Written evidence submitted by Plan Research [HLV 021]

1. I am a town planning consultant working in private practice in the south of England. My role includes helping families and small-to-medium enterprises obtain planning permission for housing, tourism accommodation, agricultural projects and commercial buildings. I therefore have insight into the process from the point of view of clients who are land owners, developers and investors in housing provision, typically of one to thirty residential units per site.

2. The text of the Call for Evidence implies that land value capture is presumed to be helpful, and that changes to the system might be needed to capture more value, or capture it differently. I would put it to the Committee that the current implementation of Section 106 agreements and Community Infrastructure Levy is flawed, in that it limits and actively discourages housing provision, by adding to costs and causing unnecessary delays.

3. The roots of the problem go back to the assumption that the private sector will do the vast majority of the house building, while local government will set policy on additional charges for the private sector, often with very little democratic oversight. Incentives pull in opposite directions, whereby local authorities seek as much as they can from developers, and developers seek to avoid paying these contributions if at all possible. The problem has been exacerbated by the recent tendency of local councils to seek developer contributions which are only tangentially related to the planning system or the provision of housing.

4. For example, the London borough of Lambeth requires applicants for planning permission to pay for car hire club membership for future residents, via a Section 106 agreement which takes months to process. This membership may not ever be used by those residents. Measures like these artificially increase the cost of housing, in an attempt to ‘nudge’ prospective residents of the area into preferred behaviours. This is despite the Supreme Court decision Wright v Resilient Energy Severndale Ltd & Forest of Dean District Council [2019] UKSC 53 which re-affirmed that planning permission is not meant to be bought or sold, and that it is not permissible for a developer to use financial inducements to obtain planning permission.

5. Nevertheless, there will be instances where a developer contribution is reasonable and proportionate. I have known several planning applications refused permission on the grounds that a Section 106 unilateral undertaking had not been completed by the statutory determination date for the planning application. That was sometimes because paperwork had not been returned by the applicant, but more often because the local authority’s legal department had not produced the paperwork in time. This problem could be solved by national planning guidance requiring routine contribution agreements to be signed on a standardised form at the pre-commencement condition discharge stage, rather than a bespoke legal agreement during the application determination stage. Currently, time and money is being wasted for all parties by requiring legal agreement processes for applications which do not ultimately gain planning permission, or will never make a lawful start.

6. The requirement on applicants for planning permission to sign a legal agreement, resulting in a registered land charge, committing the landowner to pay infrastructure charges, can be sufficient to discourage some people for applying for planning permission at all. There are also instances where the sums demanded tip the project into unviability, in which case the applicant has to pay further sums to a ‘viability consultant’, who argues with the local authority for a smaller contribution. This creates an uneven playing field, in which some housing schemes end up paying more or less than others. Because private housing provision involves risk, and a great deal of work and expense navigating the local planning process, it does not take much additional expense – for example, £10,000 added to the cost of each three-bedroom house – to prevent a housing scheme going past the pre-application advice stage.

7. Local authority planning officers are not typically trained in economic viability, and will happily load costs on to a planning application by making additional, costly demands at the earliest stages. Land value capture negotiations now happen alongside all kinds of extra report requirements, some of which were introduced by Government only recently and require specialist consultancy. In addition to the traditional costs of plans and drawings, applicants for planning permission are now required to pay for heritage statements, biodiversity net gain calculations, nitrate mitigation designs, landscape visual impact appraisals, business plans and many other kinds of documents to be produced. A Section 106 agreement or Community Infrastructure Levy negotiation can be the proverbial straw that breaks the camel’s back.

8. One of the key misconceptions of the land value capture system is that landowners are all wealthy, or are making ‘excessive’ profits which need to be seized for the common good. This is not always the case. The people who occupy new housing end up paying these extra costs, because the money required by Councils from all developers inflates the market. Loading the costs of infrastructure on to the planning system is a regressive form of taxation because residents who already own property, or do not require a new-build home, pay nothing.

9. If the Government wishes to increase the delivery of affordable housing in particular, it should reduce the up-front cost of making a planning application to the absolute minimum required to establish that the proposal is acceptable in principle. This would also reduce the workload for local authority planning officers, who now have to parse hundreds of pages of documentation for even the simplest of housing applications. Should it subsequently be discovered that a scheme is not viable at the condition discharge stage, a new design approach would be needed, which the ‘variation of condition’ process enables at relatively low cost.

10. In my view, it would be a distraction for the Government to embark on a major reform of the land value capture system at the present time, as that would create further uncertainty for prospective housing developers and landowners. There are already sufficient challenges to meeting local housing supply targets without adding another. The simple reforms I have described above – limiting payments to directly relevant infrastructure, preventing demands for inducements, and pushing formal agreements forward in time to the condition discharge stage – should be sufficient to remove most of the roadblocks that our clients experience.

11. I am very concerned about the suggestion in the committee’s Call for Evidence of new methods of land value capture which could potentially be incompatible with human rights legislation. This sounds like compulsion, which is exactly the opposite of what is needed to persuade land owners to allow the building of new homes. We need more carrot and less stick.

12. Ultimately, the use of land value capture will not overcome the basic problem that requiring private provision of public goods, such as affordable housing, is conceptually flawed. The market cannot deliver the needs of those people who cannot afford to participate in the market. Advocates of land value capture might wish to reflect on the fact that only government creates betterment, by identifying the most suitable sites for new housing. If more affordable housing is the goal, then local planning authorities should be given the skills and training required to bring forward sites as public housing projects, as they did in the past, rather than relying on arbitrary development taxes on the private sector to make housing provision ‘fair’.

March 2025