Guest post: Planning for the future

Foot Anstey planning lawyer, James Clark, discusses the future of residential development in Cornwall


There have been a number of recent announcements that are likely to influence developers’ strategic decisions to pursue residential development sites, having the potential to significantly affect Cornwall’s future landscape.

The cost of investing in property

You may well recall that, from 1 April 2016, a supplemental 3% Stamp Duty Land Tax (“SDLT”) charge became applicable to the purchase of certain additional residential properties, such as buy-to-let properties, second homes and holiday homes, making the acquisition of additional residential properties more costly. Further, the Government’s decision to cut mortgage interest tax relief, limiting landlords’ ability to offset the cost of mortgage interest from the rental income they earn, will significantly reduce the potential returns a landlord can make from their property investments. These two factors may encourage investors to move away from investing in property and look for alternative investment opportunities, having a significant impact on the property market in areas, such as Cornwall, where investment in buy-to-lets, holiday homes and second homes is relatively high.

Planning considerations

Changes in planning policy at local and neighbourhood level will also affect how development comes forward in Cornwall. Following the adoption of the Cornwall Local Plan in November 2016, the Council now intends to introduce Community Infrastructure Levy (“CIL”) in Cornwall.  CIL is essentially a tax on development to fund infrastructure.

The Council is currently consulting on its Preliminary Draft Charging Schedule (“PDCS”), which proposes CIL of up to £400 per square metre for residential development in areas with the highest house prices. The Council is proposing that no CIL will be charged on residential development in areas with the lowest house prices and on strategic sites allocated for housing. It appears the rates proposed are intended to incentivise the construction new homes for owner occupiers on allocated sites or in areas that have traditionally seen lower house prices.

It remains to be seen whether the Council will pursue the CIL rates set out in the PDCS if the response to the current consultation is unfavourable.  Even if it does so, the proposed rates must be independently examined and found to be viable.

Exemptions and reliefs for CIL are available (subject to various conditions and criteria) and where available, will reduce the impact of the levy. Taking advantage of the exemptions and reliefs will require careful consideration and planning and we recommend developers seek specialist advice at an early stage.

The St Ives Neighbourhood Development Plan, which prevents new homes being used as second homes, received much media attention when it was upheld in the High Court in November last year. Since then, a number of other parish and town councils have proposed similar restrictions in their neighbourhood plans. Currently the Rame Peninsula (covering a number of parishes) and St Minver neighbourhood plans, which are pending examination prior a local referendum being held, propose to restrict new open market houses to use as permanent  residences. The Mevagissey neighbourhood plan contains similar restrictions, but it has not been submitted for examination.

Impact on Development

The combined effect of changes to SDLT and mortgage interest tax relief, together with high CIL charges and restrictive neighbourhood plans in certain areas, may serve as a significant challenge to developers who have traditionally targeted the second home/holiday home market. Such developers will need to consider carefully where they want to secure sites for development and to ensure they secure all the CIL reliefs and exemptions they are entitled to.

About the author: James Clark is a planning lawyer at Foot Anstey advising clients on planning, highways and environmental issues.