MPs launch inquiry into effectiveness of current land value capture methods

The Housing, Communities and Local Government (HCLG) Committee has launched an inquiry that will consider potential new mechanisms for land value capture (LVC) in order to help boost house building and fund affordable housing and public infrastructure.

The inquiry will partly examine the effectiveness of existing land value capture methods, such as the Community Infrastructure Levy (CIL) and planning obligations under Section 106 of the Town and Country Planning Act 1990.

The committee is also likely to explore reform of compulsory purchase orders, whether alternative mechanisms for capturing the uplift in land values in England may be more suitable, and how value could be realised across regions in England that have lower average land values.

In its terms of reference, the committee sets out the following questions relating to planning CIL and section 106 contributions:

• Should reforms to land value capture be pursued through changes to the current section 106/Community Infrastructure Levy regime, or by introducing a new mechanism?
• What changes to planning law and guidance would be needed to introduce a new mechanism of land value capture?
• Would new methods of land value capture be compatible with human rights legislation regarding property rights?

Launching the inquiry, Florence Eshalomi MP, Chair of the Housing, Communities and Local Government (HCLG) Committee, said: “Currently, landowners can make significant profits from the substantial increases in land value when local authorities grant planning permission. We need a land value capture system which is fair and that helps to deliver what communities need – affordable housing and public services which people can rely on.

“I hope the Committee’s inquiry will bring forward practical recommendations to reform land value capture and help the Government achieve its target of delivering 1.5 million new homes by the end of this Parliament.”

Public evidence sessions are expected to commence in March 2025.

Adam Carey