The British Property Federation has written to new housing secretary Michael Gove calling for a change in legislation to exempt build-to-rent from a new developer tax.
The letter, also sent to housing minister Christopher Pincher and chancellor Rishi Sunak and seen by EG, says the government “must reconsider the cumulative burden” of taxes.
The BPF and industry experts have requested a meeting to explain their opposition to the residential property developer tax and the challenges alongside the building safety levy.
The RPDT is a tax on developer profits that aims to generate £2bn for cladding remediation. When announced earlier this year, former housing secretary Robert Jenrick said the tax would “make the industry pay for the faults of the past”.
However, the BTR industry argues the tax would be a “dry tax” targeting a profit that does not exist – as landlords retain assets to rent and do not sell properties. Any tax would therefore “create huge complexities” and distort competition in the sector.
The letter said: “Building safety is an absolute priority for all of us in real estate, and the build-to-rent sector has led the way when it comes to funding remediation work and ensuring that tenants are both safe and protected from any financial impact.
“It would be extremely penal to suggest that these building owners and investors now be taxed additionally to enable remedial works to be funded within the build-to-sell sector.”
Experts have previously raised concerns that added costs would also restrict viability, preventing some development and reducing the sector’s affordable housing contribution.
The letter added that any impacts will be “exacerbated further” by the new BSL. This levy will target high-rise development. As a comparison, 90% of recent BTR development falls into this bracket. Meanwhile, the largest national builders are likely to be exempt, as they typically focus on low-rise housing.
It said: “Nearly all the sector’s output will be caught disproportionately by the RPDT and BSL on the more challenging but more environmentally sustainable urban brownfield development we engage in all to recover remediation funding directed at the BTS market.
“We are therefore calling on government to exclude the BTR sector from the scope of the RPDT.”
Draft legislation for the RPDT has already been published, exempting student accommodation. However, despite campaigning from industry figures and the BPF, it is still unclear if BTR will be included. A decision is expected to be reached in the coming weeks.
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