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Planning gamble on green paper |
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Forcing developers to add value to a community is one of the options being investigated in the Government's planning Green Paper.
Forcing developers to add value to a community is one of the options being investigated in the Government's planning Green Paper. Local authorities can use ’planning obligations' to compel developers to give cash or in-kind ’gains' such as roads, schools and affordable housing to an area in which they wish to build. Currently planning obligations are not compulsory and can be haphazard in ensuring the community will benefit.
Greg McGill, a Henry George Foundation board member and Fellow of both the Royal Institute of Chartered Surveyors (RICS) and Royal Town Planning Institute (RTPI), says that the favourite idea of the Department for Transport, Local Government and the Regions (DTLR) is a fixed tariff as part of the planning obligation for all but the smallest developments.
But revitalising communities and developing infrastructure will be harder to do under the proposals. Land values will often rise and fall according to the investment or planning blight (where property values fall) that result from planning permission being given for new development. The current property tax system, Business Rate and the Council Tax sustains a culture of land speculation that is ultimately damaging to communities. This is because the seller of a property is the only person who gains from its increase in value rather than the local community.
Some think the tariff-based approach to planning obligations will improve the situation. It won't. It will merely regularises it, removing inequities between local authorities, some of which do not exercise their right to implement obligations. The fundamental problem of increasing house prices will remain. At best they will produce a tiny proportion of social housing, while making other housing more costly and of lower quality, because tax paid by developers has to come out of their development costs.
There is an alternative way to achieve truly sustainable development not explored in the Green Paper. It requires a completely opposite approach: the un-taxing of development and the taxing of the land value element of property value. Denmark reassesses property values every year and has seen the cost of administering the tax reduce overall. More frequent revaluations pick up the effects of planning decisions on all site values. This tax reform would foster urban renewal (as the Urban Task Force recognised) and, significantly, would require less public revenue. The more buoyant property tax might even do away with the need for planning obligations. It would save the taxpayer money! And it would undoubtedly promote sustainable development.
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