Land value capture and funding delivery
The process of capturing some of the increase in land value which comes from policy decisions, the granting of planning permission by local authorities, or as a consequence of new or improved, publicly funded infrastructure projects.
Capturing land value uplift of a garden community
This involves making sure an appropriate portion of the enhanced land value arising from the development is made available to fund the delivery of:
other measures needed to support development of a sustainable garden community
Funding and delivery
When considering the funding and delivery of garden communities you should think about the following.
identify upfront what infrastructure, facilities, design quality and legacy provisions are needed, and ensure there’s a good evidence base justifying them
develop a clear planning policy for your garden community. Set out what infrastructure, services, stewardship, and other attributes will need to be delivered
build consensus around the role of land value capture in delivering the vision for the garden community
ensure the right skills and experience are available to help the parties with the legal and financial issues and negotiations
establish collaborative working relationships with the main landowners and promoters agree how land value uplift will be harnessed and used to fund costs. Enshrine consensus on this in a memorandum of understanding, collaboration or other agreement
assess the viability of the project and investment needed to deliver your garden community(both upfront and at later stages) to help Also determine what extent of land value capture is feasible
think about the role the public sector can play if parties are unable to agree an appropriate approach to land value capture. Like using a proactive approach to land assembly or public investment in infrastructure delivery
Delivering the outcomes of land value capture
While the purpose of developer contributions is not land value capture, these mechanisms can be used to secure infrastructure and other works and provisions that are funded from the uplift in land value which comes from the grant of planning permission.
Planning agreements such as Section 106
These can be used to capture the works, provisions and contributions required from developers to mitigate the impact of the development.
Make sure the Section 106 agreement has appropriate review mechanisms over the course of delivery that reflect changes in viability and delivery of the garden community.
Where there are multiple landowners or developers involved, a framework approach S106 is a useful mechanism to attribute the delivery of specific items of infrastructure to specific development phases.
Community Infrastructure Levy (CIL)
This is a planning charge to help deliver infrastructure within a local authority. Given its complexity, potential for infrastructure provision needed up front and long timeframe for delivery, CIL may not always be feasible or appropriate for a garden community development.
Further information on CIL can be found on the GOV.UK website
These are successful when a landowner or promoter has a long-term interest a garden community, and is willing to accept returns over a longer than typical timescale.
Partnership approaches also have benefit when the local authority is willing to invest in delivery of the garden community to facilitate its development.
development agreement – a negotiated legal agreement that sets an agreed sum that will be paid to the local authority at a later stage in return for upfront infrastructure investment. It enables early delivery of infrastructure and an appropriate return which can be reinvested by the local authority
joint venture – typically between the landowner and local authority, whereby investment in infrastructure is treated as an equity stake in a garden community, and the partners shares in the risk and reward associated with development
informal partnership – effective where there’s a strong partnership between the local authority and landowner/developer . It can be underpinned by a memorandum of understanding to set out respective responsibilities to ensure delivery of the project
Public land acquisition
The public sector can explore the potential for a proactive approach to land assembly at an early stage. This may create opportunities for land value capture.
Other funding sources
Garden community developments should be largely self-financing, but there may be some circumstances where additional funding is required either to:
- fund specific infrastructure which is critical to a garden community or has wider strategic impact, but is beyond what is viable for the development
- provide enhanced benefits to a garden community
Funding gaps should be identified early in the process as part of viability testing and addressed by the main partners.
Some current funding sources
central government Housing Funding Programmes on GOV.UK website
charitable Institutions such as the Wolfson Foundation
Homes England Home Building Fund on GOV.UK website
Local Enterprise Partnerships through the Local Growth Fund on GOV.UK website
download the Urban Growth Company: Value capture framework and toolkit on the Urban Growth Company website (PDF)
download the Creating Garden Cities and Suburbs Today on the Town and Country Planning Association website (PDF)
download the Transport for London: Land Value Capture information on the London.gov.uk website
download Land value capture and infrastructure delivery through SLICs on the Town and Country Planning Association website (PDF)