Why will a HART Credit Work in the UK?

HM government has embraced tax credits

With the Community Investment Tax Credit (CITC), which goes live in April, 2003, HM government has shown its interest in tax credits.
DPM Prescott and Chancellor Brown both endorsed tax credits as a delivery vehicle in October, 2002 speeches to the Urban Summit.

Tax credits are a proven source of gap equity

Affordable housing. More than 1,000,000 apartments produced, £60 billion cumulative credits allocated.
Historic rehabilitation. More than £5 billion cumulative allocations across a broad spectrum of property and tenure types.

All key principles (allocation, market competition, pay-for-performance, enforceability) have proven successful in the US experience.

Tax credits promote regional autonomy

In the US, state allocating entities are free to tailor state-level allocation rules and scoring criteria that meet state policy goals. States revise these goals and criteria annually based on experience and changing priorities.
Multiple state allocators encourage best-practise sharing of experience.
Annual feedback cycles mean rapid programme innovation; problem areas are swiftly identified and corrected in future years' cycles.
State-level decision-making contributes to a vast spectrum of alternative approaches and regional priorities. Allocation plans and allocation strategies vary significantly based on state and local needs.

Addresses critical needs: brownfields and urban regeneration

The HART Credit is designed to work exclusively in brownfields. Its gap funding will help overcome cost penalties of working in brownfields.
The HART Credit is congruent with higher-density, adaptive reuse solutions.
It can be focused exclusively on regeneration areas and works across the whole range of tenures (residential and retail). Thus it will catalyse neighbourhood change.
The HART Credit will stimulate higher local values (captured later in rates).

Funds gaps that otherwise stymie development

It will close the financing gap in schemes that are otherwise not feasible.
Delivers ongoing affordability in schemes that otherwise would not include such.
Subsidy levels will taper off as markets improve.

Complements grants

The HART Credit will eliminate restrictions inherent in housing grant regime.
It targets a broader range of recipients and larger-scale schemes (see next section).
It does not replace grant but rather is complementary with grant.

Additionality

Will lever other resources: in deprived areas, ±150%, in high-value areas, HART Credits will lever ±300% (and will buy affordability).