Government confirms developer contribution changes to capture land value uplift

BUDGET 2018 The government is to change the planning gain system in a bid to give developers and councils more certainty while enabling localities to capture a greater share of increased land values for spending on infrastructure and affordable housing.

Development: Budget changes aim to better capture land value uplift
Development: Budget changes aim to better capture land value uplift

The moves appear in a Ministry of Housing, Communities and Local Government (MHCLG) response, published alongside today’s Budget, to a consultation in March on supporting housebuilding through developer contributions. The ministry said it will consult on draft regulations later this year to put the revised arrangements in place.

Among the key points in the response, the government says it will:

  • enable combined authorities with strategic planning powers to take forward a strategic infrastructure tariff 
  • lift the pooling restrictions on section 106 contributions in all areas
  • take forward proposals to allow local authorities to seek a fee from applicants towards monitoring planning obligations

The government said it is not now proposing to legislate to take forward proposals in the March consultation intended to allow local authorities to capture increases in land value where this is justified by infrastructure needs.

However, it maintains that there are "existing flexibilities" in the Community Infrastructure Levy (CIL) regulations that, through the use of differential levy rates, allow local authorities "to go some way towards achieving the objective of the proposed reform".

It promises changes to guidance to support councils in setting differential rates "more effectively".

The response document says the government recognises the "inherent tension" within this proposal between seeking to increase market responsiveness and the wider objectives to reduce complexity and increase certainty and acknowledges the concerns raised during the consultation, "in particular those related to the inherent complexity of the proposals".

Elsewhere, the document indicates that the government intends to lift the pooling restrictions on section 106 contributions in all areas and promises further measures to incentivise uptake and continued use of the levy.

The document also confirms that the government will enable combined authorities with strategic planning powers to take forward a strategic infrastructure tariff and encourage groups of charging authorities to use existing powers to "more effectively support the delivery of strategic infrastructure through the pooling of their local CIL receipts".

"In the longer term, the government will bring forward proposals for allowing joint planning committees to charge the tariff and will review options for giving other groups the power to levy a tariff," it adds.

The government also says it will retain the current requirement for councils to consult on draft CIL charging schedules, but will remove the current requirements for two separate rounds of consultation in all cases.

"This will ensure that charging authorities can decide the most proportionate approach to consultation, speeding up the time taken to introduce and amend charging schedules. It will also ensure stakeholders have clarity over how they can respond to proposals," the MHCLG claims.

In addition, the government said it will take forward proposals to make clear that local authorities can seek a fee from applicants towards monitoring planning obligations. "In developing these proposals, the government will consider how best to ensure that monitoring sums are set at an appropriate level," says the MHCLG document.

Melanie Leech, chief executive at the British Property Federation, welcomed the government’s "sensible, measured approach to land value uplift". She said: "In a noisy environment with multiple views on land value capture being aired, it is pleasing to see such a considered response providing more certainty for developers and local authorities, and enabling more infrastructure provision for local communities."


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