New tax on vacant land ‘would deter developers’

A PROPOSAL to tax undeveloped land has been described as “absolutely bonkers” by a property consultant.

Stephen Wade, director of property consultancy Legat Owen, said it was “ridiculous” to believe that developers pay for land and then deliberately hold back from developing it.

Mr Wade was reacting to a Welsh Government announcement that it would bring forward a vacant land tax as the first of a possible four new taxes being considered under its new tax powers.

Finance Secretary Mark Drakeford said the new tax aimed to prevent land banking and make sure idle land was brought into use in a reasonable timescale.

But Mr Wade said the rate of housebuilding in Wales was already falling behind England and the new tax would only act to deter developers from investing in Wales.

He said: “There may be the occasional case where, for commercial or market-led reasons, that a scheme stalls, but in most cases it’s down to delays with planning or utility connections. Ask any housebuilder and they will tell you that utility connections are a nightmare. This is where Welsh Government should be targeting improvements.

“If the Welsh Government are really serious about increasing housebuilding in Wales, then they need to start to listen to the people building the houses. This tax won’t help the case, it will make it worse by deterring more developers from looking in the first place.”

Chris Sutton, lead director of property agency JLL in Cardiff, said he was unaware of any largescale examples of speculative land banking.

Mr Sutton pointed to the length of time it has taken to bring the area adjacent to Dumballs Road, south of Cardiff Central station, into development and questioned whether a vacant land tax would have made any difference.

He added: “Vacant land tax seeks to encourage development by penalising under-use but does not improve development viability. I believe it would be unpopular and seen as an increase in taxation rather than a shift in the base of tax.

“There are other ways to incentivise new development – a longer period of exemption from business rates for new development, reduced stamp duty (soon to be land transactions tax), simplified planning, reduced planning gain etc.”

A Welsh Government spokesman said: “The idea is not primarily focused on revenue-raising. Rather, it would focus on incentivising more timely development by making it more expensive to hold on to vacant land which has been identified as suitable for development.”