Legislation in new parliament may allow councils to widen the scope of amenities to be funded

Developers may face increased planning gain costs if government proposals for overhauling the section 106 system are implemented.

It is understood that the communities department intends to use the Planning Reform Bill, announced in the Queen’s speech in Tuesday, to introduce a planning charge.

This is despite scepticism in the industry that the charge required enabling legislation.

The tariff is to be modelled on the “roof tax” piloted in Milton Keynes, whereby a developer pays a sum to the council for every housing unit it builds, and this goes towards for local infrastructure. These proposals replace plans for a planning gain supplement, dropped last month.

At present, councils are able to ask developers to fund only infrastructure such as access roads that “mitigates the impact of a development” or community facilities. Developers are concerned that changes to the system may give councils a legal right to ask them to fund a wider range of amenities.

The bill, due to be published in the next few weeks, is intended to spell out what councils can ask for, and the government is negotiating with bodies such as the Home Builders Federation over what this will be.

Michael Chambers, the British Property Federation’s director of regeneration and development, said: “There was concern that a system based on existing section 106 powers could be challenged in court.”

A communities department spokesperson said: “A big part will be about capturing more of the uplift in the value of land as a result of planning.”

John Slaughter, HBF external affairs director, said: “We welcome clarity into what can be funded under the charge. One of the issues has been that it’s been an open-ended system.”