Report recommends new mechanisms to capture land value uplift in London

London should be allowed to develop new mechanisms for better capturing land value uplift arising from major infrastructure developments and central controls should be removed on planning application fees, a report has recommended.

London: report sets out beefed up devolution proposals
London: report sets out beefed up devolution proposals

Mayor of London, Sadiq Khan, last year tasked the London Finance Commission to bring forward a new, beefed-up set of devolution proposals for the capital in the wake of the UK’s vote to leave the European Union.

The commission, a group of cross-party political and business leaders led by Professor Tony Travers from the London School of Economics, has now published its proposals.

The overall approach that the commission recommends is to allow the capital's government control over areas including property taxes, in exchange for lower levels of government grant.

The document says that it "may be possible (and necessary) to develop mechanisms which tax some of the value uplift on property brought about by public capital investments, such as in transport or regeneration schemes".

It says that evidence presented to the commission by mayoral agency Transport for London shows that "existing value capture mechanisms extract only a small fraction of land value gains from transport investment, in an ad-hoc and poorly-targeted manner".

The report recommends the government work with the mayor "to explore the feasibility, effectiveness and acceptability of new charges levied on new purchases or rentals in the residential property sector directly related to the uplift in value catalysed by public-sector capital investment, to be used to fund new capital investment".

Analysis "suggests such mechanisms could make a material difference to the funding of new transport in London", the report says.

The report also says that centrally imposed caps on planning application fees "continue to be seriously problematic for local authorities and for some businesses".

It recommends that local authorities "should be able to set fees that allow full cost recovery".

Devolution: a capital idea can be read here. 

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