BPF Spotlight Series - Land Value Capture

💬 “The Government’s delay in publishing its Long-Term Housing Strategy has left the industry in the dark”.

This week, we sat down with our Director of Policy Danny Pinder to discuss the Housing, Communities and Local Government Committee’s report on Land Value Capture published earlier this week. Over to you, Danny:

❓What is Land Value Capture and why is it important?

🗣️ Land Value Capture (LVC) is a term that relates to a range of policies which seek to recover increases in land value and recycle the resulting revenue into the provision of local infrastructure and affordable housing. In England, this is primarily achieved through s106 agreements and the Community Infrastructure Levy (CIL).

❓What has the committee’s report recommended?

🗣️ The report finds that existing LVC tools fail to deliver their full potential and proposes a number of reforms. We believe the report includes several sensible recommendations, including:

✅ Greater s106 standardisation, which still allows for development-specific negotiation, could help speed up the planning process.

✅ Greater transparency on the CIL would ease existing frustrations around unspent developer contributions.

✅ Immediate publication of the Long-Term Housing Strategy would provide clarity to the sector on how the Government plans to make their 1.5m new homes commitment a reality.

✅ Access to funded Level 7 planning apprenticeships is critical if we are to have a sufficiently resourced planning system.

✅ Confirmation of initial funding for New Towns at the upcoming Budget would be welcome, as would greater clarity on broader New Towns funding arrangements.

❓So, all positive committee recommendations?

🗣️ Not quite. While there is much in the report to be welcomed, there are some recommendations where we would suggest caution. As our Budget submission makes clear, the sector is currently facing a development viability crisis. As such, it’s important that changes to LVC provisions don’t exacerbate this existing commercial reality. These points are:

⏸️ While we absolutely recognise and support the need for greater provision of affordable housing, mandating levels of social rent and broader affordable housing provision within New Towns risks exacerbating viability pressures and delaying spades in the ground.

⏸️ With limited detail provided on how a dispute resolution scheme would work, it’s difficult to see how this would lead to anything beyond additional bureaucracy and uncertainty.

❓What happens next?

🗣️ The Government is expected to respond to the Committee’s report within two months. More immediately, all eyes are on the Budget. We hope that the Chancellor builds on the recent pragmatic changes announced by the Housing Secretary and Mayor of London by announcing further changes to address the viability crisis.