It's time for councils to get back on track

ROY DURIE argues that local authorities who want development in their areas will need to change their attitude.

ONE of the better decisions made by the Prime Minister, Gordon Brown, over the past 12 months was to abandon proposals for the Planning Gain Supplement (PGS), although it is very disappointing that his government is still considering some form of Infrastructure Levy.

Had it gone ahead, the Planning Gain Supplement would have arrived just in time for the current depressed property development market and would have resulted in many developments not proceeding.

It is too easily forgotten by local and national politicians that it is not really the big, bad developer who would have paid the Planning Gain Supplement but the landowner. The developer would just reduce the price payable to affordable housing landowners to compensate for the PGS and other costs, like Section 75 agreements. In many cases, the landowner does not have to sell and all he will do is withdraw the site from the market until the government changes and there is an improvement in the development scene.

Scottish local authorities have increasingly been trying to extract as much financial levy out of the planning system as they can. In respect of residential development, most local authorities are insisting that the developer provides 25 per cent of the total in plots for affordable housing. This is effectively a 25 per cent tax on the developer/landowner.

Councils also seek contributions to Section 75 agreements for education, traffic improvements, etc. One local authority is now seeking a total in excess of £13,000 per unit for education contributions. Many of these Section 75s are not well ring-fenced and the sum secured is necessarily spent on the original target.

There are also specific demands, for example in

There has been demands for a tram tax in Edinburgh

Edinburgh, for tram tax, and the Scottish Borders Council for the Waverley rail line.

These considerable demands are affecting the attitude of developers and landowners in this depressed market, resulting in many schemes not proceeding within the near future. The market is stalling.

If there are fewer new residential developments, then there will be less affordable housing and many councils, like Edinburgh, are struggling to get anywhere near their target for affordable housing.

The more progressive councils will look closely at their Section 75 demand and consider whether they should reduce them to ensure that developments do proceed. Councils will have to compete with other councils to attract the reducing number of active developers.

It is interesting to remember that in the 1970's some councils, including Edinburgh, actually made a payment to the developer of several thousand pounds per unit to provide residential units in converted bonded warehouses, etc.

Many councils have now built new primary and secondary schools with the assistance of the PPP schemes, but unless new houses are built these schools are going to be short of pupils, with some schools having to close.

The message to councils should be that they should not be so anti-developer and should be looking at ways to ensure that development does proceed within their areas.

Roy Durie is senior partner at Ryden.