Towards a community-led plan for London JustSpace.org.uk 4/2/2016
Workshop session briefing note here. Scroll down to green heading for notes of the workshop discussion.
LAND VALUE CAPTURE / viability assessments / S106 etc
The market value of land and property in London is very high and has risen very fast in recent decades.
Crossrail 2 will cost £27bn & would create property value uplift of £15bn (TfL) for housing alone.
Massive state investment in infrastructure boosts values; so does investment in buildings and services. Hardly any of this is taxed or captured to pay for London’s services and needs.
Long-term / big issues
- Taking land out of the the market by compulsory purchase at existing use value, thus socialising the uplift on that land.
- What would be the benefits and disadvantages of moving towards a system of taxing land and property values across London?
- Which of these current taxes could be replaced?
- Council Tax
- Business rates (NNDR)
- Capital gains tax
- Stamp Duty on transactions (SDLT)
- Could it replace taxes levvied just on new developments?
- Section 106 agreements
- Borough Community Infrastructure Levy (CIL)
- Mayor of London’s CIL
- Would site value taxation
- Encourage owners to develop?
- Be feasible without strict zoning which the UK does not have?
More immediate issues:
- making Council tax fairer
- incentives for developers to build faster
- transparency and enforcement of S106 social housing %
- securing social infrastructure and timely services
Conference document statement (in the housing section):
The policy objectives are:
- Bring land forward for development at lowest possible cost
2. Ensure most effective use of land and property in relation to public policy objectives
3. Land and property value appreciation should be captured for public policy objectives
Further research is needed to inform debate on the policy options that include:-
- Tax on land that has been consented for development but not started on site,
- Higher council tax rates for higher value properties and council taxes related to level of occupation,
- Capital gains taxes
- Land value tax.
- Local Plans should be explicit as to the land use for any development site, including specification of density, tenure mix, affordability, bedroom size mix and built form
- Boroughs should designate land for housing and then have powers to acquire the land at existing use value through a Compulsory Purchase Order if necessary.
- Boroughs to retain equity stakes in development to ensure that the public benefit from the uplift in value.
The land issue is central to debates about planning. A systematic review of the relationship between planning, land ownership and development is critical to securing the housing supply and infrastructure that is needed. To ensure that housing is affordable to those on lower incomes, the profit requirement and the dependence on development finance need to be taken out of the equation.
Turner, George 2016 http://www.georgenturner.com/surveying_the_crisis
Colenutt, B., A. Cochrane and M. Field (2015) “The rise and rise of viability assessment” Town and Country Planning 64(10): 453-458
Duncan Bowie, Revisiting the Land Issue, 2016 forthcoming, IJURR
TCPA (2014), ‘Garden city principles’, available at http://www.tcpa.org.uk/data/files/TCPA_Garden_City_Principles_Note_20140411.pdf
Edwards. M (2015), ‘Prospects for land, rent and housing in UK cities’, Government Office for Science, London, societycould.wordpress.com
Francesca Medda, Land value capture finance for transport accessibility: a review, Journal of Transport Geography 25 (2012) 154–161, www.elsevier.com/locate/jtrangeo (probably ££, so obtain via a university or other library)
Notes of discussion at the workshop 4 February 2016. Read on here, or download PDF
JS conf worskshop LVT viability 201602014
Working groups on housing in recent months considered that a wider discussion of land values, land value capture and taxation would be a valuable element in the conference, as a deeper way of approaching “viability”, Section 106, CIL and so on. After all, those devices are all attempts to “capture” bits of land value growth for collective purposes.
London’s communities engaged with planning have become more and more involved with issues surrounding S106 and land values and how these affect the delivery of social housing and social facilities. Property values in London are astronomical and they have been growing incredibly fast and recovered quickly after the property crash. There is now a new property boom; the largest growing occupational category in London is estate agents. There needs to be a discussion about how to get around these issues in a more strategic way and in the broader framework of social benefits to London people, rather than on a case-by-case basis. The mayoral campaign is also an opportunity to elaborate what we can do in the next months. (Michael Edwards, facilitator, opening discussion.)
Duncan Bowie: The history of land nationalisation and land value taxation to support civic infrastructures goes back a long way. In London value capture worked well between 2004 and 2008 but started to fail after the recession.
In London the battle to extract more value from developments has become very hard due to the very high value of land.
– Local authorities should have more powers to acquire land at pre-housing costs (i.e. non-residential use values) in order to build what they need at low cost.
– S106 and CIL do not capture long term value increases.
– Property and land taxation must be calibrated so that land gets developed.
– Capital gain on property should be taxed especially where land /properties are underused.
– Need more research on this.
George Turner explained what viability is and its importance in relation to the discussion of value capture. The Planning system is the mechanism to share land values, so the land value uplift might not matter if it is better redistributed. The planning system has been obliged to subsidise development when it is likely to produce profits below private developers’ expectations. The subsidy takes the form of a reduction in duties under S106 or duties to provide affordable housing or social infrastructures.
