Chancellor of the Exchequer Gordon Brown has firmed up government
plans on a number of property issues that had been hanging
in the balance.
In December’s pre-budget report, he
- a consultation will be carried out
on the introduction of a planning gain supplement - a tax
on the uplift in land values after planning permission has
- residential property will not, after
all, be allowed to be included in self-invested pension plans
(SIPPs) from April 2006.
- real estate investment trusts (REITs)
will be included in the forthcoming Finance Bill and are likely
to be introduced this year; they will provide a way for people
to invest in residential property via pension funds despite
the u-turn on SIPPs.
- shared ownership schemes will be
- local authorities will be obliged
to accelerate planning consent for housing on brownfield sites.
The RICS says that while the idea
of harnessing some of the uplift in land values to fund local
services and infrastructure is laudable and viable, a simple
tariff would be much more practical than the proposed planning
gain supplement. The RICS wanted a range of options to be
consulted on and feels that the current plans show a fundamental
misunderstanding of how land markets work.
The CBI also voiced concerns about
a planning gain supplement. Director-general Sir Dibgy Jones
said “Any new land development tax, however the proceeds are
spent, could undermine the aim of increasing the supply of
housing, and could make some developments uneconomic.
In particular, a planning gain supplement would make development
of more complex or more risky sites, such as larger brownfield
sites, less attractive to developers. Areas of low prosperity
most in need of renewal could be made less viable for development.”
In relation to the governments shared-ownership
plans, the RICS believes that the scheme is too small to have
any real effect. While it will help a small fraction of first-time
buyers, the scheme will account for less than 0.5% of transactions
each year, benefiting only 20,000 buyers over a period of
Instead the RICS suggests that the government should
be looking to drastically increase housebuilding, through
both public and private sector provision. The organisation
cites the decline in government-sponsored housing over the
last 20 years as the more important factor in the affordability
crisis for those most in need.
Source : RICS Business
- Jan 06 issue