Cock-up rather than conspiracy lies behind the vacant building credit debacle. It may be quite the most poorly thought out legislative change to hit property in some time, but there is a silver lining.
With a resolution seemingly at hand, the property industry, for once, looks set to emerge with its reputation enhanced.
Changes to the credit, revealed in Estates Gazette last Saturday, were splashed across newspaper front pages this week, denounced on radio and defended by housing minister Brandon Lewis on TV. Councils, meanwhile, were left counting the £1bn-plus cost to affordable housing budgets.
How did we get into this mess? Well it seems that there was a consultation undertaken by CLG leading up to the 28 November decision to amend the basis for calculating affordable housing contributions. How thorough this was is disputed, however.
Once CLG had been made aware of the consequences of changing the basis of calculation from total floorspace of vacant buildings to additional floorspace, the penny dropped: it was a policy that would have a severe impact on local authority budgets.
Clearly, the change here was well-intentioned. The government’s efforts to bring vacant buildings back into productive use should be celebrated. But the fact that no exemptions were offered – at a time when other, similar policies did recognise regional disparity – was a serious oversight by civil servants.
It seems a solution is at hand. The mayor’s office is involved in talks. Privately, ministers and their advisers say they want a quick and quiet solution to be found, with exemptions for principally inner London boroughs likely. Let’s hope so.
Councils such as Westminster, Southwark and the City of London, which have been most spooked by the change, may not agree, but good has come of this unfortunate episode.
Property has found its voice.
It would have been easy for the industry to stay silent on this one and central and local government to trade blows. But, to his credit, Westminster Property Association chairman Dan van Gelder waded in, going on the radio, on TV and into newsprint saying that developers were not looking for a cut in their affordable housing contributions when a cut was clearly never intended.
“Our members, with responsibility to maximise shareholder returns and to follow the law, find themselves with the possibility of windfalls,” van Gelder told a WPA gathering on Wednesday night. “But we know we have a responsibility to contribute to the community, and in increasing times of social division and government austerity the role we have, and the role we are seen to have, is becoming more and more important. So despite the perceived short-term benefits of the new policy, I was delighted to receive so many notes of support from our members this week on our stance. I think we all recognise that this short-term gain would have been exactly that.”
I suspect not every member of the WPA agreed with the stance. If they didn’t they were right to stay silent. And van Gelder’s motive? Well it was a brave, sensible and not entirely selfless act. I think the phrase is “enlightened self interest”.
Is it premature to call this a turning point in property’s willingness to go on the front foot on matters affecting its reputation? Perhaps. But I hope the industry quietly accepts an unfamiliar kind of victory when it surely comes and thinks hard how it can make the most its enhanced standing.
■ Congratulations to CBRE, whose turnover has hit $9bn (£5.9bn). Indeed, its EMEA turnover alone is now $2.3bn, equal to its overall revenues on listing a decade ago. But before anyone gets too carried away I will draw a possibly unfair comparison with one of the giants of the professional services world. That $9bn total income is only a little more than PwC makes from tax advice alone.
damian.wild@estatesgazette.com
