Charging Council Tax on unbuilt developments could damage house building, warns FMB

Local Government Association (LGA) proposals to charge Council Tax on unbuilt developments could damage house building, warns the Federation of Master Builders (FMB).​

The LGA says that town halls should have the power to penalise developers who take too long to build new homes after new research showed there are a record 475,647 properties in England that have been granted planning permission but have yet to be built.

It wants councils to be able to charge developers the full council tax for every unbuilt development from the point the original planning permission expires.

But the FMB warns that charging Council Tax on unbuilt developments could decrease house building numbers by deterring SME house builders.

“The imposition of Council Tax on unbuilt homes could increase the risks of bringing forward new developments by small house builders. The measure could deliver the opposite of what it hopes to achieve by reducing the number of smaller housing developments,” said FMB chief executive Brian Berry.

“SMEs already face serious challenges in terms of access to finance and scarcity of small sites. For small house builders to be liable for Council Tax on properties which can’t be built would add yet another layer of risk and act as a further deterrent to smaller developers. It is already commonplace for local authorities to start charging council tax on homes that are incomplete – sometimes before even the basics, such as plastering, have been finished. It seems there’s now a danger of Council Tax being charged if you do build and also charged if you can’t build. That can’t be right.

“On Monday, the Government recognised that empowering SMEs by releasing smaller parcels of land could hold the key to increasing the number of homes being built – along with some local authorities which are enabling more small sites to be brought forward. If all councils were similarly bold, they would stand to benefit from faster rates of house building completion, thereby achieving their targets while also stimulating the local economy. There’s a huge convergence of interest between local authorities and SME developers, and we hope that we can work together in the future on realising what is ultimately the same end goal – to get more homes built.”

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