Milton Keynes council to levy planning tax of £20,000 per home

Developers would pay about £18,000 to £20,000 for each home they build.

The money raised, which could total more than £60m a year, is expected to fund infrastructure. The tax may also be rolled out in the government’s other housing growth areas.

John Best, the council’s chief executive, said: “Milton Keynes council is supporting the proposals from [growth area agency] Milton Keynes Partnership that will create a significantly greater contribution from developers towards infrastructure.

“We want developers to agree a substantially increased contribution to meet the needs of a growing community. In return, they will have greater certainty that schools and surgeries will be up and running as houses are built.”

The tax is a forerunner of the government’s proposed planning tariff, which it is set to consult on after the general election.

Previous versions of the idea have run into problems because setting a single tariff for one local authority area could prove particularly difficult in areas that mix very expensive and very cheap property. However, multiple tariffs in a single area would be complex to operate.

Developers were positive about the proposals for Milton Keynes. However, there were fears that the tariff could make it more difficult to mix affordable and market-price housing in a single scheme.

Michael Chambers, head of the policy unit at the Royal Institution of Chartered Surveyors, said: “Its impact on affordable housing depends on how the funds are allocated. A lot of people in housing associations would be loathe to move from section 106 [planning gain agreements], which is a means of delivering a proportion of social housing on specific schemes.”

Terry Fuller, chair of the affordable housing group at the House Builders’ Federation, said: “[The tax] is open, clear and speedy. Developers know from the outset that there is a flat rate to pay. You will get much faster planning decisions and developers will be able to deliver homes much more quickly. Instead of spending four years negotiating a section 106 agreement, it may only take four months, which is unheard of.”