The Home Builders Federation is working on alternatives to the planning gain supplement (PGS), after Gordon Brown last week challenged the industry to present him with a better way to fund infrastructure.
The HBF expects to announce its proposals in September.
John Stewart, the federation’s director of economic affairs, said: “PGS could not be made to work.”
The main alternative is the “roof tax” being piloted in Milton Keynes by English Partnerships. Under this scheme, developers pay councils a sum based on the number of homes being built instead of negotiating a section 106 agreement.
Peter Coles, development director of Hammerson, argues in a paper for a recent Smith Institute book on planning reform that many of the benefits of the PGS could be delivered through the tariff.
The Treasury wants a form of levy on land that has secured planning permission, but has signalled that it would consider alternatives to the PGS in response to a backlash against proposals.