Halman on ... raising money from the land

The issue of land development taxation sets the pulses of property professionals racing.

Attempts to instigate a system that is both equitable and fit for purpose has often ended in failure and withdrawal.

Recently, much thought has gone into devising a system that can capture a proportion of development value uplift for the public good. Prime minister Gordon Brown has confirmed that he will introduce a form of planning gain supplement, but he has also invited alternative proposals and a debate on the merits before legislation.

In the short term, local authorities have embraced the idea, with supplementary planning documents to legitimise developer "contributions" linked to the grant of planning permission. These involve calculation of a payment related to public benefits such as public transport, open space and education. In effect, it is a levy on development, although there is no relationship to land or property values. Such payments are often calculated with a simple formula and there is no guarantee of how money will be spent. So this is a blunt instrument and a local development tax that should be discontinued.

The Conservative Party suggested at its conference that it would raise inheritance tax thresholds above £300,000. Proponents of the system argue that the tax should target the unearned windfall from the massive inflation in house prices. Yet this is unfair. One alternative would be to apply the proceeds of inheritance tax directly to the creation of affordable housing. Those homeowners who have benefited from spectacular gains would then subsidise those who are unable to afford to get on the property ladder.

- Gary Halman is a partner at commercial planning adviser HOW and immediate past chairman of the Royal Institution of Chartered Surveyors planning and development faculty. The views expressed are his own.

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