The recent redefining of Uttlesford as “urban” has the effect of removing the development levy imposed on smaller developers to contribute to affordable housing.
A knee jerk reaction may be to see this as an attack on the less privileged and a subservience to “big capital”.
Of course the provision of affordable housing is deservedly a priority of any right minded district authority. The question is; is this a retrograde step or is there possibly a better way of managing the developer’s social contribution?
Whether Uttlesford meets the objective criteria of “urban” I would argue, is moot as the definition itself is open to adjustment and manipulation. But the effect of this designation has rear bearing on developers selection of building sites and their bottom lines.
As a point of departure, one might argue, that the issue of housing in Uttlesford cannot and should not be completely divorced from the national agenda. Although the UK appears to have weathered the storm of the Great Recession better than many contemporaries, there are still real indicators that there is some way to go. With falling inflation and particularly European employment levels still well below pre-recession levels there is possible evidence of demand side shock. Quite the opposite of the slow burn stagflation of the nineteen eighties.
Arguably one major advantage of the UK over its European neighbours has been the robust growth of the property market close akin to a similar trend evidenced in post “dot com bubble” USA. Obviously this market needs to be monitored, debt levels contained and bank regulation sustained. But resting on a sound property market allows a large number of UK citizens the chance to rebuild their capital base and actively participate in a growing economy. To stifle this market, particularly at the local SME level would not only limit that sectors’ competitiveness but may undermine the systemic growth of the whole sector. Whereas the larger developers can initially afford to take a developers premium in their stride the smaller entrepreneurial developer simply cannot.
Of course a sound property market needs to be leveraged into social upliftment and the wealth created needs to be shared by all. But the blunt instrument of a levy is perhaps not the ideal way to achieve this.
What it does do is raise a “tax” or penalty on new developments which in an ideal world would be invested into a fund to support low cost developments.
If a tax is justified as a social good, it might still be argued that a more direct route would be to require all developments to include a greater, or more tangible, affordable housing component thereby leveraging the skills and expertise of the developer outside of a possibly inefficient and costly bureaucratic administration.
So the question remains, is the threshold of 10 units a tipping point at which the levy becomes sub optimal or is there simply a more creative way to leverage commercial investment into social housing to the benefit of the whole system?