The umbrella-body believed councils would spend some £1bn above this fee income to cover the cost of developers’ planning applications by 2022 unless the government acted.
Last February’s housing white paper Fixing our Broken Housing Market promised councils a 20% uplift in fees from July 2017 if they invested this in their planning department.
A further 20% was offered at an unspecified time to councils delivering against commitments for new homes in their area.
The LGA said the July increase had failed to materialise and it was unclear when it would.
Longer term, councils want powers to set planning fees locally as they see fit, as developers are charged fees for the cost of handling applications but these are set nationally and may not reflect the real cost to a council.
The LGA said councils received an average of 486,500 planning applications each year, with council tax being used for handling one third of these.
This amounted to some £200m a year and would reach £1bn by 2022, the LGA said, equivalent of repairing 4.35m potholes or creating 828 miles of pavements.
LGA housing spokesman Martin Tett said: “It is wrong for communities to keep being forced to spend hundreds of millions each year to cover the cost of all planning applications.
“The shortfall in the amount of fees councils can charge and the cost of processing applications is heaping further pressure on the stretched planning departments which are so crucial to building the homes and roads that local communities need.
“Councils need to be able to recover the actual cost of applications and end such a needless waste of taxpayers' money.”
A Home Builders Federation spokesperson said commercial applications generally covered their costs and that councils lost money mainly on householders wishing to make minor changes to their property.
They should therefore make more use of permitted development rights – where certain types of changes are allowed without planning permission.
He said: “Setting fees nationally means that an applicant submitting similar applications in any part of the country knows that they will be charged the same fee for the same task. It is up to local planning authorities to ensure that they provide that service in an efficient way.
“Given that all local planning authorities are a monopoly allowing local authorities to set their own fees would mean that inefficient authorities would be rewarded by being able to charge higher fees while applicants have no choice over the level of service being offered.”
Michael Harris, deputy head of policy and research at the RTPI, said: "The institute is continuing to make the case on behalf of its members for more reinvestment in planning services to deliver the homes and infrastructure we need, including through forthcoming research that will capture the value of planning to local economies."
Department for Communities and Local Government has been approached for comment.
