A senior official at Westminster city council, a Conservative-led borough, has described the government’s new vacant building credit as insane and estimated it could lose as much as £1bn in housing payments, deepening the accommodation crisis afflicting the poorest people.
On 28th November 2014 the government announced the introduction of the ‘vacant building credit.’ This will mean that when a vacant building is brought back into any lawful use, or if it is demolished and replaced by a new building the developer will be offered a financial credit by the local planning authority and deducted from the overall affordable housing contribution calculation.
The purpose of the policy will make it more financially viable and therefore more attractive for developers to build on brownfield sites comprising vacant buildings as VBC will offset the common costs associated with bringing brownfield back into use. However, this could, in some areas, result in the local planning authority failing to meet their affordable housing needs.
This has caused much controversy, with many being of the opinion that the new policy legally permits housing developers in the UK to receive hundreds of millions of pounds in windfall profits whilst simultaneously reducing their efforts to provide much-needed affordable housing. In some cases, they could even avoid paying contributions altogether.
John Walker, director of planning at Westminster, expressed concern over the policy, saying “there will be some sites where we get absolutely nothing. On a forthcoming scheme we agreed that £9.1m was viable and we would lose all of that as a result of the vacant building credit. On just three schemes we consented [in a planning meeting] on 13 January we lost £29m. It is insane.”
As an example of the negative effect that the policy can have on the affordable housing drive, Great Marlborough Estates is planning 80 homes near Regent’s Park and is expected to pay £18.7m in affordable housing contribution. Westminster said the council now expects to lose more than £10m of that.
James Murray, executive member for housing at the London borough of Islington, also disapproves of the credit, saying “the real impact of this is to increase landowners’ and developers’ profits at the expense of the affordable housing we desperately need.”
Conservative MP Brandon Lewis defended his party’s policy, saying “it was crazy to be levying a tax on empty and redundant buildings being brought into productive use. Such stealth taxes hindered regeneration and encouraged more empty properties. Our changes will help deliver more housing at no cost to the taxpayer in both London and across England. This is part of a package of measures by the government to reduce the number of empty buildings across the country, which is good for both the environment and for society.”
Emma Reynolds, Labour MP disagreed, stating “this is yet another example of the government giving developers an opt-out from providing affordable housing. This government has consistently and repeatedly watered down affordable housing requirements, depriving local communities of badly needed affordable homes.”