Abstract/Summary

Given their increasing importance in the formation and implementation of planning policies in the UK, this paper focuses on the use of development viability tests to determine how land value uplifts actuated by planning consent could be distributed between developers, landowners and the community. Following a discussion of way in which planning obligations act as a quasi-betterment tax that can both capture and create land values, alternative approaches to operationalising Benchmark Land Value (BLV) are evaluated. The effects of different approaches to BLV on potential land value capture are simulated for a number of hypothetical development sites in order to identify and compare implied betterment tax rates and to estimate viable affordable housing proportions. It is concluded that large geographical variations in property prices produce large variations in the potential for land value capture. Different approaches to BLV have a range of strengths and weaknesses. In addition, given that viability models are susceptible to significant levels of error and potential bias, using such models to make and implement planning policies renders such processes vulnerable to opportunistic behaviour and prone to miscalculation.