Earlier this year HM Treasury (HMT) announced that it was introducing a new Residential Property Developer Tax (RPDT) as part of its building safety package. The tax aims to raise £2bn over 10 years to fund the remediation of unsafe cladding. It will apply to any profit made by residential property developers above a threshold of £25m.
The original consultation paper on the policy design of the tax suggested that charitable activity, including housing associations developing affordable homes, would be exempt from the tax, however it was unclear on market sale development.
Since the announcement of the tax and the subsequent consultation, we have made a case in both our response to the consultation and our submission to the Autumn Budget and Spending Review, that charities, non-profit registered providers of social housing and companies that are wholly owned by non-profit registered providers of social housing should be exempt from the RPDT.
If the RPDT were to be payable by non-profit registered providers of social housing or their subsidiary companies, it would incur an additional cost to the sector that would leave less funds available for investment in affordable housing. In addition, it could also affect the ability of housing associations to finance improvements to the safety of homes – the very work that the RPDT is intended to support.
Following our conversations with HMT, we are pleased to confirm that the draft legislation now includes an exemption for all non-profit groups, including for profit-subsidiaries and joint ventures. This exemption will save our members a significant amount of money going forward, which can be reinvested into housing associations’ homes and services across the country.
As part of its building safety package, the government are also looking to introduce the Building Safety Levy which would be payable by developers of new residential buildings, care homes and hospitals which are 18m or more in height, or at least 7 storeys. We will be calling for a similar exemption for the sector in our response to the consultation of the design of this policy.