The property industry has delivered a damning verdict on planning gains supplement (PGS) as consultation on the proposed land tax ended this week
The British Property Federation (BPF) claimed Gordon Brown’s proposals for a windfall tax on the uplift in land value showed a “fundamental lack of understanding of the development process”.
Chief executive Liz Peace warned the tax could harm regeneration and restrict the supply of land, holding up vital work and threatening major developments.
She said: “At a time where ministers are setting out targets to improve the supply of housing it seems inconceivable that so much public money can be wasted consulting on a tax which successive Labour governments have tried and failed to introduce because of its impracticality.”
The BPF called for brownfield developments to be exempt, and warned scaled-back section 106 agreements would threaten “development-critical infrastructure”, forcing developers to pay for the infrastructure twice “simply to make their development viable”.
Jasper Masters, senior director of agency, development and corporate services at CB Richard Ellis, said: “Development values are a matter of conjecture and educated guesswork. Appeals will be inevitable and will add further uncertainties and time delays.”
He added that because PGS is paid when value has been “created, but not realised”, unlike phased planning obligations, it bore no reference to the profits from an individual scheme.
Michael Crook, chair of Cushman and
He said: “Even if the cost of collection was only 10% that is a lot of money being taken off developers.”
Eversheds said it had received an “overwhelmingly negative response” from clients and warned uncertainty over technical issues could have a “devastating effect upon the development industry, and cause chaos for local authorities and the planning process”.
The CBI responded that PGS would have even greater implications for small businesses, most of whom did not currently face planning obligations.
PGS has emerged as the treasury’s “lead option” for raising money for infrastructure following Kate Barker’s 2004 review of housing supply.
However, government has been urged to consider alternative proposals, including revamped section 106 agreements or a Milton Keynes-style roof tax.
Jeremy Edge, head of
“At the moment developers and land owners are entering into PGS break clauses in agreements so they can assess how bad the impact is likely to be. If it is too bad those agreements will be torn up.”
DTZ director Peter Weatherhead said this would be exacerbated by political uncertainty after Conservatives pledged to repeal the tax.
“It has been tried at least four times before and exactly the same threats are being made now. It could be that developers gamble and hold back,” he said.
The property industry delivered a damning verdict on planning gains supplement (PGS) as consultation on the proposed land tax ended this week
The British Property Federation (BPF) claimed Gordon Brown’s proposals for a windfall tax on the uplift in land value showed a “fundamental lack of understanding of the development process”.
Chief executive Liz Peace warned the tax could harm regeneration and restrict the supply of land, holding up vital work and threatening major developments.
She said: “At a time where ministers are setting out targets to improve the supply of housing it seems inconceivable that so much public money can be wasted consulting on a tax which successive Labour governments have tried and failed to introduce because of its impracticality.”
The BPF called for brownfield developments to be exempt, and warned scaled-back section 106 agreements would threaten “development-critical infrastructure”, forcing developers to pay for the infrastructure twice “simply to make their development viable”.
Jasper Masters, senior director of agency, development and corporate services at CB Richard Ellis, said: “Development values are a matter of conjecture and educated guesswork. Appeals will be inevitable and will add further uncertainties and time delays.”
He added that because PGS is paid when value has been “created, but not realised”, unlike phased planning obligations, it bore no reference to the profits from an individual scheme.
Michael Crook, chair of Cushman and
He said: “Even if the cost of collection was only 10% that is a lot of money being taken off developers.”
Eversheds said it had received an “overwhelmingly negative response” from clients and warned uncertainty over technical issues could have a “devastating effect upon the development industry, and cause chaos for local authorities and the planning process”.
The CBI responded that PGS would have even greater implications for small businesses, most of whom did not currently face planning obligations.
PGS has emerged as the treasury’s “lead option” for raising money for infrastructure following Kate Barker’s 2004 review of housing supply.
However, government has been urged to consider alternative proposals, including revamped section 106 agreements or a Milton Keynes-style roof tax.
Jeremy Edge, head of
“At the moment developers and land owners are entering into PGS break clauses in agreements so they can assess how bad the impact is likely to be. If it is too bad those agreements will be torn up.”
DTZ director Peter Weatherhead said this would be exacerbated by political uncertainty after Conservatives pledged to repeal the tax.
“It has been tried at least four times before and exactly the same threats are being made now. It could be that developers gamble and hold back,” he said.
