The new ULEZ charges have produced divided opinions

ULEZ expansion has 'touched a nerve' in London, but developers could be happy with the changes

This week, the Ultra Low Emission Zone (ULEZ) was extended to outer London.

On Tuesday (29th August), Mayor of London Sadiq Khan stretched the zone across all London boroughs.

The policy means any vehicle that does not meet the ULEZ emissions standards and isn’t exempt will be charged £12.50 per day to drive into the new zone, applying to cars, motorcycles, vans, specialist vehicles up to and including 3.5 tonnes, and minibuses up to and including five tonnes.

The scrappage scheme — which has been allocated £160m — will provide financial aid to successful applicants needing to scrap non-compliant vehicles, however the ULEZ has remained controversial.

Development finance professionals have given mixed views on what the expanded ULEZ zone will mean for the market.

Callum Taylor, CEO at Portway Finance, commented: “I am a strong believer that cleaner air will bring a greater demand for housing, which can only be a positive for developers.

“The scheme should improve living conditions of those within the new ULEZ zones; if you look at the statistics with the original ULEZ zone, prices increased more within these areas.

“I believe that developers will be happy with the changes; reduction in air pollution and traffic is positive for their prospective buyers.

“One section of the market that might be affected by these increased prices is first-time buyers.

“We still need to find a solution for this, whether that be planning or a new Help to Buy scheme [as] this sector is still underserved.”

Rico Wojtulewicz, head of housing and planning policy at the National Federation of Builders, added: “Many simply view this as a small cost but, in reality, it is a stacking cost — many workers traveling to jobs or head offices will pay an extra £12.50, and employers will need to subsidise that or fear losing staff.

“Deliveries to builders’ merchants will be more expensive and perhaps even delayed, as companies will attempt to load maximum stock in one trip.

“Some companies and workers from outside the capital have already said they will reconsider working there, particularly as they will not be eligible for support.

“And finally, costs to upgrade or retrofit vehicles or fleets so businesses are compliant can run from tens or hundreds of thousands [of pounds], and all that needs to be paid for — older workers will also struggle to pay back loans for new vehicles, so are already leaving the industry and new businesses may not start up, as they are not eligible for grants.

“All this stacking will see material prices and quotes go up to pay for increased costs, and with workers and businesses now avoiding the capital, greater competition for a shrinking pool of workers will see the price of works rise naturally.

“For new-build housing — where costs are already high — the increase will be more manageable, but for renovations and smaller works, the rise in costs may be very difficult to swallow, especially for councils who have long pipelines of projects and are already cutting some due to material price inflation relating to Covid-19 and the Ukraine war.”

Chris Gardner, joint CEO at Atelier, said: “The ULEZ expansion has touched a nerve in many of London’s outer boroughs, where people tend to rely on their cars much more than those living in inner London.

“But while the new rules are forcing the drivers of non-ULEZ compliant vehicles to think about how they get around, the impact is focused largely on the car market rather than the property market.

“For many drivers, their car is their second biggest purchase after their home — but the two always come in that order.

“People choose where they live based on a number of factors — ranging from what they can afford to proximity to work, family and amenities — and then choose a car that fits their transport needs, rather than vice versa.

“While I don’t expect there to be a major shift in the property market as a result of the ULEZ expansion, it will accelerate the trend we’re seeing of forward-thinking developers adding EV charging points to their designs as a matter of course."


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