Radical Planning Reform

The longstanding roadblock to building many, many more quality well designed spacious homes is the constraints on the planning system. We are almost all NIMBYs at heart and the politicians know that our votes depend on them respecting our wishes. To break this impasse a radical approach is needed involving both stick and carrot.

Almost all Local Authorities are facing severe deficits leading to yet more painful cuts. Capturing a larger share of Planning Gain would greatly help in minimising the worst of those cuts. Government’s recent “Planning for the Future” consultation proposed a flawed Infrastructure Levy; there is a much better alternative.

The 1976 Development Land Tax Act (“DLT”) attempted a similar approach to the Infrastructure Levy but was abandoned as the supply of suitable land collapsed due to landowner reluctance to sell. Only by enabling Local Authorities to acquire suitable land compulsorily (“CP”) will substantial Planning Gain capture be possible. ( if CP is acceptable for the controversial HS2 then surely it must be acceptable to help solve the nationally debilitating Housing Crisis? ). However this will require the Government to amend the law on Compulsory Purchase. Currently a landowner faced with CP can claim compensation based not on existing use value but at a value having regard to the land’s potential for being granted planning permission. For example agricultural land could under current law be valued on compulsory purchase at, say, £0.5m an acre instead of its current use value of perhaps £10,000. Historically Local Authorities have followed a tortuous Section 106 route to capture some planning gain rather than attempt compulsory purchase. Unfortunately the proposed Infrastructure Levy is likely, as with the DLT, to be self defeating as it will reduce substantially the availability of land for development. If the law were changed so that land could be acquired compulsorily at, or at only a small premium to, existing use values then:

1. Following compulsory purchase and granting of suitable planning permissions the Local Authority could auction off the land (possibly with “build by” dates).

2. Nearly 100% of the Planning Gain would be captured by the Local Authority – no argument.

3. NIMBYs adversely affected could be compensated (the Carrot!)

4. New housing could be located in the most logical areas, not where landlords felt like selling land.

The quantum of Planning Gain available will vary between Local Authorities but will often be very substantial and certainly meaningful in the context of the mounting deficits and cuts being faced by almost all Local Authorities, even after funding the associated affordable housing and required new infrastructure.

Central government support to Councils should be in part positively geared to the level of funding raised locally by the Authority in support of addressing the Housing Crisis (the Stick!)

With an 80 seat majority the current government is empowered to implement radical, even if potentially controversial, policies. In addition with the door now open to initiatives to revive the economy post COVID, this proposal should have a favourable reception and could be transformational both for Local Authority funding and, above all, for addressing the debilitating national problem, the Housing Crisis, that’s arguably even greater and certainly otherwise longer lived than COVID.

 

 

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