IN HIS pre-Budget report, Chancellor of the Exchequer Alistair Darling announced that the unpopular Planning Gain Supplement (PGS) – a proposed tax on the rise in land prices following successful planning permission – would be shelved while new schemes were considered.

This is good news as the Planning Gain Supplement system was considered unworkable, similar to the old development land tax, and it was unclear whether local communities impacted by development would get the money re-invested from the Government.

The PGS was designed to replace Section 106 agreements, which are slowing down the planning process as negotiations can take months after developments have been given the go-ahead. A fairer and more accountably-direct method would be to implement a roof tax which would give more flexibility to local planning authorities.

A roof tax would mean contributions from landowners or developers based on the number of dwelling units involved in a scheme with a separate contribution for each employment site calculated on the basis of floor area.

A percentage of money is paid upfront while the rest is paid in instalments when development starts and as houses or flats are sold. The system has already been successfully trialled in Milton Keynes. The affordable housing requirements identified in each local authority Local Development Framework will not be effected by these proposed changes.

The theory is Local Planning Authorities will identify the need to increase the provision of schools, roads, healthcare and other infrastructure to accommodate development.

They will then be able to borrow funds against a promise to pay by landowners/developers through the number of plots on the approved schemes with the Government acting as guarantor. Hopefully it will only apply to larger-scale developments and will be taxed and spent locally for the community.

This should be a fairer method and should encourage more landowners to bring forward plots for development as it would give them an idea of taxation involved from the outset. It should also end the site-by-site negotiations of the current 106 system which is slowing down the delivery of new homes.

* Peter Randall can be contacted at p.randall@rpcland.co.uk or visit www.rpcland.co.uk