Planning Gain Supplement to be Replaced by Tariff System
The concept of a ‘Planning Gain Supplement’ (PGS) was first suggested in the Barker Review Final Report 2004. It was due to be introduced in 2008 as a tax based on the uplift in the value of land as a result of being granted planning permission. Market speculation anticipated a PGS rate in the region of 20% of this uplift.
Intense objection from all those involved in the property industry was immediately raised, in anticipation of a strong negative effect on the release of development land and the speed of the development process, with prolonged disputes over valuations expected. Small scale development in rural areas would have been particularly badly affected under the PGS scheme.
Strong lobbying by a wide range of those involved in the property industry, including RICS, has finally resulted in the government announcing in its pre-budget report of 9th October 2007 that it is abandoning PGS in favour of a different method of raising revenue for infrastructure costs. Yvette Cooper has told parliament that the new system will build on current Section 106 agreements and the tariff formula pioneered in Milton Keynes.
A tariff-based tax is widely popular in the property industry and already used by a number of Councils, most notably Milton Keynes. The tariff based system is likely to be set at the local level according to planned infrastructure needs and levied on all but the most minor developments. In councils already using a tariff system, it works in such a way that the cost of the infrastructure required by the development is assessed, and the council then typically ask for a third of this figure from the developer involved. This system would match the fee payable to the scale of the development and thereby provide a much fairer system. It is widely expected that the final scheme adopted will provide much greater incentive for small scale rural development and the release of development land by landowners than the previous PGS proposition.
Further details are expected to be announced shortly, with the necessary legislation likely to be included in the forthcoming Planning Reform Bill.
For further information please contact Caroline Green on 01530 410851.
- Ashby de la Zouch
- 01530 412821
- Banbury
- 01295 271 555
- Knutsford
- 01565 757970
- Market Harborough
- 01858 410 200
- Newark
- 01949 851815
- Southampton
- 02380 883150
- Stafford
- 01785 220 044
- Worcester
- 01905 453275
