The New Homes Bonus would be unlawful, an environmental campaign group has claimed.
Under the bonus system, councils would receive money from the Government to match the council tax raised from new homes over six years.
Ministers have said the bonus will tackle the housing shortage by creating and incentive for communities to accept development.
But the Campaign to Protect Rural England has argued this would be unlawful because the outcome of planning decisions by councils would be linked to their financial rewards.
It said this meant any planning permission linked to the bonus would be ‘tainted’ and could well be overturned by judicial review.
Policy director Neil Sinden said: “Many councils are currently facing hard financial choices. In these circumstances it will be very tempting to seek to fill shrinking coffers by permitting any development, regardless of its environmental impact.
“But decisions based solely on money, rather than on whether proposed development is appropriate and sustainable, could be hugely damaging.”
The legal opinion by barristers John Hobson QC and Stephen Whale said the bonus scheme “and the grants made under it will not be a land use consequence of any planning decision, or else they will not fairly and reasonably relate to any particular application or development.
“As such, the bonus scheme (which is clearly designed to influence planning decision-making by encouraging more approvals than would otherwise be the case) will taint the planning decision making process.”