Value Capture

I’m aware that there are lots of reports out there at the moment on the question of value capture, such as Land Value Capture report by TfL, the Viability and the Planning System by the London Boroughs and the Strength In Numbers report by the Centre for London. New Civic Housebuilding also discusses land value capture as an element of its proposals.   

A common feature of all these reports, echoing the Mayor of London’s Affordable Housing SPG, is a recommendation for policy intransigence on the question of affordable housing and sometimes other policies (see page 29 of the TfL report for example). The Mayor’s SPG actually goes further on this and argues for inflexibility on all London Plan and local Borough policies if applicants wish to benefit from Route B (avoiding having to submit viability appraisals and to commit to a review for the local authority to recoup any increased value later on).

Clearly there is a concerted effect by local government and the third sector to try and capture more of the value that is created by the planning permission. Whether this sits comfortably with the aim of the plan-led system is another matter. The simple idea behind the introduction of the plan-led system (under Chris Patten in 1990) was that it would provide clarity for applicants and speed-up decision-taking. This sentiment is echoed in the NPPF with its reference to the need for Local Plans to include clear policies to guide developers so that applications that accord with the local plan "can be approved without delay". Needless to say, when you mention this to local authorities, they look at you with some bewilderment. They've become so used to treating the local plan as the starting point for negotiation (if they're aware of it at all) and not the end point, that it is difficult to convince them of the supposed efficacy of the plan-led approach.

The problem with all these proposals for value capture is that they're trying to achieve by stealth what the Government has determined not to do by legislation - i.e. to have a formal mechanism for value capture in law. This does have important implications for the operation of our current planning system. Since the abolition of the 100% betterment levy in 1953 (an element of 1947 system that was integral to its effectiveness) we have seen various attempts by the State to formally capture value at varying rates. These vanished altogether by the 1980s.

If local authorities and the agencies of the State now wish to capture more of the uplift via local policies (on the basis of Existing Use Value for example) when considering each application then the emphasis of planning changes. Basically, every application will be judged on the basis of whether it is viable or not on the basis of the threshold land value defined by the local authority, and not whether it accords with the development plan. Local plans will quickly become irrelevant.

The post-war planning system either works with a formal system of land value capture (a betterment levy) or as a plan-led system whereby the local authority specifies what polices an applicant needs to comply with to secure a planning permission. You can't really mix and match.