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Residential property tax to be revealed by Chancellor in Budget

The consultation on the introduction of the new Residential Property Developer Tax (RPDT) ends this week with details revealed in this month’s Budget.

The Government announced on 10 February 2021 that it would introduce the RPDT as part of its Building Safety Package.

The Building Safety Package aims to:

Pay for the removal of unsafe cladding for leaseholders in all residential buildings 18 metres (six storeys) and over in England.
Provide a finance scheme for leaseholders in lower rise, lower risk buildings – those between 11 and 18 metres (four to six storeys) – to help pay for cladding.
Introduce an industry levy and a new tax on residential developers, to ensure developers play their part and make a fair contribution.

The Government says measures are designed to bring an end to unsafe cladding, provide reassurance to homeowners and support confidence in the housing market.

Details of the new tax will be provided by Chancellor of the Exchequer Rishi Sunak in his Autumn Budget on 27 October.

The Government held a consultation seeking views on the policy design of the RPDT between 29 April and 22 July 2021.

It has since been holding a technical consultation on the draft legislation of the RPDT ahead of its inclusion in the 2021-22 Finance Bill, to ensure the legislation operates as intended, and concludes on 15 October.

To help pay for these interventions the government is introducing two revenue raising measures:

A new Gateway 2 levy, which will be applied when developers seek permission to develop certain high-rise buildings in England.
A new tax on the residential property development sector.
The tax would be time-limited and apply to the largest residential property developers in relation to the money they make from UK residential development.
It would be introduced in 2022 and seek to raise at least £2 billion over a decade.

The Government says it helped support confidence in the property market with interventions on stamp duty land tax and the mortgage guarantee scheme. Therefore, given the significant costs associated with the removal of unsafe cladding, the government believes it is right to seek a fair contribution from the largest developers in the residential property development sector to help fund it.

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