EC Harris says industry must back government consultation over planning viability for build to let

The property industry is being urged by senior figures to back moves to allow private rented sector developments to receive reduce planning levies.

A proposed amendment to current guidance would see PRS treated differently from regular housing on account of its different business and long-term nature of income producing assets.

Support from the industry – delivered via the government’s website – would allow the changes to be cemented in legislation. It not reduce the amount of affordable housing – but mean that the different between PRS developments and traditional build to sell developments are recognised.

The amended text currently reads:

“In respect of large scale private rented sector housing… viability considerations in decision-taking should take account of the economics of such schemes, which will differ from build for sale. This may require a different approach to planning obligations or an adjustment of policy requirements.”

Leading property law firm Addleshaw Goddard says this change to the planning and housing need assessment will be warmly welcomed by companies like Grainger, Essential Living and M&G who are all set to be major players in Britain’s burgeoning rental market over the coming years.

Details on the policy can be found here.

However, it is possible that others could oppose the change and supporters should air their views before the closing date on 9 October via the government’s response website.

Marnix Elsenaar, partner, head of planning at Addleshaw Goddard, said:

“One of the dilemmas faced by local authorities is the need for more social housing and the lack of central government funding they now receive for services. This pushes the burden onwards and, given that development levies like section 106, provide such significant funding for councils, it’s understandable that authorities want to maximize them.

“However, if the housing being built is market rent and thus affordable to the middle ground, then it’s clearly better to have reduced social housing on top as opposed to nothing at all.

“Recognition that PRS is different from build-to-sell is essential. One is an income-producing asset, the other is simply a transaction enabling the realizing of increased land value. It is essential the property industry gets behind this changes and helps cement more certainty for delivering homes to rent at a time where PRS is the UK’s fastest growing housing tenure.”

Nick Jopling, executive director at Grainger Plc, the UK’s largest listed landlord, said:

“There are many local authorities who already grasp the very different business model that build-to-rent presents and who treat it accordingly. But more certainty across the board and up front recognition that build-to-rent is different from build-to-sell will help reduce one of the key barriers to delivery. This is a welcome move from the Government that the industry must get behind and support.”

Mark Farmer, partner, head of residential at EC Harris, said:

“We’re incredibly focused on working with PRS providers to get under the skin of viability and understand exactly where schemes break the water line. Having more clarity and greater certainty over the section 106 treatment will be tremendously helpful and is essential if we are serious about supporting large scale rental in the UK.”