Treasury plans new tax on property developers

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The Independent Online

The Treasury is to publish plans for a controversial new tax on property development after the general election. The levy would force housebuilders to pay up once they received planning permission on a site.

The Treasury is to publish plans for a controversial new tax on property development after the general election. The levy would force housebuilders to pay up once they received planning permission on a site.

The so-called "planning gain supplement" was one of the main recommendations in last year's Treasury-sponsored review of housing by Kate Barker, a member of the Bank of England's Monetary Policy Committee. A Treasury source revealed that it would publish a consultation document on the tax early in the summer, with the aim of drawing up firm proposals by the end of the year.

While the tax will worry some property developers, many support the Barker review because it has recommended a reform of an unpopular system known as "planning gain".

This allows local authorities to force developers to build community facilities in return for planning permission. However, some housebuilders have labelled this "institutional bribery", accusing councils of demanding too much.

A Treasury spokesman refused to comment on plans for the planning gain supplement, but confirmed that other Barker report recommendations would be out for consultation in the summer. These will include a long-term, national goal for affordable housing and proposals to merge regional planning bodies and regional housing boards.

There is growing frustration among property developers and housing charities at the slow progress in implementing the Barker recommendations. This has prompted the formation of More & Better Homes, a campaign group that counts Shelter, the CBI, Wilson Bowden and George Wimpey as members.

Adam Sampson, director of Shelter, said: "If the Government delays things too long, the momentum generated by Barker will disappear."

The Barker report said 260,000 new homes needed to be built each year to stop first-time buyers and public service workers being priced out of the market.

It is understood that the Office of the Deputy Prime Minister is against many of the Barker recommendations.

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