Government looks Onward to land value capture reform

By Kasia Banas, Consultant

The government has been called on to consider radical reform of land value capture for communities in an open letter addressed to the Secretary of State for Housing, Communities and Local Government, Rt Hon James Brokenshire MP.

The letter from conservative think-tank Onward was signed by 16 organisations including the National Housing Federation, CPRE and Shelter, and identified ‘the way we buy and sell land’ as the primary cause of England’s housing crisis.

The signatories believe more gains from uplifts in land value need to be invested into communities, which will lead not only to less opposition to new development, but also to much better infrastructure. They propose the following three main steps to achieving that:

• Monitoring the implementation of changes to Section 106 to ensure that councils deliver, and developers do not continue to ‘wriggle out’ of their commitments,
• Giving local government a stronger role in buying and assembling land for housing, allowing them to plan new developments more effectively, share the benefits for the community and approve developments in places local people accept,
• Reform of the 1961 Land Compensation Act to clarify that local authorities should be able to compulsorily purchase land at fair market value that does not include prospective planning permission, rather than speculative “hope” value.

Finally, the letter encourages government to look for good practice examples across the borders, to other countries that are considered to be doing a better job in creating desirable new places for the benefit of all.

There are however, voices from the sector that question the early enthusiasm that these ideas have sparked. Matthew Spry, Senior Director at Lichfields UK, cast a shadow of doubt on the comprehensiveness of the proposals and stipulated that some practical questions need to be answered about them. These include issues around the purpose of capturing land value, resources, a two-tier land market, fairness and more. He warned that the failure to consider these could result in “undermining delivery in a system that, for all its many faults, is beginning to supply more of the homes we need”.

The letter was published a month after the National Infrastructure Commission (NIC), the government’s infrastructure advisory body, recommended that councils be granted greater powers to capture any uplift in land value arising from planning and infrastructure decisions.

They also called for powers for local authorities to “levy zonal precepts on council tax, where public investments in infrastructure drive up surrounding property values by 2021″ and for Section 106 pooling restrictions to be removed by 2020 to increase effectiveness of the planning value system.

The government has committed to present the NIC’s assessment before parliament, and to respond to it within six months.

On 5 September 2018, the Housing Minster Kit Malthouse is due to appear at the meeting of the Communities and Local Government Committee, which is conducting an inquiry into land value capture. His evidence may provide an early indication as to the government’s position on the proposed changes to the land value capture system.