Letwin Review Proposes Radical Approach to Land Value Capture

First what the chancellor said in his budget speech about no evidence that Housebuilders were engaging in speculative landbanking was nonsense, the final report does not mention the terms landbanking or speculation once- that was all in the draft report, and the same analysis that housebuilders were restricting build out to ‘absorption rates’ for reasons of maximising profit is held – that statement was just red meat to housebuilder shareholders and executives who are major Tory donors.

What it does say I wont attempt to summarize.  Letwin has a reputation for detail and mastering his brief.  Read it in full yourself.

I will simply quote the killer para.

To ensure that a reasonable balance is struck between promoting the public interest through increased diversity and faster build out rates on the one hand, and proper recognition of the value of the land on the other hand, I recommend that the Housing Secretary (when issuing updated viability guidance alongside the new planning framework) should guide local planning authorities towards insisting on levels of diversity that will tend to cap residual land values for these large sites at around ten times their existing use value. In the case of agricultural land, for example, this might result in values of around £100,000 per acre – perhaps as little as 5% of the current residual development value of a straightforward site with unconstrained development permission and no major infrastructure requirements in an area of high housing demand.

That is the bottom end of the 10-20x of the Harmen Report,  Good news. Surely 10x what land is worth satisfies the ECHR requirement of compensation, and no ‘dual market’ issues as it would apply to all development land above the threshold, below the threshold, why not include the 10x cap in the PPG on viability – simple no ‘dual market’ the Association of CPO lawyers endlessly wine about.

He then rightly goes full on continental

I recommend that the new primary legislation should also give local authorities explicit statutory powers to draw on precedents in England and on  models of development which are entirely familiar in much of continental Europe.

Development Corporations…e able to buy land on the basis of the value which such land would have in the absence of the development scheme. They are fully staffed and have the resources tocommission proper masterplans that respond appropriately to the characteristics of the site and can be accompanied by detailed and enforceable design codes; in this way they can make the architecture of the site and the landscape and infrastructure of the site internally consistent, congenial and convenient for the inhabitants. Finally, they have the capacity to raise finance, to invest in appropriate infrastructure (including major infrastructure) and thereby to provide well-prepared terrain (or even serviced plots) which major builders, small and medium-sized builders, private rental institutional investors, housing associations, providers of student accommodation, providers of accommodation for the elderly, custom builders,
and self-builders can all use to enter the housing market on the site.

…However, unlike their counterparts in most continental European countries, non-mayoral local authorities in England do not (without obtaining special permission from the Housing Secretary) currently have statutory vehicles capable of governing the development of large sites in areas of high housing demand. Clearly, if we are to see in future the greatest possible well-planned diversity on these sites, it would make abundant sense to empower local authorities to establish a new form of development vehicle which could perform this role inEngland as their counterparts so often do elsewhere in Europe.

The Dutch/German system (France is pretty similar) Yes Yes Yes Yes – it produces best planned and most equitable large sites in the world, what is not to like.  Peter Hall bless hi would be smiling now.

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One thought on “Letwin Review Proposes Radical Approach to Land Value Capture

  1. Pingback: Why the Government Will Have to Implement Letwin @oletwinofficial | Decisions, Decisions, Decisions

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