Tax Incentives for Development of Brownfield land

In October 2007, the Government published a summary of all of the responses it received from its consultation on tax incentives for brownfield land. The Treasury is proposing to extend tax relief for the remediation of contaminated land to include long-term derelict land and the cost of removing Japanese knotweed and withdraw the existing landfill tax exemption for waste arising from the remediation of land. Most responses to the consultation were supportive of the Treasury's proposals. They have said that they are committed to bringing the changes in time for the March 2008 budget.

Under the land remediation tax relief scheme, companies can claim a deduction in corporation tax for capital expenditure incurred in the remediation of certain contaminated sites. At present, the deduction is an amount equal to 150% of the qualifying clean up costs. The proposal is that this is now extended to long-term derelict sites. To qualify the site must have been derelict since 31st March 1998 and the Government would use the English National Land Use Database as its primary source of evidence.

There is a concern by the Treasury that landowners are claiming relief on land which has been remediated but not developed. The Government was thinking of making the relief dependent on the expenditure having been incurred in accordance with the planning permission or obligation. Most respondents thought this was a bad idea.

I will keep you posted on the proposals when these are published.

SDLT relief on Zero Carbon Homes

SDLT relief on Zero Carbon Homes ("ZCH") has just come into force on 7th December 2007 and will apply for all ZCH's acquired from 1st October 2007. On properties costing less than £500,000, there is a complete exemption for SDLT if this is the first acquisition of a ZCH. ZCH must meet the standards set out in the 2007 Regulations.

To qualify as as ZCH, the home must have:

• a heat loss parameter of no more than 0.8 watts per square metre
• a carbon dioxide emission rate of no more than 0 kg per square metre over the course of a year
• net carbon emissions not exceeding 0 kg per square metre over the course of a year

The latter is calculated by taking the annual CO2 emissions per unit floor area for space heating, water heating, ventilation and lighting and those associated with appliances and cooking and deducting the CO2 emissions saved by the use of energy generation technologies in or on the home and additional "allowable electricity". "Allowable electricity" means electricity generated from a zero carbon energy source. A "zero carbon energy source" includes wind, photovoltaic and hydro-electric power.

A potential ZCH has to be inspected by an accredited assessor and if satisfied a ZCH certificate will be issued.

Once the ZCH is built, the vendor of the property has to get the ZCH certificate from an accredited assessor and give it to the purchaser who can then use it to get the relief.

Although the relief has attracted a lot of publicity, it should be noted that the relief is only available until 30th September 2012 and the technologies required to make a property zero carbon are very expensive at present and may be more than the relief. Also, it is all very well having a zero carbon property and quite another thing to run a home using energy efficiently. It's all back to turning off lights, shutting doors and windows so that heat doesn't escape and using the right light bulbs, and making sure monitors, TV's and eletrical appliances are turned off at night just as much as having an energy efficient building and using renewable energy sources. Time will tell if we see these properties in any great number on the market.

Carbon Footprint Calculator Launched by Environment Agency

The Environment Agency ("EA") has just made its carbon footprint calculator available to the UK construction industry. This calculator measures the amount of carbon dioxide generated by construction projects. It was developed by the EA for its major construction projects and it has now made it available to other construction companies, consultants and government bodies. It can estimate the amount of carbon dioxide emitted by:
-the raw materials used
-the transportation of raw materials and employee travel
-site activities, such as earthworks and excavation
The tool allows comparison of waste management options and saving to be made.
The Carbon Trust has also recently launched a carbon footprint calculator for all business sectors.
The EA's calculator will be especially useful for large-scale construction projects where the developer is required to prepare a Site Waste Management Plan which is compulsory from 2008.

Fast Track Option Agreements

We keep hearing horror stories about deals and opportunities lost because of the delay in the legal process and we think we have found a possible solution which would be of interest to developers and landowners alike. We can get an option agreement exchanged on hotly sought after site in as little as 24 hours. This fasttrack service obviously requires us to drop everything and attend an all parties meeting to accelerate the usual lengthy process of drafting, negotiating and amending an Option Agreement and so there is a slight premium added to the standard fee for this special expedition. Searches and title investigation can either be left till after exchange or an exchange can proceed on the basis of title investigation only. If searches later prove to be adverse, then the Agreement gives the developer a right to rescind. We have been using a precedent from an organisation called PLC which attempts to strike a fair balance between landowner and developer and most large firms would instantly recognise the agreement. This greatly speeds up the process of agreeing the document. If a landowner does not have a particular solicitor who he insists on using, we can recommend some small firms who are familiar with the PLC option agreement and would be happy to drop everything to see a rapid exchange of the Option Agreement. When negotiating the option with the landowner, it might be a further incentive for the landowner to use one of the smaller firms we can recommend if the developer offers to pay their legal fees. If you would like further details contact me via the blog or my partner, Karl Reynolds at karl.reynolds@trethowans.com.