First time buyer news: Land tax to stifle affordable homes market

08-May-2006

Affordable homes in the UK are to be jeopardised by a new government proposal to tax property development, according to latest research.

A report by the Royal Institution of Chartered Surveyors (Rics) and the British Property Federation (BPF) reveals that first-time buyers may be affected by the tax.

It is thought that the intention behind the Planning Gain Supplement (PGS) is that revenue from uplift in land value is collected by the state and used to pay for infrastructure.

Aspiring first time buyers considering affordable housing options should work with a good mortgage broker.

However, in reality, the lack of political consensus means that landowners will hold back on developments in the hope that the next government will overturn the tax.

"Due to the long-term nature of the planning cycle, landowners can afford to sit on land until it is most advantageous to develop it," comments Rics chief executive, Louis Armstrong.

"PGS is a disincentive to bringing land forward for development and the timing couldn't be worse," he added.

First time buyers can make buying a new home affordable through a 'gifted deposit' scheme whereby a deposit is not required just the cost of professional and arrangement fees of £5000

The proposals came under the scrutiny of the Office of the Deputy Prime Minister select committee last week.

Mortgage lenders have risen to the challenge of creating a growing number of options for first time buyers.

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