Why a Housing and Regeneration Tax Credit (HART Credit)?

Why a Housing and Regeneration Tax Credit (HART Credit)?

Why a tax credit?

Compared with grants, tax credits have proven a superior vehicle for government resource delivery into affordable housing and urban regeneration programmes. Credits:

Pay for performance: before, during, and after development.
Transfer development risk from government to sponsoring entities.
Bring in market mechanisms and market forces.
Are provided via a permanent tax mechanism rather than a vulnerable appropriation method that counts against PSBR.

Why focus it on Housing And Regeneration?

Throughout Britain, our cities struggle with the twin problems of neighbourhood renewal or affordable housing shortage. While regions may experience differing levels of each, in practise they are often co-dependent: neighbourhoods become healthy only when improvements in housing are matched by regeneration and job creation.

To endure, change must also be large-scale, affecting the entire neighbourhood, and encompassing all tenures. By far the most common, and the most difficult to stimulate without gap funding, are affordable housing and neighbourhood retail (flats over shops).

Additional benefits to government

Above and beyond its direct production stimulus to affordable housing and urban regeneration, the HART Credit will deliver to government significant additional benefits, among them:

Will stimulate higher local values (captured later in rates).
Delivers ongoing affordability in schemes that otherwise would include such.
Required subsidy levels will taper off as markets improve.
Will lever other resources: in deprived areas, ±150%, in high-value areas, HART Credits will lever ±300% (and will buy affordability).
Levers up to 80% more private investment (and compatible with asset-based finance rather than entity-level finance).
Brings new participants into affordable housing and urban regeneration.
Geographically precise intervention in essentially brownfield areas.
Closed targeted to delivery of PSA targets (neighbourhood renewal strategy, balancing supply and demand, brownfield redevelopment).
Inexpensive for government to administer.
Efficient and effective compliance and enforcement