The government could undermine its own housing growth plans in south-east England if it introduces the planning gain supplement, a report warns this week.
The study says that the levy may discourage developers from building in growth areas where there is little infrastructure.
The government is expected to scale back its plans for the PGS and embark on a fresh round of consultation. The changes are likely to limit greenfield and not brownfield development.
The study says that the existing system of section 106 agreements allows developers to contribute to the cost of infrastructure. But under the PGS, which will be set and collected by the Treasury, there is no such guarantee. As a result, the study says, developers will build in areas where infrastructure is in place.
It says: “Without community infrastructure that would be guaranteed under section 106 agreements, PGS would paradoxically cause a reduction in housing delivery.”
The report claims the levy is unlikely to bring in more money for infrastructure and will hit smaller schemes disproportionately hard.
The report was jointly commissioned by the British Property Federation, the CBI, the Home Builders Federation and the RICS.