Jersey To Introduce Social Charge On Developers

by Jason Gorringe, Tax-News.com, London

27 June 2011

Jersey's Minister for Planning and Environment, Freddie Cohen released on June 17 details of a policy intended to provide affordable housing in Jersey.

By requiring all new private residential developments, which provide six or more homes, to include either a proportion of 'affordable homes' as part of the development, or to make a commensurate cash contribution for the construction of affordable homes elsewhere, the government hopes to increase affordable housing stocks in Jersey.

The principles were proposed in draft policy H3, adopted by the States on April 2, 2008, by a substantial majority (41-4), which requested the Minister for Planning and Environment to bring forward a policy that requires planning applications of over a certain size to provide a percentage of their build for social need whether that be social rented, first-time buyer, retirement, sheltered housing or a mix, whichever is most appropriate for the site.

Cohen said that the government would consult with stakeholders, to ensure that the adopted policy balances the need to increase the provision of affordable homes while maintaining the viability of the development industry in Jersey. It is proposed that the policy be implemented on a transitional basis, with a phased introduction and gradual expansion.

The policy will introduce a charge equivalent to 12.5% (rising to 20% over a period of five years) of the gross development value of a development to be applied to all new private residential schemes of six or more units of residential accommodation.

For the purpose of calculating the affordable housing element of a proposed residential development, gross development value will be calculated by multiplying the actual gross development area (of the private housing element) and a notional development value per square metre (NDV), Cohen said. This value is referred to as the notional gross development value (NGDV), to be reviewed annually.

"The NDV is to initially be set at a level which recognizes the industry’s need for a transitional period to adjust site values and profit expectations, but will, over an appropriate period of time, rise to reflect average development sale values," Cohen stated.

It will be at the discretion of the island's Minister for Planning and Environment to allow a reduction in the contribution of some projects, where exceptional site-specific or general market conditions would render a proposal unviable.

Explaining the plans, a statement from the Minister said:

"The policy expects developers to provide affordable housing on all large housing sites and in so doing removes the necessity to rezone land in the countryside. The plan also proposes that the States uses its own land to provide much needed affordable housing for island families."

"The affordable housing mechanism will be smoothly phased in over a number of years and will be consulted upon annually with the development industry and other interested stakeholders. The annual consultation will maintain flexibility, will react to changing market conditions, and will ensure that a viable construction industry in Jersey is maintained and encouraged."

"This policy complements the use of States-owned land for much needed affordable housing and has been supported by the independent planning inspectors."

"Previous island plans have involved the loss of countryside, and multimillion land value profits for those fortunate to own the rezoned fields. This island plan delivers both affordable and open market housing, expects more from developers and landowners, uses land that has been already developed, and protects [the island's countryside]."

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