Government committee launches inquiry into land value capture

As part of the inquiry, the committee will also consider reforms to the current system of developer contributions to affordable housing and infrastructure.

It will 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 committee will explore how land value capture 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.

It will also examine the effectiveness of existing land value capture methods, such as the Community Infrastructure Levy and planning obligations under Section 106. 

Florence Eshalomi, chair of the 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.”

She said that, 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,” Ms Eshalomi said.

“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.”

Public evidence sessions are expected to start in March.

The government finalised its National Planning Policy Framework in December.