The Chancellor has announced plans to trial ‘community land auctions’ whereby more plots could be made available for new homes.
Local councils are being invited to join the 12-month pilot, which will initially involve only land owned by the public sector. If successful, it would then be rolled out.
Under the scheme, local authorities would be able to ask landowners to submit sealed ‘bids’ giving the price at which they would be prepared to sell their land.
The local council would then have the right to buy the land at that price for a specified period, grant planning permission and auction it off to developers.
The model means that local authorities would capture the lion’s share of the land value uplift created by the granting of planning permission. Profits made by councils could be enormous.
According to a paper published in 2007 by the Centre Forum think tank, the value of a hectare of land in the south-east rises 400 times when planning permission is granted.
But doubts are already being expressed as to how the scheme would work, given that private landowners could be reluctant to sell land only to see local councils cream off huge profits.
Simon Rubinsohn, chief economist at the RICS, said: “It seems unlikely that landowners will be willing to sell if they think they can benefit from gaining planning permission, which could deliver far greater profits. There will also be difficulties regarding sites where there are multiple ownerships, in particular brownfield sites.”
Planning consultancy Hogan Lovells said such a model “appears to be a form of development land tax by another name”.
The idea follows a proposal in 2007 by Liberal Democrat Ed Davey, who proposed a two-stage land auction system to replace the current planning system.
In stage one, local landowners would have submitted their sealed ‘bids’, giving the councils the right to buy the land at that price for a set period. In stage two, the council would choose which land it wanted to see developed, grant it planning permission and auction it off. The idea appeared to have sunk without trace until now.
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Comments
Isn't the bigger concern that some councils might 'hint' that plannign might only be granted if the landowner sells to them?
Or perhaps the LPA would grant plannign where they otherwise shouldn't or wouldn't because they have muscled in on the uplift. It's a bit like builders granting there own planning consents, where are the safeguards?
Where huge profits are available you have to be aware that systems can quickly become corrupted.
Any new idea like this will be exploited so sometimes it is better to stick to what we have with the existing safeguard of market forces to stop people being ripped off.
What do you think?