Public Land Value Capture
"In a submission to the Scottish Government’s consultation on stage 1 of its Planning Bill, which closes today, Common Weal proposes that: “Public authorities should have the legal means to purchase land at existing use value, so that the uplift in land value from planning permission for development of the land is captured for the public good. The effect of this will be to reduce the cost of land for development considerably, as planning permission can increase the value of land by one-hundred fold or more.”
A similar idea was cited in The Guardian on Thursday (1 February) as being under consideration by the Labour party UK-wide, but it would be possible for the Scottish Parliament to amend the Planning Bill to introduce this now in Scotland.
The proposal would mean public authorities would identify simplified development zones which would be priority areas for public-led development, especially for housing. The land in these zones would be purchased at existing use value, rather than the current policy of purchasing the land at the anticipated future value once planning permission is granted (known as ‘hope value’).
Public authorities would borrow against the future uplift in land value from the granting of planning permission to develop the site. This borrowed sum could then be used to fund the master-planning, infrastructure and construction of public-rental housing, while some plots could be sold-off to the private sector at a profit. Either way, the reductions in land costs would eliminate land speculation in the development process and increase the affordability and quality of housing development. According to the ONS, the cost of land has risen enormously in the UK over the past 20 years, from £1.5 trillion in 1995 to £6.8 trillion in 2016.
A similar approach, cited in the paper, is currently utilised in the Netherlands and Germany, where the cost of housing is significantly cheaper than in Scotland. It was also used in the UK after the second world war, including to build Scotland’s New Towns, but was repealed in 1959." (https://www.commonspace.scot/articles/12281/public-land-value-capture-new-model-housing-development-scotland)