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Experts warn greenfield taxes will only boost demand

Hefty new taxes aimed at putting the brake on housing over the countryside will not deter greenfield development but increase demand, experts fear.

The government is gearing up for an announcement next week on the controversial number of 4.4 million new homes needed by 2016. These are believed to include taxing landowners who sell land for development, and slapping VAT on those developments. Deputy PM John Prescott is expected to tell councils to increase new housing on urban sites by 10 per cent to 60 per cent of the total. This would increase brownfield development by 800,000 homes. Yet he is also also tipped to scrap the 'predict and provide' method of assessing housing needs, with regional planning conferences deciding future levels.

David Rose of the Royal Town Planning Institute warned that taxing greenfield development was no answer. 'A greenfield tax may have little effect on people's wishes to live in those areas, ' he said.

The desire to live in the countryside might also encourage people to pay higher prices, he added.

This could increase greenbelt demand, with prices being pushed up to lessen the blow of taxation. If you restricted greenbelt development, the price of the land might rise. Instead, he said, the government needed to use a 'portfolio approach to development' focusing on wider issues such as social policy and transport. 'These will influence the number and types of households created. Radical design thinking is called for: building small detached houses or single-person flats is not the answer.'

Richard Feilden, vice president of RIBA public affairs, said there was a risk taxation would put a premium on greenbelt land and increase demand.

But 'a tit-for-tat tax could liberate more resources for brownfield development. We have a bizarre state where land at £2000 per acre rises to £400,000 per acre once it has planning consent.

There is no public benefit to that increase.'

He said the RIBA was tackling the issue in a 'Brownfield Initiative', looking at creative ideas for meeting housing demand. This will involve an exhibition of top urban schemes and should be started within weeks.

David Lock, chief planning adviser to the DoE between 1994 and 1997, said builders had taken measures to protect themselves from tax. And if it came out of landowners' pockets, they would still make a packet. 'Money raised should subsidise brownfield sites but nobody has thought up a mechanism on how it can be done, ' he said.

However, Martin Simmons, chief planner for the London Planning Advisory Committee, supported tax breaks for brownfield developments and penalties for greenbelt sites.

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