Recent announcements that include changes to the stamp duty thresholds and the potential introduction of investment zones have sceptically been received as positive within the development sector and opposed as an attack on nature by environmental groups. It does seem somewhat premature to rush to judgement on both counts.
There has been historical discussion of the introduction of zoning in the UK previously but none quite so bold that if implemented well enough could certainly add weight to levelling up some communities in the country. There still exists some areas where the build cost exceeds value and with rising build costs plus a weakening pound there are additional areas that are also becoming borderline unviable. So, will trickle down economics work in the development sector and assist in levelling up the country? The devil is in the detail and so much detail remains unknown.
The broken and convoluted planning system still has no silver bullet to the housing supply shortage; and whilst there have been several limited attempts, still nothing comprehensive enough to deliver the number of homes and associated infrastructure required. Rising interest rates historically have cooled the housing market but with demand still outweighing supply in many parts of the country values are still on the increase. This begs the question, are we still trying to shoehorn more development into these areas or is this a genuine attempt to level up and take the pressure off these areas by creating demand where it is genuinely needed? Or, could both realistically be achieved simultaneously? Or, will parts of the country still be left behind until demand also outstrips supply?
Anything that can effectively streamline the planning bureaucracy and reduce uncertainty should be a positive for both commercial investment, growth and the speeding up of the delivery of housing supply – but many questions remain about the identification and delivery mechanisms; only time will reveal the answers. The benefits if delivered comprehensively will remove the barrier for growth and could accelerate the transition to the low carbon economy, securing the investment needed to create more high-quality skilled jobs and provide much needed housing and associated infrastructure that creates positive agglomeration effects. Is this the silver bullet that gets Britain building the homes it needs? Will investment zones offer real potential for growth and levelling up across the UK? Or will it turn out to be just the empty gun…
Headline summary of In principle policy offer for Investment Zones:
Speeding up planned development and simplifying new opportunities
- remove burdensome EU requirements which create paperwork and stall development but do not necessarily protect the environment;
- focus developer contributions on essential infrastructure requirements;
- reduce lengthy consultation with statutory bodies; and
- relax key national and local policy requirements
Time-limited tax incentives
Specified sites in England could benefit from a range of time-limited tax incentives over 10 years. The tax incentives under consideration are:
1. Business Rates – 100% relief from business rates on newly occupied business premises, and certain existing businesses where they expand in English Investment Zone tax sites. Councils hosting Investment Zones will receive 100% of the business rates growth in designated sites above an agreed baseline for 25 years.
2. Enhanced Capital Allowance – 100% first year allowance for companies’ qualifying expenditure on plant and machinery assets for use in tax sites.
3. Enhanced Structures and Buildings Allowance – accelerated relief to allow businesses to reduce their taxable profits by 20% of the cost of qualifying non-residential investment per year, relieving 100% of their cost of investment over 5 years.
4. Employer National Insurance contributions relief – zero-rate Employer NICs on salaries of any new employee working in the tax site for at least 60% of their time, on earnings up to £50,270 per year, with Employer NICs being charged at the usual rate above this level.
5. Stamp Duty Land Tax– a full SDLT relief for land and buildings bought for use or development for commercial purposes, and for purchases of land or buildings for residential developers.
(Source: Department For Levelling Up, Housing & Communities & HM Treasury) Guidance
The following 38 authorities have had some engagement and have expressed initial interest in creating investment zones prior to this announcement which include the following:
- Blackpool Council
- Bedford Borough Council
- Central Bedfordshire Council
- Cheshire West and Chester Council
- Cornwall Council
- Cumbria County Council
- Derbyshire County Council
- Dorset Council
- East Riding of Yorkshire Council
- Essex County Council
- Greater London Authority
- Gloucestershire County Council
- Greater Manchester Combined Authority
- Hull City Council
- Kent County Council
- Lancashire County Council
- Leicestershire County Council
- Liverpool City Region
- North East Lincolnshire Council
- North Lincolnshire Council
- Norfolk County Council
- North of Tyne Combined Authority
- North Yorkshire County Council
- Nottinghamshire County Council
- Plymouth City Council
- Somerset County Council
- Southampton City Council
- Southend-on-Sea City Council
- Staffordshire County Council
- Stoke-on-Trent City Council
- Suffolk County Council
- Sunderland City Council
- South Yorkshire Combined Authority
- Tees Valley Combined Authority
- Warwickshire County Council
- West of England Combined Authority
- West Midlands Combined Authority
- West Yorkshire Combined Authority
Other MCAs and UTLAs will be able to come forward to make expressions of interest in creating investment zones including freeports.
As this is a UK-wide mission, they will work in partnership with devolved governments and other stakeholders to agree how they can use their levers to deliver Investment Zones in Scotland, Wales, and Northern Ireland.
Further details on the liberalised planning offer for Investment Zones is expected in due course.
The government will look to introduce primary legislation in order to enable the offer on tax and simplified regulations. The final offer will be subject to the passage of that legislation through parliament.
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Article written by Steve Norman, Planning Director, VirginLand by Ringley
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