Another win

At times like this, I can really get behind this government. There are a few policy ideas I have been a supporter of since hearing about them or considering them, but never expected them to see the light of day. Scrapping NI is one: apparently, this could now happen.

Here is another radically liberal plan which could make it into the Budget, according to the FT Westminster blog:

There will be a pilot project announced for councils to oversee a system of “land auctions” whereby they would effectively sell planning permission to developers – freeing up more land and driving down the price.

The source of this brilliant policy (and it really is quite brilliant) is CentreForum's Dr Tim Leunig; you can read the report at this link (src).

It is a way for councils to capture a large proportion of the uplift in land values which takes place when they add planning permission. Currently, you may be aware, the landowner or developer applies for planning permission, and the council either accepts or rejects. The uplift in value is shared by the landowner and the developer in some combination; none of the uplift flows to the local community as expressed in the local council.

This scheme would allow landowners to offer the council an option on a parcel of their land: a price, and possibly some conditions, would be attached to the parcel. The council would then choose which options to buy — that is, which parcels to accept — and would slap on whatever planning permissions they thought appropriate. The council then auctions off the land, and thus earn the uplift from the landowner's price to the developer's.

This is sensible because it is only the council which adds anything new to the process between landowner and developer, and yet the council does not see any of the uplift. Consequently, there is no incentive on council or local residents to agree to new developments. By aligning the pay-off with the agent in this way, local communities will have a reason to agree as well as reasons to disagree. Hopefully, this will result in lower land prices, cheaper housing, more development, better public services and lower council tax, to name but a few of the benefits.