Nick Boles Backs Land Value Capture in new Book

Square Deal

We should give councils new responsibilities to bring land forward for development and new powers to ensure that development benefits the wider community. Currently, councils play a reactive role. They wait for landowners and developers to propose sites and then respond by granting planning permission subject to a large number of conditions and the negotiation of a Section 106 agreement, which is meant to secure reasonable financial contributions from the developer to the cost of improving local infrastructure. The process is tortuous and expensive. Developers are adept at keeping their financial contributions to a minimum. As a result, necessary improvements to local infrastructure are underfunded and local people become even more hostile to new development.

We should move towards the system that operates in Germany, which I first got to know when, as planning minister, I visited some of the superb new extensions to the city of Freiburg in 2013. There, local councils take the lead in acquiring land for major developments and putting in the necessary basic infrastructure – roads, sewers and utilities as well as parks and schools – before selling off serviced plots so that private developers can start building houses. They have the power to purchase land compulsorily at a value that relates to its current use and not its future use as a development site. As a result, councils are able to capture most of the increase in land value and use the money to fund the infrastructure that unlocks sites for development and offers benefits to the wider community.

To introduce a similar system in England, we will have to change our laws on compulsory purchase, specifically the 1961 Land Compensation Act, and give local councils (and their development corporations) the power to buy land at its ‘current use value’, if it is going to be used to meet the community’s need for housing or other kinds of development. It would be a mistake to restrict the new powers to brownfield sites, as was proposed in the last Conservative manifesto, as large urban extensions will usually involve a mixture of brownfield and greenfield land. Instead we should seek cross-party support for a broad reform to the land market which ensures that the interests of the community in meeting housing need and maintaining high quality infrastructure are balanced against the rights of landowners to receive fair value for their property (1).

But the Manifesto not say that – rather the press notices only focused on Brownfield. The manifesto said:

we will work with private and public sector house builders to capture the increase in land value created when they build to reinvest in local infrastructure, essential services and further housing, making it both easier and more certain that public sector landowners, and communities themselves, benefit from the increase in land value from urban regeneration and development.

No Oxford Comma ar regeneration, so ambiguous.  Looks like bd editing from Nick Timothy, however the subject of t sentence is ‘increases in land value in urban areas, so could legitimately argue the general principle was included.



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