The Housing, Communities and Local Government committee has set out a series of suggestions to overhaul land value capture mechanisms to increase the delivery of housing.
As part of its recommendations, the cross-party group said that the current system in place for developer contributions in England could be reformed, capturing a greater proportion of land value uplifts to deliver affordable housing and public infrastructure.
Currently, when planning permission is granted for housing on a site, the land value typically increases significantly, with agricultural land value in England (excluding London) rising from around £23,000 per hectare to roughly £2.67million on average.
The committee said that, in order to capture more value for new homes, an argument could be made for reforming mechanisms such as the Community Infrastructure Levy or Section 106. However, it warned that doing so too quickly could have a negative impact on supply initially, so suggested that an iterative process is needed.
The HCLG’s report called on the government to:
- Introduce new template clauses for Section 106 agreements to focus negotiations on site-specific factors rather than legal wordings
- Reinstate access to funded Level 7 planning apprenticeships for students over the age of 21
- Establish a statutory dispute resolution scheme to settle deadlocked negotiations between local authorities and developers fairly
- Publish updated land value estimates data, which have not been updated since August 2020, to inform future reforms to land value capture.
The committee also calls for all local authorities in England to be encouraged to set a minimum percentage target for affordable housing in their Local Plan, with a fast-track planning route for developments which meet this local target.
The report also suggested that the government’s proposed new towns would provide the ideal scenario for the government to experiments with new mechanisms of land value capture, but expressed concern that no planning policy to protect land value has currently been announced, despite details of the 12 potential sites being publicised.
The committee is calling on the government to announce new funding to establish the development corporations as part of the Autumn Budget in November, so that it can commence land acquisition on the first new towns sites without delay by spring 2026.
It also recommends that development corporations are mandated to prioritise homes for social rent within the 40% affordable homes requirement, rather than other types of affordable housing.
