Invest & Fund: Planning fee rise could deter smaller developers
Invest & Fund has responded to the government’s proposed planning fee increase, saying the move could deter smaller developers from entering the market.
The proposal, which is still subject to consultation, would see planning fees increase by 35 per cent for major applications and 25 per cent for all others. It will also introduce additional costs for ‘fast track’ services, like a VIP lane.
In a blog post on the move, published today, Invest & Fund foresaw two potential outcomes of the move. On the one hand, the lender said that the VIP lane was potentially discriminatory, benefitting larger businesses with bigger budgets. On the other, it felt ringfencing the extra money could improve local authority processes.
“In theory, this could speed up the overall number of applications dealt with at a cost of a fair system,” it said.
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Invest & Fund argued that any business with the means would opt for the fast track, creating “a bottleneck situation before you have even started”.
“There is also talk of doubling fees for retrospective applications and removing the ‘free go’ for repeat applications, which may dissuade people from building rather than increase revenue,” it said.
While a consultation is in the offing before any of the new rules come into play, Invest & Fund said the industry is likely to raise numerous concerns, including seeing the changes “as another stealth tax with only a vague outline of how the extra money will improve the performance of the system”.
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That said, the lender admitted planning reforms were needed and that one positive would be if the extra money were ringfenced to expand local planning authorities, helping to speed up decision-making and rebuild capacity.
However, there remains a concern that the incremental fee increases will be to the detriment of smaller business, reducing their ability to contribute to solving the housing crisis.
“We believe that the proof will be in how well the government can demonstrate that the money ringfenced will directly correlate with an increase in the speed of decisions being processed,” the lender said.
“The danger is the money could be used to shore up the existing system attracting more staff to replace those who have left post-pandemic, or just returning the wait times from unacceptable to terrible, and that will feel like a stealth tax on the very sector government is looking to incentivise to combat the housing shortage.”
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