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News Release from: Chartered Institute of Building [CIOB] | Subject: Planning gain supplement
Edited by the Buildingtalk Editorial
Team on 22 December 2005
Planning gain supplement under scrutiny
The question to be discussed at a forthcoming conference in London is how will the planning gain supplement work in practice?
at London conference Judging from the wording of the United Kingdom Government's consultation document on the planning gain supplement, Ministers are placing a great deal of faith in the part the proposed new charge will play in realising its commitment to offer everyone an opportunity to live in a decent home at a price they can afford
This article was originally published on Buildingtalk on 3 Feb 2006 at 8.00am (UK)
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For English Partnerships, the main issue in the Government's Planning Gain Supplement consultation has been the funding of the infrastructure.
Set against the current problems of affordability faced by local authorities and developers, not to mention people awaiting the chance to get onto the property ladder for the first time, this appears to be an exceptionally bold declaration.
The question to be discussed at a forthcoming conference in London is how will the planning gain supplement work in practice? So far comment on this has been muted.
In a policy paper published in October, the RICS dismissed the planning gain supplement as unworkable and told the Government it should not be adopted.
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The British Property Federation has argued in favour of planning gain tariffs to fund infrastructure rather than PGS, using powers under Section 106 of the present legislation.
But the Government believes that the planning gain supplement is likely to be a more effective means of capturing land value uplift to support the expansion of housing supply, with the proviso that it proves possible to implement the new tax successfully.
One of the first opportunities in the New Year to debate the issues and hear what economists and property market experts have to say about it occurs on 31 January 2006 when the planning gain conference deferred from last October is revived under the title "The Coming Land Tax: How will it affect your business?".
The meeting, to be held in London's Lion Court Conference Centre, will be chaired as previously by Liz Peace, chief executive of the British Property Federation.
By that time the BPF will no doubt be able to give a preliminary assessment of the effect the planning gain supplement is likely to have on companies owning, managing and investing in property.
It sounds at first hearing as though PGS will take a slice of the land value increment arising on the grant of planning permission, but this intention has been held out before.
The outcome previously was failure of the hopes invested in it and disruption of the land market, at the same time frustrating the aim of bringing more land forward for development.
If that happens again, it would place a serious obstacle in the way of the proposed expansion of house building to 200,000 new homes every year and block the promised return to housing affordability.
A Treasury speaker has been invited to open the conference with a statement on how PGS is expected to work and its role in financing the expanded infrastructure demand created by the determination to raise the rate of house building by at least one third over previous attainments.
But the January date is still within the consultation period on the planning gain supplement which is due to close at the end of February 2006 so what the Treasury is prepared to say may well be limited.
Planning value and current value.
Questions which might be discussed at the land tax conference could include some of those suggested by the Treasury and ODPM in the consultation document.
For example, the paper describes planning value as the market value of the land the moment after full planning permission is granted, and current use value as the market value immediately before that moment.
Responses are sought on what further clarifications might be needed about what is meant by planning value and current use value.
How can the self-assessment of PGS valuations and liability be made as easy as possible to comply with? When should payment of PGS occur? Should the development start notice triggering the payment of the charge be submitted to the local authority or to H.M.
Revenue and Customs? How should PGS revenues be used to fund strategic infrastructure at the regional level? Speakers at the conference include Yolande Barnes, Savills Research director, on the behaviour of land values and land price volatility; Cathryn Vanderspar, tax partner at Berwin Leighton Paisner, on the tax implications of PGS; Jeremy Edge, partner and head of planning, Knight Frank, on how the PGS proposals are likely to affect future planning gain negotiations.
Dr Vincent Cable MP, Liberal Democrat Shadow Chancellor of the Exchequer, is to speak on his party's response to current taxation proposals.
So far the Liberal Democrats have limited their comment to endorsement of the Government's belief that increases in land value created by planning decisions should help to finance the infrastructure needed to stimulate and service growth.
The afternoon session of the conference provides time for discussion from the property developer's viewpoint on whether the tax will aid or frustrate further development, led by Michael I Gunston, chief surveyor of the British Land Company plc.
The concluding sessions will centre on the wider questions of tax reform, one contribution from Professor John Muellbauer of Nuffield College who has already told the Treasury that the council tax is irrational, with zero marginal rates for the affluent and the highest rates for the poorest; and the other by Tony Lloyd of the Henry George Foundation who is expected to urge the adoption of land valuations as the universal tax base for the United Kingdom.
For further information on the Land Tax conference, go to www.newzeye.com/conferences_education/conferences.cfm E-mail conference@newzeye.com; Telephone Newzeye Conferences at 020 8969 1008; Fax 020 8969 1344.
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