This report outlines the case for public land value capture – the process by which councils, not those selling land, can benefit from the increase in land value due to changing use (such as planning permission for housing) or can reduce house prices by not passing that uplifted cost on to renters and buyers of the houses built on such land. This briefing is based on Common Weal’s submission to the Planning Bill consultation in response to question, on alternative ways to finance infrastructure provision. It is part of a series of briefings by Common Weal on housing, communities and places.
― Public authorities should have the legal means to purchase land at existing use value, so that the uplift in land value from planning permission for development of the land is captured for the public good. The financial consequence of this public land value capture policy will be increased funding for housing development without any upfront cost, as the public authority could borrow against the future uplift in land value to finance the development of the site. Plots of land can then either be developed directly by the local authority, or sold to developers at cost price plus infrastructure costs. This approach would be significantly cheaper than what developers would pay for development if their costs involve purchasing land at market value.
― Public land value capture is not new. The UK Government’s 1947 Town & Country Planning Act introduced planning permission and with it the provision for public authorities to compulsory purchase land at existing use value. Public land value capture simply seeks to return Scotland to a situation where the public gains the increase in value from public investment in the development of the land. This public investment would also create better market conditions, as instead of the private sector competing over control of the land market it would compete over the quality of housebuilding developments, creating a more diversified market for housing supply and tenure type.