From The Times:
A mansion tax would lead to developers in London building fewer affordable homes, according to the deputy mayor of London.
Sir Edward Lister, who is also Boris Johnson’s chief of staff, said that if demand waned for expensive homes as a result of a mansion tax and developers reduced the number of luxury properties they built, there would also be fewer affordable ones because builders have to agree to construct a certain number of these in the same development to win planning permission.
For a start, the "affordable housing" requirement does not really reduce overall average rents, it's market segmentation that's all, but let's gloss over that.
Planning departments usually stipulate that a certain proportion of the total number of units in a development are sold for a smaller-than-usual profit margin to a Housing Association. The proportion is different in different areas, and can be any old number the planners pluck out of the air (unless they get too greedy and the developer just shelves the project - it is a very crude tool).
Agreed that the Mansion Tax would reduce the number of large, expensive units of housing in a new development, but by definition, it would increase the number of smaller, cheaper units.
So if the number of units goes up and the proportion allocated to "affordable housing" goes up, then the number of units of "affordable housing" would go up, not down.
Or the planning department could drop its required proportion and keep the number of units of "affordable housing" constant.
Wednesday, 11 March 2015
From The Times:
My latest blogpost: He doesn't do numbers or logic.Tweet this! Posted by Mark Wadsworth at 15:11