Communities and Local Government Committee launches inquiry on land value capture

The Communities and Local Government Committee (CLG) Committee is to examine the effectiveness of current land value capture methods and the need for new ways of capturing any uplift in the value of land associated with the granting of planning permission or nearby infrastructure improvements and other factors.

Clive Betts MP, Chair of the Communities and Local Government Committee, said: “Private landowners can take advantage of rises in land prices arising from public investment in infrastructure and the granting of planning permission for housing. Should they benefit from this public investment and these decisions of public policy? Should we be doing more to ensure the infrastructure required by these developments is paid for by those who actually benefit from it? Our inquiry will look at whether there could be changes to land value capture mechanisms to enable councils to take the opportunities to capture the significant uplift in land value that planning decisions and infrastructure projects often stimulate.

 “The recent history of the building of the post-war new towns provide a lesson here. These new towns would never have been built without buying land at existing use value. We want to examine what new methods could be employed and what lessons we can learn from past practice and other countries.”

The land value capture inquiry will look at whether current methods, such as the Community Infrastructure Levy are adequate, what new methods could be employed, advantages and disadvantages of alternative systems and lessons learnt from the past.

Terms of reference

The Committee is inviting written submissions on the following points:

• ·         Are current methods, such as the Community Infrastructure Levy, planning obligations, land assembly and compulsory purchase adequate to capture increases in the value of land?
• ·         What new methods may be employed to achieve land value capture and what examples exist of effective practice in this area, including internationally?
• ·         What are the possible advantages and disadvantages in adopting alternative and more comprehensive systems of land value capture?
• ·         What lessons may be learned from past attempts to capture the uplift in value?

Evidence can be submitted on the Committee’s website here

The deadline for written evidence is Friday 2 March.

Background

The inquiry is proposed in the context of a growing number of calls for more detailed consideration to be given to implementing an additional mechanism for capturing the uplift in land values in England, beyond those which already exist, such as the Community Infrastructure Levy (CIL) and Section 106 of the Town and Country Planning Act 1990. It is intended to be a forward-looking inquiry, seeking to identify suitable methodologies for capturing increases in the value of land.

The 2016 Budget invited Transport for London to bring forward proposals for financing infrastructure projects from land value increases while the Government’s 2017 Housing White Paperincluded a pledge to consult on improving arrangements for capturing uplifts in land value for community benefit.

One of the clearest definitions of land value capture, or ‘betterment’, is that included in the 1942 Government report that first looked at this issue – the Uthwatt Report: “… betterment … may now be taken, in its technical sense, to mean any increase in the value of land (including the buildings thereon) arising from central or local government action, whether positive, e.g. by the execution of public works or improvements, or negative, e.g., by the imposition of restrictions on other land.”