View more on these topics

Government tax proposal ‘flawed’ say RICS

The Government’s proposals on land tax reform are ‘seriously flawed’ says a Royal Institute of Chartered Surveyors report.

The Planning Gain Supplement, advocated by Kate Barker in her report for government on housing supply, is seen as a means of funding infrastructure requirements. However, the RICS research suggests it is based on a misunderstanding of how land is valued, how planning gains arise and how the property market operates.

RICS say the key problem with the proposals is that planning permission is only one stage of development and the tax would be paid when the permission is granted, rather than on the actual and eventual gain in value.

The government’s proposals would have to be radically altered if PGS were to be introduced as it would involve the introduction of valuations for all affected sites and complex computations that would make it more akin to failed previous attempts to tax gains such as development land tax or betterment levy.

The RICS report considers a variety of alternative approaches including wider use of planning tariffs, a system already operated by some local authorities under which those granted planning consents for significant development pay a fixed scale of charges to meet future infrastructure requirements.

Louis Armstrong, chief executive of RICS, says: “Changes of this kind must be evidence based. RICS has supported previous attempts to capture development gains for the public benefit. However, despite the fact that its introduction would be a bonanza for Chartered Surveyor valuers, the proposed PGS looks unlikely to help in easing the supply of land for housing.

“Moreover, without a political consensus over such a tax it would encounter the same problems that crippled previous attempts to tax development gains.

“The planning tariff approach looks a better bet, though operating such a system in Hackney or Tower Hamlets would be a great deal more complex than doing so in places such as Milton Keynes where it is already working.”

The RICS research was carried out by Professor Tony Johnson, a leading authority on land development taxes and author of standard works on Development Land Tax, and by Chris Hart, a taxation expert with experience both within Government and the private sector.

Recommended

Tailors to take Mortgage Expo by storm

Mortgage Business Expo has teamed up with image consultants Dress2kill for the London Expo on November 16 and 17 2005. Visitors to the Expo at Earls Court 2 will for the first time be able to pay the image doctors a visit and get the prognosis on their fashion health. If your suits are flatlining […]

Self-cert offer from Capital

Capital Home Loans is offering free valuation on its 90% LTV self-certification tracker mortgage. The base rate plus 0.74% tracker allows borrowers to save up to 465 on valuation costs and gives borrowers a 0.5% discount until December 31 2007. Mike Healy, head of sales at CHL, says: “This must be one of the top […]

Citizens’ Advice backs FSA insurance review

Following the Citizens Advice Bureaus recent report on the selling of payment protection insurance, Select & Protect has backed the Financial Services Authoritys review of PPI and its bid to improve standards.Bruce Reid, managing director of Select & Protect, says: Payment protection insurance is sold to borrowers to offer peace of mind and reassurance that […]

More cover

Paymentshield has added home emergency cover and legal expenses cover to its building and contents insurance products. Both additions are free to new policy holders for 12 months from the policy start date.

Newsletter

News and expert analysis straight to your inbox

Sign up