Much needed affordable homes in the UK will be jeopardised by
a new Government proposal to tax property development, says the
RICS and BPF (British Property Federation).
The laudable intention behind the proposed Planning
Gain Supplement (PGS) is that revenue from uplift in land value
is collected by the state and used to pay for infrastructure
and housing where it is most needed.
In reality, the lack of political consensus means that landowners
will hold back potential development land in the belief that
the next government will overturn the new tax.
It will impose a tax on business expansion and take the means
of delivering local development priorities away from local government.
RICS chief executive Louis Armstrong, said: "Due to the
long-term nature of the planning cycle, landowners can afford
to sit on land until it is most advantageous to develop it. PGS
is a disincentive to bringing land forward for development and
the timing couldn’t be worse.
"The affordability crisis facing many people today can
only be improved by increasing the supply of housing. With the
best intentions, government is setting out to increase the flow
of land available for development but, because of a fundamental
misunderstanding of how the development process operates, its
proposals are likely to achieve the opposite result."
BPF chief executive Liz Peace, said: "The current planning
system ensures developers and local planners work together for
the benefit of their local communities.
"The PGS proposal removes this vital link between the provision
and the local benefit, will discourage development, and will
see money disappear into a central pot, rather than being raised
and used locally to meet local infrastructure needs.’
The proposals come under the scrutiny of the Office of the Deputy
Prime Minister (ODPM) select committee today, where RICS and
BPF will jointly make their representations.
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