Inflexible local authorities could be costing small house builders millions of pounds, according to a new report from the Federation of Small Businesses (FSB).
The report found that councils take no account of the higher building costs associated with projects of ten units or less, which is found in developments run by smaller firms, when calculating the charge developers pay when granted planning permission.
According to the FSB local authorities could be overcharging small firms by as much as £100,000 per project, likely pushing many urban brownfield housing projects beyond viability.
John Allan, National Chairman of the Federation of Small Businesses, explained: “It’s a lose-lose situation for everyone — smaller developers, local authorities and those in desperate need of local affordable housing.”
Councils should consider the size of a proposed project when deciding how to set the levy, Allan said, and ensure that small house builders are not disproportionately burdened.
He concluded: “This approach will help to deliver the houses we need in the places we need them. It will also support the local small businesses and their suppliers, which are at the heart of our local communities.”