– Viability studies are the mechanism to assess whether a development is below profit expectations. The fact that developers in London are not building social infrastructure and still making profit demonstrate that the mechanism is not working. Developers are being dishonest in their assessment.
– Confidentiality is not inscribed in legislation but it has become standard practice for local authorities’ officers to deny full disclosure of viability studies to the decision makers and the public. The practice has also been upheld by a number of court judgements such as the Shell Centre case.
The system is designed to facilitate corruption.
-Recent campaigns have put councils and councillors under pressure to disclose assessments and some London’s boroughs have developed policies for this (Islington, Southwark, maybe Hackney). Southwark’s council will only request disclosure if the development chooses to go below the 35% share of “affordable” housing.
– Nicky Gavron is proposing that the mayor should introduce such policy and JS should ask all candidate mayors to do so. (Note Nicky Gavron letter to the Mayoron behalf of Assembly Planning Committee a few days ago)
Pat Turnbull. (HA but previously) Council tenant, involved in two regeneration schemes in Hackney since 1999. The residents worked on a scheme that was put on hold during the recession after several years of discussions. The council now wants to proceed but “viability” demands increase in density with two new 16-20-storey towers
Bonnie Vandesteeg. Negotiation on viability can include changes to the hectarage of the development (see Bishopsgate Goodsyard and Kentish Town)
Stephen Hill. Viability studies are done by a variety of professionals. Some are qualified surveyors; some have no training.
– the charter of RICS requires its members to work in the public interest. It goes back to the 19th century and requires them to get the optimum use of land for social and economic value. Residents and campaigners should take issues with the professional bodies to the High Court and challenge that, even if they are not doing anything illegal or corrupt, they are behaving against the public interest.
Catherine MacArthur. Suggested that Agenda 21 is the reason why local authorities are against social housing. Their interpretation of the Agenda is supportive of high density residential hubs around transport nodes.
xxxxx: If land is owned by the council, its value should not be included in the valuation of the costs of development.
Duncan Bowie: local authorities are now going against their own planning policies in order to get as much money value as possible from disposals of their own land. Short-termism is understandable due to cuts to councils’ budgets. TfL is doing the same on its own land with the collaboration of the London Mayor.
Duncan Bowie, Steve Birak and others on the role of planning in land value.
– Local authorities should keep their land and if they don’t they should get longer term benefits. (This must be wrong – ed)
– A stronger planning system can restrict those transfers of value from social to private.
– Our main demands should be to keep our land in public ownership or occupy it if needed.
Anne Gray: Haringey Council has based its evidence for the local plan on data and figures taken during the recession, so can it be considered unsound because of not-up-to-date values? Duncan Bowie says yes.
xxxxxxx: adequate information is essential, especially on land valuation: how value arises in the first place and becomes part of the circulation. The terms of land buying and selling are crucial.
– Most valuable short-term tactics is to get more information. (Michael Edwards replied that Just Space will engage with the production and circulation of more information)
– law that allows Local Authorities to sell land or interest in land at below market value is extended to TFL and Network Rail.
– Housing associations did not have to pay for the land when the transfers from local authorities were made. HA should now be required to deliver much more than the 35% that is requested from private developers who have to pay for the land.
Anne Gray and others on privatisation of housing deliver.
– Hackney is building housing on their land but they have to sell to private market 1.5 units for every 1 social housing unit they build.
– Haringey willing to give public land to a joint venture company that is 50% private and 50% public. It is a threat to public accountability.
END – note by Elena Besussi
The following had signed up in advance for this workshop, though not all took part. Others may have joined in as well.
Michael Edwards – Bartlett Planning UCL Workshop facilitator
Duncan Bowie – University of Westminster
Robin Hawkes- West Ken & Gibbs Green
Betsy Dillner – Director Generation Rent
Anne Gray – Our Tottenham, Haringey Green Party
Steven Boxall – FORGE/ Regeneration X
Melissa Fernandez – LSE London
Dee Searle – Green Party/ IF project
Glenn Power – Tower Hamlets Tenants Federation
Stephen Kenny – Grove Park Neighbourhood Forum
Santa Pedone – Ubele
Bonnie Vandesteeg – Tower Hamlets Renters
Alastair Murray – Housing Justice
Barbara Lipietz – UCL DPU
Daniel Fitzpatrick – UCL Planning
David Farnsworth – Freelance Consultant
Sarah Sackman – Barrister, Francis Taylor Building
Catherine MacArthur – Bruce Grove Residents Network
Kathleen Egan – Age UK London
Pat Turnbull – London Tenants Federation
Maddie Guerlain – Sustain
Robin Grey – Three Acres and a Cow
Kathryn Johnson – Sustainable Hackney
Jo Meehan – Old Kent Road People
Isabella Coin – Shared Assets
Elena Besussi – UCL Bartlett
Rob Logan – Community Food Growers Network
Michel Prigent – London Housing Federation
Dr Michael Parmar – DharArt Ltd
Stephen Hill – Future Planners
David Boardman – Kennington Oval and Vauxhall Forum