The Communities and Local Government Select Committee have been looking in to land value capture, having noted 'the re-emerging political interest in land value capture'. Their report was released last Thursday.
Rather than ongoing general increases in land values, the report focuses on increases in land value which arise from specific development events (eg the grant of planning permission or the provision of new infrastructure), and makes recommendations as to how government should best capture value from those increases.
Although the key conclusion from the report is that 'There is scope for central and local government to claim a greater proportion of land value increases through reforms to existing taxes and charges, improvements to compulsory purchase powers, or through new mechanisms of land value capture', there are no new taxes recommended. The report refers made to previous unsuccessful attempts to introduce land value taxes (development land tax, planning gain supplement) and emphasises the need for cross party support for any new tax contemplated in the future. Without cross party support, there is a tendency for landowners to delay applying for planning permission (and so increase the value of their land) until the existing Government is voted out and the incoming Government has overturned the tax.
The principal recommendations of the report instead relate to:
- Improving the section 106 regime (local authorities ensuring they have well-defined local plans providing clarity and certainty to developers, support for authorities in their negotiations with developers, using Compulsory Purchase Order regime in order to enforce s106 agreements)
