Monday, May 14, 2007

The Planning Gain Officer

Just back from Glasgow where I helped deliver the seminars at this year’s Homebuilding & Renovating Scottish show. Very well attended and a very lively audience.

I learned quite a bit, as ever, and in particular I found out about a new breed of planner, the Planning Gain Officer. In the past few years, it has become customary for local councils to start “requesting” payments from selfbuilders and small developers by way of contribution to the community. It’s been happening on big sites for decades and apparently the Americans are past masters at this sort of thing as well. But it’s still relatively new on small development sites and as yet it’s been piecemeal. Some councils don’t bother, others charge a little and a few charge a lot, like £20k or so.

I’d not heard of it being applied in Scotland before, but that’s all changed now. Back in 2005, Aberdeen City Council hit on the wheeze of appointing a Planning Gain Officer to fill a much needed gap for this Council, consistent with efficient government principles. You bet. The job description basically involves dreaming up reasons to extort money from private developers and selfbuilders. Initially, the council didn’t expect the income to cover the outlay on funding the post — which might seem just a little inconsistent with the principles of efficient government — but they needn’t have worried. It was set to become a goldmine for the local authority and the guy is now in demand right across Scotland, lecturing all the other authorities about how to go about it.

By way of example, I came across one guy in his sixties who was applying to convert his workshop into a house. In order to do this, his council were demanding £3,000 to go towards the local primary school, £2,000 for the secondary school and £1,700 for work on a new railway. Coupled with a bizarre demand by his building inspector to install a sprinkler system in his two storey, two bedroomed house, he reckoned he would be out of pocket by £15,000 or more, just to get his project off the ground.



Anonymous Anonymous said...

Section 106 "contributions" are simply daylight robbery, and come on top of the "affordable homes" thievery from developers. In my area, you can't build more than 5 units without having to give away 25% of the units to a Registered Social Landlord. On a recent development of 12 small flats and houses, I was told I had to sell 3 two-bed flats for £65,000 each to the RSL, which was less than the cost of construction, let alone the land, fees and so on. The flats' market value was £200K each, so I was effectively giving away £400,000 to the RSL - and I still had to pay Section 106 fees and then capital gains tax on my negligible remaining profit!

As it happened, the affordable homes theft meant my gross profit margin of 15%, which I needed to get development finance from the bank, was reduced to 5%, destroying the whole project. I am now building four detached executive homes instead, instead of 12 flats. And people ask why there's a crisis of housing supply in this country!

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