Planning Gain Supplement (PGS) is a proposal for a fixed levy on



the enhanced land value after it receives planning permission. It

is the Government’s intention to move forward with this new land

tax if, after further consultation, it continues to be deemed

workable and effective and PGS will then come into force in 2009.

The property industry is firmly against the implementation of PGS

and there was qualified support for an extended role of S106

Agreements.

Calculating PGS

Below is how we expect PGS to be calculated with an example to

illustrate.

Current Use Value (CUV) Planning Value (PV)

PV – CUV = uplift

PGS liability = PGS rate (20%) x uplift

An example, 5 acre greenfield site:

CUV = £20,000

PV = £4,020,000

Uplift = £4m PGS = 20 % of £4m = £80,000

Main Feature of PGS

The main features of PGS are that it would apply to residential

and non-residential development, the S106 obligations would be

scaled back and that the revenues would be dedicated to local

communities and the provision of infrastructure.

Problems with PGS

Many people have argued about the problems with introducing PGS,

and these are summarised in the following points:

• Transitional arrangements

• Make your planning application now

• Thresholds

• S106 to continue

• Will it affect supply of land

• Allocating PGS revenues

• Added bureaucracy

Benefits of PGS

The Government are committed to PGS and say the it will improve

efficiency and speed up process. It will assist the property

sector as it will provide certainty, and reduce the wide

variations in S106 that currently occur. Also, the revenue from

PGS will help to fund infrastructure on a local and regional

basis.

Conclusion

Richard Hegarty concludes, "The PSG will have a major influence

on the land supply available for development. I think some

landowners may decide to act very quickly before PSG comes into

force to avoid paying, but many landowners who have thought about

selling will simply keep their land and hope for a change in

policy in the future."