Local councils face a £6bn fall in contributions from property companies this year as developers halt work and renegotiate plans in the face of the industry’s worsening crisis.

Income from planning obligations, the process through which councils give planning permission in return for contributions in cash, affordable housing and infrastructure work, will fall by around two-thirds because of a sharp slowdown in development, says EC Harris, a consultancy.

The prediction comes as MPs on the Commons communities and local government committee warn today that the government is unlikely to meet its ambitious housing targets as a result of the downturn. Surveyors expect the number of homes built in 2009 to be well below 80,000, some way short of the 240,000 official target.

Financial Times