LEGAL & FINANCE: Planning Law Looks like a Housing Tax

Article excerpt

The Government could be set to target private homeowners when it introduces its controversial Planning Gain Supplement tax in 2008.

That's the warning from property experts at MFG Solicitors in Worcestershire and Shropshire.

MFG partner Chris Bovey, head of residential conveyancing, said: "There is growing concern that the Government is considering levying the tax on homeowners for when they, for example, get planning permission to build an extension and there is an increase in the value of the property.

"When Gordon Brown announced his PGS proposals in the Budget, we understood his intention to be to capture a proportion of what he regards as 'unearned' and 'windfall' increases in land values that arise from the granting of planning permission.

"This would affect those selling off land for residential development in the hope of making a quick killing, and also major developers who assemble huge land banks to fuel their building programme.

"There was no initial suggestion that he was targeting those who were simply aiming to improve their existing residence."

He said that it would be difficult to put a specific figure on the

value of a building project such as an extension or a "granny" flat, and therefore it would be equally difficult to ascertain what "gain" had arisen.

"How you would estimate the 'gain' is hard to say. What the builder built it for, and what the estate agent tells you it is worth when the housing market is tough may not be too far apart, and who is to be the final arbiter? …