Land value capture reform wrong way to solve housing crisis, warns CLA

13 September 2018

Land Value Capture

Proposed changes to the way the Government captures the increase in the value of land when it receives planning permission would fail to deliver additional homes in order help solve the housing crisis, according to the CLA.

A report by the Housing, Communities and Local Government Committee has proposed wide-ranging reforms to land value capture including increasing the financial contribution development makes to local communities and removing ‘hope value’, an important part of valuing land being compulsorily acquired that considers the future potential of land to receive planning permission.

The CLA which represents landowners, farmers and rural businesses said these reforms would remove the incentive for landowners to bring land forward for development, arguing thatlandowners and the development sector already contribute significant sums of money to local communities which pay for affordable housing and social infrastructure.

CLA Director of Policy and Advice Christopher Price said: “The current system of capturing the increase in land values already provides a range of benefits. In 2016/17 £6 billion was raised via planning obligations like the Community Infrastructure Levy and Section 106. This money was raised by capturing the change in the value of land when planning permission is granted. History shows us that increasing these obligations too far stops landowners bringing land forward and stalls development.

“We are frustrated that the committee has recommended the removal of hope value. The principles of fair compensation are that any price should reflect the value of the land if it was to be sold on the open market. It is iniquitous to ignore the fact that the price paid for land with development potential should be higher than land with no development value whatsoever.”