Reforming the land market – How land reform can help deliver the government target of 300,000 new homes per year

How the government can reach its target of 300,000 additional homes by reforming the land market.

15 April 2018

By Thomas Aubrey

2 minute read

A new analysis from the Centre for Progressive Policy shows that the government can reach its target of 300,000 additional homes by reforming the land market. The research estimates that reforms to the land market, which would bring down the cost of land, could deliver:

  • An additional 96,500 homes a year, a quarter of which would be across England’s core cities
  • Of which 36% (35,000) would be affordable
  • This would bring the number of new homes built in the UK up from around 184,000 to 280,000

However, a major challenge to reach this target are the UK’s land compensations rules which require that landowners be compensated at values including the assumption of planning permission in the event that land is acquired by the state for new housing rather than the value of the land related to its current use.

This is in stark contrast to many countries in Continental Europe and Asia. In countries with significantly higher housebuilding rates, most of the value of rising land flows to the community rather than landowners. This reduces the speculative nature of the land market thereby creating a far more efficient system as seen in countries such as France, The Netherlands and Germany.

By enabling local authorities to capture the uplift in land values instead of the landowner, there would be a dramatic change in the level of infrastructure investment across England. Prior analysis estimated that this could increase investment by as much as £9.3 billion per year which could pay for the necessary infrastructure for an additional 96,500 units per annum, a quarter of which would be in the Core Cities.

Quote from Thomas Aubrey, author of the report:

The image used above is by Wenzlerdesign. published under CC0