime, included huge delays in negotiating affordable housing and a lack of recognition in Local Plans.  This is unsurprising given that, of 99 post-NPPF adopted Local Plans:

  • 29 do not have a generic elderly persons’ accommodation policy
  • 88 do not have a specific requirement for elderly accommodation; and
  • 94 do not make specific allocations

The research also identified that a lack of incentives, such as Help to Buy, for retirement home delivery means that there is a shortage of new developers entering the market.

The Inspector of a recent appeal in Aylesbury Vale for 16 retirement properties (Ref: APP/J0405/W/17/3174027) found that the scheme would not warrant a sport and leisure contribution, despite the Council’s request for a fixed sum of £22,000. While this may seem like a no brainer, it’s actually a pretty big step in the planning world and could potentially pave the way for other future immunities.

So is it time for retirement development to be released entirely from the burden of Section 106 and CIL payments? Such incentives could bring new developers into the market and speed up delivery by shortcutting excruciatingly lengthy viability debates.  While this may seem drastic, and is unlikely to be brought into full effect any time soon, we think that a radical solution is ultimately needed.

This is part of a series of NJL thought pieces, with more to follow on this subject as further announcements are made.

If you wish to discuss your retirement development with us, please contact our Director Mark Saunders.

Images used courtesy of Karen Beate Nøsterud (norden.org) and Pixabay

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