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Land value capture

Monday 13th March, 2017

A new paper by the URBED Trust's Dr Nicholas Falk, originally prepared for the Royal Society of Art's Inclusive Growth Commission, is available to download. You can view the executive summary below.

 

Sharing the uplift in land values

Smarter urbanisation and inclusive growth  

 

There is growing agreement that building the housing we need, and creating a more sustainable (and just) society depends on greatly increasing the investment in infrastructure, especially transport. Excessive land values could offer a solution, but only if they could be tapped. Yet land, and the way it is valued and assembled, continues to be an intractable problem in the UK, unlike most other European countries where land use planning is more proactive.

A review of examples show there are a range of models. The most pertinent examples are recent experience of introducing Land Value Tax in Canberra, the capital of Australia, using split-level rating to promote the regeneration of the central areas of Pittsburgh, Pennsylvania in the USA, and planning urban expansion along transit corridors in Copenhagen. Other cities have used state investment banks to fund local infrastructure.

Research has shown that it is fairly straightforward to improve the way property (buildings and land) is taxed. This could be part of a wider programme for making local authorities less dependent on central government, shifting tax from transactions and on to wealth, and reforming the anomalies in local property taxation (the Business Rates and Council Tax).

This paper, produced originally for the RSA’s Inclusive Growth Commission argues that changes in the way that land is valued for compulsory purchase purposes offer a start.   But as local authorities no longer have much capacity to lead major development or tackle spatial inequalities there are both technical and political obstacles that need to be overcome first. So proposals are made for:

 

  1. Spatial growth plans (to allocate development to rebalance cities)
  2. Community development corporations (to secure smarter urbanisation and rapid change)
  3. Neighbourhood land trusts (Community Land Trusts to regulate occupation)
  4. Local Infrastructure Funding Trusts (to pool contributions)
  5. Land Value Rating (annual ground rents to redistribute wealth)
  6. Municipal Investment Corporation (bonds to fund housing and local growth)
     

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