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Planning revamp could push first time buyers out of housing market

As UK house price growth reaches a seven year high, a Yorkshire architect fears that the biggest ever shake-up to planning regulations could be a further setback for first time buyers.

Andrew Stoddart of Leeds-based Vida Architecture - which seeks out land and property opportunities for UK and foreign investors - is concerned that the new Community Infrastructure Levy (CIL) could have a detrimental impact on the UK’s residential property market.

Andrew explained: “Applying to all new buildings and extensions above 100 square metres, the CIL allows local councils to raise funds from developers applying for planning permission when undertaking new building projects - and my concern is that developers could pass these costs onto the buyer.

“With the CBI’s business lobby group expecting house prices to rise by 8.2% this year and by 5.1% in 2015 - this could be a massive blow for first time buyers struggling to climb the property ladder.”

CIL levies can vary dramatically between local authorities, locations and whether a development is residential or commercial - with figures from the Planning Advisory Service highlighting levy charges at £575 per square metre on the Thames waterfront at Nine Elms, Wandsworth, and £30 per square metre in Bristol.

Added Andrew: “The CIL will impact on both the property and investment markets as well as land value. It will have a major bearing on developers who will be expected to absorb the additional costs - particularly while the construction industry is clawing its way back from the worst financial crisis for more than a century. The critical question is how long will they be prepared to do this for before passing CIL charges onto the buyer?

“With tight profit margins and increasing labour and raw material costs, developers will understandably be reluctant to pay CIL costs out of their own pockets. In the short term it is most likely that land values will take a hit, however in the long term the value of properties could soar.”

Although not compulsory, most councils are expected to adopt the levy which has been designed to simplify planning procedures and also bring in additional revenue for councils to fund road schemes, park improvements, schools, health centres or flood defences within their local community.

Concluded Andrew: “It is vital that the CIL rates set by councils are not too excessive as this will create a barrier for new developments, increase costs and potentially make buying a property unviable.”

This was posted in Bdaily's Members' News section by VIDA Architecture .