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Give Something for Nothing, or Get Something for Nothing?

Category: News 13 January 2011

Does the notion of giving ‘Something for Nothing’ appeal to you?

If not it is imperative you make this clear to the Government following their request for suggestions on what priorities and policies should be included within the National Planning Policy Framework ("NPPF" - click 'here' to see the relevant CLG web page) that will replace the current PPS documents. The Coalition Government is apparently starting with a blank canvas and this is therefore a rare opportunity to influence policy development in its infancy.

Housing and affordable housing policies will doubtless be central themes within the proposed streamlined NPPF and this opportunity to influence the pre-consultation drafting process shouldn’t be missed if the industry is to forestall attempts by local planning authorities to prescribe land values so that their CiL, financial contribution and affordable housing aspirations can be funded irrespective of economic circumstances.

If the house building sector is to recover a supply of developable land is essential and the mandarins drafting the NPPF must recognise this will not be achieved if local planning authorities are allowed to prescribe that a ‘viable’ residual land value merely equates to, or slightly exceeds, existing or alternative use values (“EUV/AUV”). Put simply, if sufficient land is to be released for development the NPPF must reflect the fundamental concept that land owners should, not only, benefit from the uplift in value conferred by obtaining a residential planning permission, but also, retain the majority of such uplift.

Expecting land owners to surrender the overwhelming majority of land value beyond EUV/AUV is a crude attempt to re-introduce a Betterment Tax and is serving only to sharply reduce the supply of viable, available and achievable development sites. The presumption that it is reasonable that the majority of land value should be sequestrated by the State exemplifies the ‘Something for Nothing’ approach of the planning system being dismantled by the Coalition Government and it is essential this point is emphatically made by the development industry to (and comprehended by) the Coalition Government or it is very unlikely it will be reflected within the NPPF.

Furthermore, the expectation that land owners give 'Something for Nothing' is demonstrably unfair when viewed alongside the expressed intention of the Coalition Government to incentivise RSLs to deliver additional affordable housing using a 'Something for Something' approach (whereby they are able to retain surpluses generated through increased rent revenues from Affordable Rents) and to incentivise local planning authorities via New Homes Bonus payments. Increased housing delivery will not be achieved if these ‘Something for Something’ incentives are expected to operate alongside an overt policy to ‘capture’ land value on a ‘Something for Nothing’ basis. Unless land is released by private sector owners the delivery of new housing will dwindle so, for the benefit of the entire industry, this simple premise needs to be stressed.

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