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We need to capture land development value for the public good

A new system to recoup development gains is needed more than ever, argues Sally Thomas

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It is more important than ever to capture land development value for the public good – Sally Thomas #ukhousing

Sally Thomas of the SFHA on #ukhousing

My father is 93. Despite the successes of a working life spent advocating garden cities, planning new towns and having his hero Aneurin Bevan support his candidature as a prospective MP, his biggest regret is that developers – rather than communities – continue to wholly benefit from the uplift in land values generated by development.

His good friend, the late, great planner Peter Hall, summed it up: “The profits from land development… rightly belong to the community, since public agencies have had to provide much of the physical and social infrastructure, and… the land values arise in large measure through the grant of planning permission.”

The planning system has employed multiple ways of capturing these values since the 1947 Town and Country Planning Act.

But we have ended up with a system which, while yielding some significant benefits, lacks transparency and tends to reinforce inequality.


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In Scotland and, indeed, across the UK, it has never been more important to do it better.

The achievement of the laudable Scottish Government ambitions to provide 50,000 homes, tackle poverty and disadvantage, promote inclusive growth and work towards a fairer country depend in no small part on the finances (money) and resources (land) to do so. The same is true of government ambition for housing elsewhere in the UK.

“We have ended up with a system which lacks transparency and tends to reinforce inequality.”

It follows that we need a system which would allow distribution of revenues on the basis of need rather than market circumstance, and which reinforces the ambition for and achievement of socially inclusive place-making. Of the many factors that contribute to this, land is one of the most critical.

Land values are generated from societal demands for goods and services, which invariably depend on the development of land (from food production to housing).

The regulation of land impacts on how land values are distributed by controlling the uses to which land can be developed.

Both giving consent and investing in infrastructure by public bodies generates values. Capturing these for the public good would seem to be a straightforward proposition, but has proved to be anything but.

“Both giving consent and investing in infrastructure by public bodies generates values.”

There are, of course, current systems of planning obligations which yield real benefits but also major drawbacks – procedural complexity, the patchy and unequal spatial distribution of gains, inefficiency in meeting the costs of infrastructure and the public perception of lack of transparency and accountability.

Here in Scotland, the government has put substantial finance – £3.2bn – behind the country’s social housing programme.

Initial analysis from the Scottish Housing Regulator shows that social landlords’ expenditure on development has risen by 24% to £807m.

If this level of progress is to be sustained, and the rents charged truly affordable, then the price of land will become an increasing factor.

The availability of land at existing use value could make a huge difference to the achievement of the programme.

And Scotland has form in this regard.

Community ownership of land is a great Scottish success story, over 500,000 acres. The government has set a target to double this by 2020.

The current Planning Bill provides the perfect opportunity to tackle the cost of land to maximise its potential for community benefit.

“There is much greater public and political support now than there has ever been for substantial recoupment of development land gains.”

This is not about punishing developers or distorting the market. Indeed, inflated land values disadvantage the private as well as public sectors.

Rather, it is about introducing fairness and equality into a system and set of relationships currently characterised by distortion, unfairness and inequality. It is about rebalancing and redistributing for greater social good, from which we will all benefit.

There is much greater public and political support now than there has ever been for substantial recoupment of development land gains. It exists and it can be sustained. Even so, the task of producing an effective system can look formidable, even daunting. It always has done, and always will do. The prize is worth it.

My father may never get to see a truly effective and efficient way to capture land development value for the public good.

We have to ensure that his children and grandchildren do.

Sally Thomas, chief executive, Scottish Federation of Housing Associations

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