New land value capture inquiry could influence UK property prices


In the UK, land value capture is a way of monetising increasing land and property values and investing the cash into local infrastructure, but ongoing calls for a rethink of the methods used has sparked a Government inquiry.

The inquiry, which has been launched by the Communities and Local Government Committee (CLG), is intended to examine the current mechanisms employed to capture any uplift in the value of land in relation to granting planning permission or local infrastructure improvements. It will also investigate any new or alternative methods that could be used going forwards.

At present, landowners whose land is required by a local council can demand to be paid the “hope value” of the land, rather than its current actual worth. This is paid on the basis of what the land would be worth if it were granted residential planning permission in the future, meaning the price paid is hugely inflated – and has an impact on local communities.

Lessons to be learnt

The methods currently employed to capture the uplift in land value include the Community Infrastructure Levy – a planning charge that some local authorities can impose on new developments – and Section 106 of the Town and Country Planning Act 1990 – where planning obligations are often used to secure affordable housing.

Clive Betts MP, chair of the CLG, 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. 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 CLG invites written submissions on the topic, with a deadline of 2 March 2018.

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New land value capture inquiry could influence UK property prices


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