Planning Gain

Professor Tony Crook is a chartered town planner, Emeritus Professor of Town & Regional Planning and former Pro Vice Chancellor of the University of Sheffield. His current research focuses on planning obligations and affordable housing and on the supply side of the private rented housing sector. His co-authored book with Professor Peter A Kemp, Transforming Private Landlords was published by Wiley Blackwell in 2011. He is also actively engaged in policy and practice. He is chair emeritus of the Shelter Trustee Board, Deputy Chair of the Orbit Housing Group, a non executive director of a regional house-builder, a Trustee of the Coalfields Regeneration Trust, a council member of the Academy of Social Sciences, and a member of the Royal Town Planning Institute Trustee Board. He is a Fellow of the Academy of Social Sciences and was appointed CBE in 2014 for his services to housing and the governance of charities. Professor John Henneberry is a charted town planner, a chartered surveyor and Professor of Property Development Studies in Department of Urban Studies and Planning at the University of Sheffield. His research focuses on the structure and behaviour of the property market and its relation to the wider economy and state regulatory systems. He has particular interests in property development and investment and their contribution to urban and regional development. He has developed a distinctive 'old' institutional approach to property research that focuses on the impact of social, cultural and behavioural influences on market actors, structures, processes and outcomes. He is a Fellow of the Academy of Social Sciences. Professor Christine Whitehead is Emeritus Professor of Housing Economics at the London School of Economics and was for twenty years Director of the Cambridge Centre of Housing and Planning Research at the University of Cambridge. She is an internationally respected applied economist working mainly in the fields of housing economics, finance and policy. Major themes in her recent research have included analysis of the relationship between planning and housing; the role of private renting in European housing systems; financing social housing in the UK and Europe; and more broadly the application of economic concepts and techniques to questions of public resource allocation with respect to housing, education, policing and urban regeneration. Her latest book, with Kath Scanlon and Melissa Fernandez, Social Housing in Europe, was published by Wiley Blackwell in July 2014. She is a Fellow of the Academy of Social Sciences and was appointed OBE in 1991 for services to housing.

