Councils are overcharging smaller house builders millions of pounds by failing to be more flexible on levy charges, according to the findings of a new report.
The Federation of Small Businesses (FSB) said developments of 10 units normally have basic building costs that are 14% higher than larger developments.
However, the report found councils to not take these higher costs into account when calculating the level of Community Infrastructure Levy (CIL) to be paid.
It warns that this is leading to an overcharge of £100,000 per project, making many projects financially unviable for house builders.
’We are deeply concerned that an inflexible approach by local authorities could be preventing smaller house builders from taking on otherwise viable projects,’ said John Allan, national chairman of the FSB.
‘It’s a lose-lose situation for everyone – smaller developers, local authorities and those in desperate need of local affordable housing.
’When considering whether to make use of the levy, councils should take a more flexible approach. They should consider the size of the proposed project when deciding how to set the levy, and ensure small house builders aren’t overburdened with unaffordable costs.’
