The Government has dropped the proposed Planning Gains Supplement (PGS).
Chancellor Alistair Darling outlined in his pre-Budget report that the measure would not be introduced in the next parliamentary session.
It was hoped the levy would raise additional cash to invest in the infrastructure needed to support housing growth, but the property industry fiercely opposed the plan.
The levy, first proposed in Kate Barker’s review of Housing Supply, will be replaced by a number of ‘other charges’, which have been agreed by Government in consultation with industry.
The Government will legislate in the Planning Reform Bill to empower local planning authorities in England to apply new planning charges to new development, alongside negotiated contributions for site-specific matters.
Stewart Baseley, executive chairman of the Home Builders Federation welcomed the Chancellor’s decision.
“PGS was unworkable and we look forward to working with Government to develop further a tariff-based approach to help meet infrastructure costs through developer contributions,” he said.
“To deliver the much needed 240,000 new homes per year, it is vital we agree a workable system to raise additional funds for necessary infrastructure.”