Select a region
Plans for a windfall "charge" to recover some of the vast profits generated when a field is rezoned for housing are on hold due to a lack of funding, it has emerged.
Last April, States Members backed the majority of a proposal from Reform's Deputy Raluca Kovacs calling for some form of charge – such as a tax or levy – to be introduced to raise revenue from any significant uplift in the value of land arising from when the land is rezoned or from when planning permission has been granted.
The successful proposition required Ministers to come forward with plans for new legislation by 31 March 2025.
But it's now emerged that work to do this hasn't been able to go ahead because the previous Government decided against funding it in the Government Plan.
Pictured: States Members backed the majority of a proposal from Deputy Raluca Kovacs calling for some form of charge to be introduced to raise revenue from any significant uplift in the value of land arising from when the land is rezoned or from when planning permission has been granted.
Following questions from Deputy Hilary Jeune, Environment Minister Steve Luce revealed that a bid had been made for funding that would provide resources to "research, analyse, consult stakeholders and provide recommendations" last year, but it was ultimately "unsuccessful".
"...The work required to be undertaken, to develop an appropriate charging mechanism and the legislation required for it to operate, remains unfunded and cannot, therefore, be progressed," he said.
As such, he said that he was unable to provide a timeline for the potential introduction of such a 'charge'.
"...This work will remain pending until such time that resources are made available to enable it to be undertaken," Deputy Luce said.
The idea of such a windfall 'charge' or 'tax' has been raised numerous times over the past quarter of a century.
In more recent years, successive Environment Ministers have struggled to get it over the line.
Former Environment Minister John Young also frequently called for the introduction of a land windfall tax.
His predecessor, Deputy Steve Luce, who resumed the role following the vote of no confidence in Kristina Moore, tried to introduce an obligation for landowners to pay for community infrastructure in December 2017, but it didn't go ahead after strong criticism from the construction and development industry.
At the time of putting forward her proposition last year, Deputy Kovacs outlined the significant value uplifts in land following development, giving the example of Field J1109 in St John.
It sold for £3.55m after it was designated an affordable-homes site in the Bridging Island Plan.
This represented an approximate 50-fold increase in value, as, prior to the rezoning, the 6.71-vergée site – located next to the former Sion Chapel – was estimated to be worth around £70,000.
Pictured: “Land that had a value of under £100,000 can be bought and sold for millions of pounds, within months of receiving approval for a change of use."
Deputy Kovacs explained that the aim of her plan was "not to raise token amounts of money to fund bus shelters or plant a few trees", but rather "to allow the States of Jersey to share in the uplift of land value created by rezoning for residential use".
“Land that had a value of under £100,000 can be bought and sold for millions of pounds, within months of receiving approval for a change of use.
“These conditions have existed for at least 30 years and the Government of Jersey has yet to positively intervene to profit from these increases in land value.
“Instead, being content to impose conditions on the type and scale of development - seeing a percentage for social rental, or first-time-buyers, or over 55’s as a positive outcome regardless of land price inflation.”
However, some – including the then-Housing Minister David Warr – warned that any new legislation must not "stifle development" by setting too high a charge, as developers will still need to ensure projects can still go ahead.
"The question now is how much should be recovered for public benefit," he said. "It’s important that projects are still viable."
"Common ground" found over rezoned land windfall tax
"Positive step" towards windfall tax on sale of rezoned land
OPINION: The taxing issue of land re-zoning
FOCUS: After 25 years of talk, is now the time for land windfall tax?
Comments
Comments on this story express the views of the commentator only, not Bailiwick Publishing. We are unable to guarantee the accuracy of any of those comments.