Kensington and Chelsea Council Set Precedent For Tax On The Super-Wealthy.
A millionaire hedge fund manager who has submitted plans to create a palatial basement underneath his London home has been hit with a £825,000 Section 106 Agreement, which is normally administered for large commercial developments. Although they have been used for domestic properties in the past, councils have never asked for such an exorbitant fee before.
The planners would not allow planning permission for the basement unless the fee was paid, calling some property experts to describe this as a super-tax on the wealthy. The council has justified its asking of the fee by stating that the project is a huge size, the equivalent of 20 two-bedroom flats and so does not fall into the normal domestic size developments. The project will include a 40ft swimming pool, bar, wine store, games room, cinema room, spa and treatment area.
Councils in London have demanded fees for domestic renovations in prime areas of London in the past but it is without doubt the largest sum that has ever been demanded. The council says that the money will go towards affordable housing in another part of the borough, something that London is desperate for.
Property experts are asking whether it is justified for councils to be charging such a huge amount because these types of properties already attracts a 7% stamp duty charge if they are worth over £2million. Although these experts are saying that it is a new tax on the super-wealthy, Gary Sector of the City law firm Addleshaw Goddard states, “This is a pretty unprecedented sum to pay for a domestic renovation, but in truth, we aren’t talking about a loft conversion here”
Mr and Mrs Griffiths, who own the property and the one next door, already have to pay £42,550 towards local projects under the “community infrastructure levy” as part of the planning permission. The 12,400 sqft redevelopment will reduce the number of bedrooms in the properties from eleven to seven once the redevelopment is completed.
However it has come to light that other luxurious homes in the area have tried to avoid having to pay out Section 106 Agreements. In fact Christian Candy, the famous property developer married to Holly Valance, has submitted plans for a 12,900 sqft basement extension to his property, Gordon House. Mr Candy is hoping that the grade II listed building, located in the grounds of the Royal Hospital Chelsea, will be exempt from the fee. The application submitted to the same council states “There are exceptional circumstances for not providing affordable housing in this instance due to the public benefits from the investment in the internationally significant Royal Hospital”. At present the planning application is still pending.
Other councils in London were not aware of the large Section 106 agreements being applied to domestic residences. Perhaps now that this has been applied they will all begin to charge for these types of “iceberg homes” as they are becoming increasingly known as. In the cramped capital it is becoming very popular to ‘dig down’ underneath your property to create more space, although neighbours do not approve. The work is very noisy, with dust and vibrations creating havoc and in some cases there has been subsidence in neighbouring homes due to the excavations.