Home front — Without more available land and a faster planning process, the PGS will fail

PGS. That innocuous combination of initials has become one of the most challenging debates in the housebuilding industry: whether the government’s plan to tax land that wins planning permission will work. Last month, research commissioned by the Home Builders Federation (HBF), in partnership with several organisations and trade bodies, raised serious questions.

The HBF’s attitude to this complex issue is comparatively simple.

We urgently need to increase the rate of homebuilding in the UK. We also accept the logic that, if we are to build more homes, we must find mechanisms to fund and deliver the required infrastructure. We have therefore framed our position against two basic tests: whether the PGS will bring more land forward for development, and whether it will help speed up the planning process.

Unfortunately, there is little evidence to show that the planning gain supplement would help provide more land. Indeed, if the Conservatives continue their opposition to the proposed levy, landowners are likely to sit on their assets and wait for the electoral tide to turn.

Equally, it seems highly unlikely that the PGS would lead to efficiencies in planning. Tortuous negotiations would continue with local authorities on scaled-back section 106 agreements, especially those concerning affordable housing, while the PGS would impose fresh complexities. We know, for example, that the PGS, as it stands, would create considerable scope for debate and interpretation over land valuations.

Perhaps most damning of all, the report demonstrates that the PGS, if levied within the broad spectrum of rates used in the research, may not deliver the rise in funding for investment needed to support housing growth.

It seems clear, therefore, that the government needs to take a long, hard look at the issue. More thinking, consultation and research is required. The HBF already has a high-level group looking at the issue and we are keen to work with the government to find the most appropriate and workable way to achieve its objectives.

Last month the Joseph Rowntree Foundation published research into the impact of undersupply. This revealed another sobering snapshot of Britain: one-third of all working households under 40 cannot afford to buy a property, even at the lowest end of the market. Statistics such as this, capturing the needs of real people in real life, place a big premium on getting it right.