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RTPI: Current approach in clawing back development gain not adequate

10 April 2017

Existing measures in England and Wales to access rising land values are not benefiting the public enough and are stalling housing delivery, the RTPI says today.

S106 and CIL not enough

The Institute has commissioned new research to look at how other countries can offer the UK alternatives to fund infrastructure through capturing the uplift in land value resulting from planning permission being granted or public investment being made on or near a piece of land.

The project will compare the current Land Value Capture (LVC) mechanisms used in the UK - S106 and Community Infrastructure Levy (CIL) - with three others: a simple tariff mechanism and two variants of the North American Impact Fee approach. Each approach’s ability to raise money, its attractiveness and ease of implementation will be tested against a hypothetical site via interviews with planners, planning consultants, lawyers, valuers and developers.

A more effective and fairer mechanism needed

The RTPI is disappointed that the Housing White Paper did not introduce a more effective and fairer LVC mechanism to fund local transport and infrastructure like doctor’s surgeries and schools without incurring more public debt.

It says a change is urgent with recent research pointing out that sticking with the current model will miss capturing a potential £185bn of total land value increase over the next 20 years. (Source: Centre for Progressive Capitalism)

Stephen Wilkinson, RTPI President, said:

“Infrastructure is critical to housing delivery and economic growth. At a time when public finance is squeezed we have to look at new funding models to ensure infrastructure can be built at the speed and scale we need. 

“We are missing a trick by not accessing the vast potential of rising land values which currently go directly to landowners. Rising land values are a reasonable place to look for infrastructure funding and international evidence suggests there are fairer, more effective ways of sharing this gain.”

On the existing measures, Mr Wilkinson said:

“The existing measures have their role but they essentially ‘claw back’ some land value uplift to mitigate the impact of development, rather than allowing local authorities to be proactive by using rising land values to fund land assembly and deliver housing.  S106 and CIL are often subject to lengthy negotiations and are not capable of producing the game-changing effect local authorities need to push forward projects.”

 RTPI is carrying out this research with Professor Craig Watkins, Dr Sarah Payne, Dr Richard Dunning, and Emeritus Professor Tony Crook from the Universities of Sheffield and Liverpool with funding from the Crook Public Service Fellowship.

An interim report will be published in the summer, followed by a full report by September.

The full abstract for the project, The Use of Alternative Land Value Capture Mechanisms to Deliver Housing in England and Wales, can be read here.