Why The Heritage Sector Needs Incentives (part 2)

Professional Associations


image002In the last blog I gave you the top 5 reasons for incentivising cultural built heritage for privately maintained heritage buildings.  However, for those owners who cannot afford to maintain their listed properties, ‘compensation’ lies at the core of this much vexed issue. Compensation can be dispensed by planning authorities in six different ways.

The most common form is by way of a planning advantage i.e. more space, greater density or lower level of compliance with pre-set planning regulations like parking, setbacks or required landscape areas.

Another form of incentive commonly used is by way of exchange such as façade easements, transfer of development rights or façade donations.

In this form, private owners provide the authority with a public benefit (renovated facades or agreeing not to add floors to their heritage buildings but being granted the opportunity to sell the otherwise unrealised space to the market) or in exchange for being granted a planning right over and above the pre-set criteria applying to all other non-heritage listed properties in the designated exchange area.

A third type is by way of abatement such as land tax relief, VAT reduction, rate relief or tax credits accumulated through the carrying of works to heritage properties. This type of heritage incentive is used profusely in the USA under the ‘Rehabilitation Tax Credit’ Scheme and was until recently used in the UK (VAT relief).

image004A fourth type of heritage incentive is by way of promotion i.e. campaigns by the presiding planning authority to promote cultural built heritage in order to raise awareness of its importance to local communities. This usually takes the form of plaques, demonstration projects, design guidelines or public works such as street lighting, streetscape upgrades, signage and renovated retail strips (Mainstreet programs especially in country towns). Often such campaigns are linked to fiscal forms of incentive called grants whereby the authority offers to contribute to the upgrade of privately owned heritage places. Grants are dispensed extensively by English Heritage under the Heritage Lottery Fund (HLF) which has been going since 1994 and has contributed £4.4 billion to the upgrade of the UK’s CBH. The HLF is directly linked to educational and promotional campaigns and has successfully raised the efficacy of CBH throughout the UK.

A fifth type of incentive is by way of acquisition or restrictive covenant whereby the authority purchases a heritage property from an owner in order to bring the building under renovation and make better use of it. Occasionally, the authority may then sell the property back into private ownership but with restrictive covenants thereby limiting the type and extent of change allowed to be made to the subject heritage property.

Lastly, there are augmented financial incentives such as low-interest loans and mortgage guarantees in which the authority offers to make up the difference between commercial banking loans and a pre-set lower interest rate loans or offers to go guarantor for the private owner who otherwise would not be able to secure finance from a banking institution. In summary, the six incentive types are;

· planning advantage;
· public/ private exchange;
· tax credit and rate relief schemes;
· Promotion of CBH via grants under targeted upgrade or maintenance campaigns;
· Acquisition and restrictive covenants by municipal authorities;
· Low cost finance and mortgage guarantee

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