The review proposes to give "local authorities greater financial autonomy" and strengthens "the incentives to support growth in the private sector and regeneration of local economies".
Eric Pickles, secretary of state for the Department of Communities and Local Government, announcing details of the review commented that the "current dependency of councils on central grant allocations makes planning difficult, weakens accountability, and stifles local innovation".
Liz Peace, chief executive of the British Property Federation, said: "Today's announcement is a good start, but there is much further to go.
"If the government is serious about the private sector leading the UK's economy out of recession then local authorities do need to be incentivised to support growth and development. Mechanisms like the ability for local authorities to retain business rates could be a powerful tool in the government's growth agenda.
"We also look forward to hearing the review's consideration of how tax increment financing can be delivered, which could be crucial in unlocking many stalled developments."
