Consultation on Proposed Residential Property Developer Tax (RPDT)

May 18, 2021 2:04 pm Published by

On 29 April 2021, the Government launched a consultation on its proposal to impose a new Residential Property Developer Tax (“RPDT”) on annual overall profits of residential developers. It is not entirely clear in the consultation how site-specific development vehicles created by applicants would be dealt with.  The proposed RPDT is to be introduced on 1st April 2022 as part of a package of proposals to raise revenue for remediation work to unsafe cladding on high-rise residential buildings. The Government aims to raise at least £2 billion over a decade with the introduction of this tax.

This tax will sit alongside a new Gateway 2 levy which will be applied when developers seek permission to develop certain high-rise buildings in England.

Whilst the rate of taxation is to be determined, it is proposed that there will be an allowance so that only profits over £25 million will be taxed. The tax will be a fixed rate for the period and set so that it does not disproportionally impact housing supply.

Housing Secretary Robert Jenrick says:

“We’re making the biggest improvements to building safety standards in a generation, investing over £5 billion helping to protect leaseholders from the cost of replacing unsafe cladding on their homes and ensuring industry is held to account for the wrongs of the past. This tax will strike the right balance between developers making a contribution and ensuring fairness for the taxpayer.”

Financial secretary to the Treasury Jesse Norman said:

“Ending the use of unsafe cladding is a priority for the government, as it builds back better from the pandemic. Given the significant costs associated with the removal of unsafe cladding, it is right to seek a fair contribution from the largest developers in the residential property development sector to help fund it.

The government wants to ensure this tax is proportionate and works as intended, which is why it is launching this consultation today.”

Hotels, care homes, prisons, charitable housing associations will be excluded but comments are being sought on how the tax will apply to student accommodation and retirement schemes that offer less care functions. It is also proposed that the tax should apply to conversions as well as new development.

The Government feels affordable housing and Build to Rent development should both be caught by RPDT, as well as retirement development save for where care is provided.  The Government proposes to extend RPDT to include undeveloped land undergoing a change in use, for which planning permission to construct residential property has been obtained.

The Government has made it clear that the tax should not have a disproportionate impact on housing supply, or other government objectives on housing. Therefore, there is an urgent need to consider the impact that this tax would have on the care and retirement living sector. Care homes and communal establishments are exempt however at this stage it is clear that the Government are not sure which way to progress with regard to the ‘different forms of retirement accommodation.’


Student Accommodation is another area of uncertainty on how the tax implications will play out and is something to be watched over the coming months.


Given the importance of affordable housing, the government would like to seek views as to any potential impact the RPDT might have with regards to the supply of affordable housing.


It is apparent that the proposed tax will have varying effects on different sectors and types of accommodation. Whilst there is currently a lack of uncertainty on how the proposed changes will work, it is expected this will become clearer once the consultation has ended in July. If you would like to discuss a specific area, especially the effect of the proposed tax on retirement accommodation please do let us know.

The full consultation is now open, available here and runs until 22 July 2021.

If you would like any further information on this or would like TKP to produce a response on behalf of your organisation, please get in touch with us at 0117 9561916 or 01732 870988. You can also contact via email at .



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