The London Borough of Croydon's preliminary draft charging schedule, which sets out how it plans to charge the Community Infrastructure Levy (CIL) in its area, proposes to exempt residential developments in the centre of Croydon from the tariff.
But the council plans to charge developers who build housing outside central Croydon £120 per square metre of floorspace, the document reveals.
The document, which was due to be approved by councillors as Planning went to press, was published as two councils outside London prepare to have their draft charging schedules examined by planning inspectors later this month.
Newark and Sherwood District Council and Shropshire Council are bidding to become the first to set up the levy.
But Newark and Sherwood Council has lodged an objection with Shropshire Council about its plans to apply zero rates to commercial schemes as it fears this could set a precedent that would "enable any charging authority to set a tax that will selectively favour one development sector over another" (Planning, 1 July, p15).
Croydon Council chief executive Jon Rouse said he was aware of the dispute, but he added that Croydon's decision to exempt residential schemes in the town centre from CIL was based on a study carried out by property firm BNP Paribas Real Estate on the viability of the charge.
The council's preliminary draft charging schedule said: "The evidence suggests that residential development in the Croydon metropolitan centre might not be able to support CIL.
"In large part, this is due to the extra build costs relating to the high-rise development characteristic of the area, which is important to meeting Croydon's growth objectives."
Masterplan documents intended to guide planning decisions in Croydon's town centre over the next 20 years were due to be presented to the council's cabinet this week as Planning went to press.