• Acknowledgements xiiiForeword by Dame Kate Barker xvPreface xviiNotes on Contributors xxi1 Introduction 1Tony Crook, John Henneberry and Christine WhiteheadPurpose of the book 1The development process and the creation of development value 2The taxation of development value 4Factors affecting effective development value capture 6Property rights and ownership 7The need for finance 8The ownership of development rights 9Taxing value or raising charges 9Rules versus discretion? 9Fixed taxes, tariffs and negotiated contributions 10Hypothecation and contract 11Key factors behind the development of planning gain policy in England 11Political economy 12The planning system 12Central–local relations: Local discretion, innovation and adoption 14Definitions 15The structure of the book 162 The Economics of Development Value and Planning Gain 20Christine WhiteheadIntroduction 20Why is land and its value special? 21The potential to tax increasing land values without generating inefficiency 22The impact of planning on development values – the creation of planning gain 25How are these values achieved? 25Planning affects land supply 26Planning affects demand 27Planning affects density of construction and use 28Planning affects prices and quantities 29Bringing together the possibilities 29Instruments available to capture planning gain 32Overview 343 Capturing Development Value Through de jure National Taxation: The English Experience 37Tony CrookIntroduction 37Betterment and development value defined 39Compensation and betterment: the Uthwatt principles 43Taxing development value: post-war national schemes 461947: The development charge and the central land tribunal 481967: Betterment levy and land commission 511974, 1975 and 1976: Development Gains Tax, the Community Land Scheme and Development Land Tax 54Lessons learned 594 Planning Obligations Policy in England: de facto Taxation of Development Value 63Tony CrookIntroduction 63Planning obligations: the key principles 65Using planning obligations to secure land and funding for affordable housing 74The overall framework 74Detailed requirements 79Recent policy initiatives 83Tariffs 85Optional planning charge 86Planning gain supplement 88Community infrastructure levy 93Changes to CIL and new LPA incentives 97Viability and S106 99CIL policy: concluding comments 100Conclusions 1015 Development Viability 115John HenneberryIntroduction 115Development viability 117Threshold land value 120Table of Contents ixDevelopment appraisal 121Property development within the wider property market 121Development appraisal 123Estimating the residual value of a residential development site 124Assessing the impact of planning obligations and developer’s contributions on the viability of development proposals 130Accounting for spatial and temporal variations in the development market 133Conclusion: addressing the viability dilemma? 1366 The Incidence and Value of Planning Obligations 140Steven Rowley and Tony CrookIntroduction 140The growth of obligations 140Methods for measuring the incidence and calculating the value of planning obligations in England 145The number of obligations in England 151Affordable housing obligations in England 155The total value of planning obligations agreed in England 160Planning obligations in Scotland and Wales 162Rural exceptions schemes 163Who pays for the obligations? 164Conclusions 1717 Spatial Variation in the Incidence and Value of Planning Obligations 175Richard Dunning, Ed Ferrari, and Craig WatkinsIntroduction 175Defining and disseminating good practice in planning obligations 177Review of earlier evidence 177Good practice research and advice 178Implications of evidence and good practice guides 184A note on Scotland and Wales 185Regional variations in the value of planning obligations 185Quantitative analysis of the drivers of the incidence and value of planning obligations 187Qualitative explanations for spatial variations in planning obligations 192The changing practice context 192Stretching the ‘rational nexus‘ 195Delivery 196Conclusions 1978 Delivering Planning Obligations – Are Agreements Successfully Delivered? 201Gemma Burgess and Sarah MonkIntroduction 201Why consider delivery of planning obligations? 202Types of planning obligations 203Case-study evidence of successful delivery of planning obligations 204Quantitative evidence on the delivery of obligations 207The factors affecting the delivery of affordable housing obligations 210Trends in the delivery of affordable housing 211The impact of the economic downturn on delivery 216Implementing the community infrastructure levy 220Conclusions 2249 International Experience 227Sarah Monk and Tony CrookIntroduction: making comparisons and transferring experience 227Australia 231Planning policy, planning legislation and its administration 231Developer contributions to infrastructure 233Developer contributions to affordable housing 236Germany 239Planning authorities and the planning system 239Special mechanisms for controlling growth 241Land readjustment 242Provision of housing and related infrastructure 243The Netherlands 244Planning institutions and planning policies 244Changing housing policies 247Providing land and related infrastructure 248United States 250The constitution, planning and its administration 250Developer contributions to infrastructure: impact fees 252The impact of fees on prices and land values 255Developer contributions to affordable housing: inclusionary zoning and linkage fees 256Linkage fees 258Summary and conclusions: comparing the English and international experience 258Table of Contents xi10 Summary and Conclusions 269Tony Crook, John Henneberry, and Christine WhiteheadIntroduction 269Policies for capturing development value 270National approaches 270Locally based approaches 271International experience 274Overview 275The economics of planning obligations 276The sources and measurement of value 276The complexities in assessing development gain 277Planning constraints 279Approaches to capturing gains 280The financial aspects of planning obligations 281Conclusions 285Looking forward: England 286Looking forward: international experience 288Index 291

"Staff from the Department of Urban Studies and Planning have won this year’s coveted Excellence in Planning Research Award for their text on Planning Gain. The award is made annually by the Royal Town Planning Institute, the global learned society and professional institute of chartered planners, following peer review of the best of the year's planning research by leading academics and practitioners. The award recognises the high quality and policy relevance of the work on planning obligations led by Emeritus Professor Tony Crook, Professor John Henneberry and Professor Christine Whitehead (at LSE) in collaboration with colleagues in the department, at the University of Cambridge and at the London School of Economics. The work was commissioned by a wide range of organisations, including research councils and charities, government departments, and trade and professional bodies. Practitioners and policy makers helped design the research to secure its policy relevance. The work has led to many research reports, articles in research and professional journals, papers at professional and academic conferences, submissions to government consultations and parliamentary select committees' inquiries, and briefings for the policy and practice communities (local and central government and the legal, planning and property professions). The researchers regularly provided independent evidence on how planning obligations worked, critically commenting both on their effectiveness and on the policy changes regularly proposed.All this work was brought together in Planning Gainauthored by the award winners and published in 2016. The book tells the 'story' of how planning obligations became an effective means of capturing development value and of securing affordable housing and infrastructure funding from developers, in a way that is accessible both to other researchers and to policy professionals."—The University of Sheffield, press release (9/9/2016)