News

14.09.18

Increases in land value is ‘fundamentally about fairness’ and should benefit local communities, say MPs

Significant increases in the value of land resulting from public policy decisions should be shared with local communities say MPs.

The report from the Housing, Communities and Local Government Committee has looked at how this land value increase can be captured to generate extra funding for local infrastructure and affordable housing.

According to government statistics, agricultural land which is granted planning permission for residential use would increase, on average, from £21,000 per hectare to £1.95m per hectare.

The Land Value Capture report published yesterday argues that local authorities and central government should capture a “significant proportion” of this uplift in value so they can reinvest into local communities.

The report recommends reform of the Land Compensation Act 1961 which they say would lead to a “much-needed” boost in housebuilding.

Chair of the committee Clive Betts said: “Land value capture is fundamentally about fairness and necessity.

“Fairness, because the current system allows landowners, through no effort of their own, to make multi-million-pound profits from the substantial increases in land value that arise from public policy decisions, such as the granting of planning permission.

“As these increases are significantly created by the actions of the state, it is right that a significant proportion of this should be shared with the local community.”

The committee argues that there is scope for raising additional revenue from reforms to taxes and charges, new mechanisms of land value capture and reform of the way local authorities can buy land.

In response to the report, Local Government Association’s Housing spokesman Cllr Martin Tett said: “We have long–called for reforms to land compensation and compulsory purchase laws and are pleased that the committee has called for the government to implement several of our recommendations.

“We are also pleased the committee recommends that government provides extra support to councils, through the LGA, to help give local authorities a strong hand in negotiations with developers.

“Government action on these recommendations would have a significant impact in building more homes with the right infrastructures and places that people want to live and work.”

Betts added: “If the government is to meet the challenge of providing enough new homes over the coming years, then they will also need to find the funds for improving the surrounding infrastructure.

“Our proposed package of reforms to taxes and charges will ensure a fair proportion of the increase in value arising from public policy decisions can be used by national and local government to invest in new infrastructure and public services.”

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Image credit: RoschetzkyIstockPhoto

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