Exempt retirement housing from CIL and section 106, says report

New retirement housing should be exempt from section 106 contributions and the Community Infrastructure Levy (CIL) to rapidly boost supply, says a new housebuilders'-commissioned report.

Retirement housing: call for exemption from planning gain charges (picture: Andy Cahill - Photoworks)
Retirement housing: call for exemption from planning gain charges (picture: Andy Cahill - Photoworks)

Research by think-tank Demos, commissioned by lobby group the Home Builders Federation, claims that new retirement housing is being "choked" by such planning gain charges.

Such schemes have "enormous social value" and, as well as helping to house Britain’s growing elderly population, also "save health and social care services millions of pounds every year" and help "free up housing for young buyers and growing families".

According to Demos, retirement housing developments often have higher build costs, due to the need to build facilities like restaurants, lounges, treatment rooms and accommodation for staff.

However, such schemes are treated no differently by local authorities when it comes to planning gain requirements like section 106 and CIL, says the report.

The report points out that CIL is levied per square metre, even on "unsellable" communal facilities, meaning retirement developers usually pay more in tax than their mainstream counterparts.

The report uses economic modelling to show that planning gain charges "fundamentally undermine the viability of retirement developments in all their forms".

The report also cites "huge delays in negotiating affordable housing contributions" as a key barrier.

It calls for the government to make such schemes exempt from affordable housing contributions and CIL to "tackle chronic under-supply in the face of significant and rapidly growing demand".

The document states: "An exemption policy responds to the clear evidence of the choke hold planning charges have on the market and is justified both by the considerable social value and the hard economic benefits of retirement developments.

"Only such a step would provide the shot in the arm the market needs to boost build volumes rapidly to help meet the government’s wider housing targets."

Demos said the report was commissioned by the HBF in response to this year’s housing white paper, which promised national planning policy changes so councils would be "expected to have clear policies" for addressing older people's housing requirements.

Only 7,200 retirement homes are being built each year, less than a quarter of the 30,000 retirement properties needed annually just to meet immediate demand, according to the report.

A Department for Communities and Local Government (DCLG) spokesman said: "We’re committed to making sure we have suitable housing to meet the needs of older people. Our Housing White Paper set out plans to make sure we build more suitable homes for people in later life and as a result of the Neighbourhood Planning Act 2017, we’re strengthening planning rules so that councils have clear plans to address this issue too.

"We’re also currently consulting on proposed changes to the way viability assessments are approached. Our measures would speed up decision making and increase transparency, so that local communities know what is expected from developers."

The Demos report, Unlocking the Market, can be found here.

Note: this article was updated on Monday 13 November at 10.30am to include a comment from the DCLG.

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