“Governments Residential Property Development Tax will reduce the number of build-to-rent schemes.” – Blick Rothenberg
Tax and advisory firm Blick Rothenberg says that the government’s proposed Residential Property Development Tax may lead to some investors pulling out of the market.
The tax’s designs, which the government invited commentary on last week, are predicted to raise £2bn over a decade to help contribute to the cost of cladding remediation work. The government said last week that the tax would be applied be profits from UK residential development and would encompass the conversion of existing buildings rather than the construction of new ones.
Heather Powell, a partner and head of property at Blick Rothenberg, said: “Governments plans to raise £2bn from residential developers to pay for the cladding crisis via a tax on their profits and will cause many investors to think again.
She added: “The Residential Property Development Tax is to be payable on profits generated from residential development in excess of £25m, but no deduction will be allowed for any interest and finance charges when calculating the profit to be taxed. As interest is a major cost for many developers the tax could push a profitable development into a loss.”