The Housing, Communities and Local Government (HCLG) Committee has launched an inquiry to look at how land value capture policies - which seek to capture the value uplift on land when it is granted planning permission - can contribute to the delivery of the Government’s house building plans and help fund affordable housing and public infrastructure.
The Committee’s inquiry will consider possible reforms to the current system of developer contributions towards affordable housing and infrastructure. It will also examine the Government’s plans to reform compulsory purchase compensation rules, and how increases in land value may be captured more effectively for public good.
The cross-party Committee will explore how land value capture (LVC) mechanisms could be optimised to operate with the Government’s planning reform agenda, including the delivery of New Towns and the release of ‘grey belt’ land for development.
Launching the inquiry, Florence Eshalomi MP, Chair of the Housing, Communities and Local Government (HCLG) Committee said: “If the Government can get its land value capture policies right, they could make a valuable contribution to funding affordable housing and investing in public infrastructure, such as GP surgeries, and schools. Reform of land value capture could also be a useful tool in supporting the delivery of the Government’s New Towns programme.
“We are in the middle of the housing crisis and the cost of land is one of the main reasons that house prices are rising so rapidly. Currently, landowners can make significant profits from the substantial increases in land value when local authorities grant planning permission. We need a land value capture system which is fair and that helps to deliver what communities need – affordable housing and public services which people can rely on.
“I hope the Committee’s inquiry will bring forward practical recommendations to reform land value capture and help the Government achieve its target of delivering 1.5 million new homes by the end of this Parliament.”
Land value capture is a method of capturing increases in land value for the public good. These increases can be due to public policy decisions, such as the granting of planning permission, or nearby development events, such as major infrastructure projects. The government uses taxes and charges to capture these increases.
The Committee’s inquiry will explore whether alternative mechanisms for capturing the uplift in land values in England may be more suitable and how value could be realised across regions in England which have lower average land values. The Committee will also examine the effectiveness of existing land value capture methods, such as the Community Infrastructure Levy (CIL) and planning obligations under Section 106 of the Town and Country Planning Act 1990. The Committee are also likely to explore reform of compulsory purchase orders.
Public evidence sessions are expected to commence in March 2025.
Witness details will be confirmed and announced in due course, but the Committee are likely to hear from witnesses including housing and planning groups, planning lawyers, think-tank representatives, local government elected representatives, and Matthew Pennycook MP, Minister of State for Housing and Planning.
