Property rules will take billions from local councils and put them into super-rich investors’ pockets

Poorer Londoners are set to lose out

Rules that came into effect in December will cost councils billions, it has been claimed.

Super-rich property investors and developers are benefitting from the rule, which means if a company has built affordable housing in the past, it is exempt from building affordable housing in a new development.

Previously, any new housing development needed to have a section of affordable housing included, or at least the developer needed to pay the local council to build affordable homes elsewhere.

However, the new rules mean if the developer is converting an empty building and has contributed to the cost of affordable housing in the past, it need not pay on this occasion.

John Walker, director of planning at Westminster council, told The Guardian: “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.”

Westminster alone is predicting to lose £1bn as a result of the change, but it will potentially affect all councils in England.

Rich investors are gaining millions from the change. For example, Qatar’s ruling family could be set to make thousands, if not more, in their £3bn redevelopment of Chelsea barracks.

In January, the Abu Dhabi Investment Council cut their contribution from £17.9m to just £9m on the 20 Grosvenor Square development.

This comes as thousands of people took to the streets at the weekend protesting about the lack of adequate housing in London and the spiralling cost of renting.

Protestors were demanding more council homes, control of private rents and to stop the demolition of properties on 70 estates.


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Readers' comments (2)

  • Actually its a stupid and unfair tax - at the end of the day its not the developer that pays but the buyer (added to the cost of the home) - and that might not be a super rich person but your average John and Jane public buying their own home.

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  • Brian M is right. Developers aren't going to forfeit profits in order to pay for social housing. Why should they?

    In 1953, the UK Government built 220,000 homes. Since Thatcherism, the idea that the state is responsible for making sure that there is quality housing available for everyone to rent has been completely sidelined.

    Instead, successive Governments have come up with useless ideas that try to force developers to take on the responsibility.

    With the power that the constructino companies wield - especially with a Tory-led coalition - Governments won't do anything to upset developers. That explains why new rules like this successively let them off the hook.

    Meanwhile, the number of homeless and people in temporary accommodation steadily grows.

    Isn't it obvious to everyone that social housing is not something that can be left to the private sector? It is a Government responsibility.

    The market has failed. Time to return to a socialist approach.

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