Property developers say they are being put off building homes by councils which enforce charges on uncompleted buildings.

The policy of issuing so-called completion notices on houses to allow local authorities to start collecting council tax has been criticised by builders in Kent.

Under planning laws, councils are allowed to set a date when they can start enforcing the charges once a building is structurally complete or where the structural work could reasonably be completed within three months.

The policy – which implements council tax regardless of whether the building is finished by that date – has attracted anger from groups like the Federation of Master Builders, whose chief executive Brian Berry called for it to be scrapped.

He said: “It has become relatively commonplace for new homes to be deemed complete for the purposes of council tax long before they are actually inhabitable.

“This is sometimes the case before even basic work has been completed, such as the walls have been plastered or the floors have been concreted.”

All councils in Kent issue completion notices, although Dartford did not respond to correspondence.

Mark Quinn, managing director of Canterbury-based developer Quinn Estates, said: “This is a very negative measure and will prove a huge disincentive for developers to build houses in what is already a challenging environment.

“Residential empty rates could potentially have the same effect as empty rates liability had on the commercial sector ie no one built speculative commercial space.

“It will result in borderline viable schemes being binned and instead of generating revenues for councils it would have the opposite effect with fewer houses being built and therefore less council tax being paid.

“There is already a chronic supply problem in commercial property and my prediction is the same would happen with the residential sector, at a time when we need to encourage house building and provision of good quality homes.”

Martin Hart, managing director of Folkestone-based Pentland Homes, said: “It’s common practice and something we have to pay even when the house is nowhere near habitable.

“We pay more for show units as these are business related and even pay for temporary site compounds.

“It all hits the viability of the scheme but it is something we allow for.”

However, councils said the measures were rarely used on properties which had not been occupied.

Swale council spokesman Philip Sutcliffe said: “We work with most of the building companies who have developments in the area and quite often the properties are not brought into the council tax list until they are actually occupied.”

Maidstone council Martin Oxley spokesman said: “We do issue completion notices if the case warrants it. However, this only happens on a very small number of occasions each year.”