Earlier this year, the government launched a 'national conversation' on land use, and specifically the development of the long-awaited land-use framework for England.
The pattern of land use in England must change significantly in the next few decades to ensure food security, clean energy, climate resilience and affordable housing, to name but a few objectives.
Balancing these is key to unlocking economic, natural and social capital in England. But in its Multifunctional landscapes report, the Royal Society estimates that, by 2050, an additional 4.4m/ha of additional land – 18% of the UK's total area – could be needed to meet these diverse and competing demands.
Landowners' perspectives central to reform
Landowners will play a pivotal role in this transition – assuming compulsory purchase remains the exception rather than the rule, despite the government's push for greater use of this mechanism in the Planning and Infrastructure Bill currently before Parliament.
The land-use framework consultation, which closed on 25 April, acknowledged the need for policy to reflect the 'actual lived experiences' of landowners in England. The extent to which the government integrates these diverse perspectives into its response to consultation, due this month, will set the tone for what comes next – and determine the success or failure of the framework.
Indeed, recognising the importance of such views, the London School of Economics and Political Science (LSE) hosted a landowners' round-table last September as part of a wider LSE Oram Fellowship project to promote a more collaborative planning culture that embraces a holistic view of value creation through land-use projects.
At the event, we asked 20 landowners from the public, private and third sectors to give us their views on land as a resource, and how the UK government might best support their participation in value creation and sharing. This was complemented by eight in-depth interviews, with LSE then publishing its findings in the Planning with purpose report.
While we focused on urban and peri-urban land in London and the South East of England rather than rural sites, our findings, discussed below, can contribute to the land-use debate as we await the first draft of the framework.
Round-table explores variety of functions
To make informed decisions about land, we must be clear what value can be created through its effective use and management. With the multiple different roles that land plays, and government and industry focusing on value uplift, capture and sharing as a key way of financing long-term infrastructure investment, it is essential to consider what other value land provides, beyond the financial.
Land as an asset class has long been valued in a transactional way for development or agriculture, but the scope, functions and values of this asset class are expanding with the emergence of natural capital markets, for example.
However, its commodification, through valuation, as an asset to be bought and sold often obscures its symbolic, social, cultural and intrinsic environmental values. Though less tangible, these are equally important in land-use decisions.
Indeed, many landowners recognise the diverse types of value that can be promoted on their property, and are keen to do so, particularly when they contribute to better business outcomes.
A round-table participant observed that 'it does relate to finances, but you can't have [financial value] without all of the others ... so ensuring that you have those factors means you inevitably increase its financial value'.
Equipping landowners from all sectors with the language and tools to discuss, measure and demonstrate this intangible value can help them protect key assets, or carry out projects that will enhance the social and environmental well-being of their communities.
It can also bolster the case for community ownership and the disposal of public land at less than market price by including social and environmental value uplift when determining best considerations. This is a requirement set in section 123 of the Local Government Act 1972 and, while there has been little policy guidance about what 'best consideration' might mean, value has mostly been interpreted as monetary.
Informed trade-offs necessary for balanced approach
It is important to distinguish between transaction-based property valuation and the economic valuation of land, which includes a wider range of values in its calculations.
Many government organisations, such as HM Treasury and the Department for Environment, Food & Rural Affairs, as well as those outside government, such as RICS and the Quality of Life Foundation, have published guidance and frameworks to calculate the social or natural capital value of sites and projects. Nevertheless, there is no single mechanism for comparing different value concepts. This makes it all the more difficult to identify and understand the multidimensional value of land.
Therefore, society needs to take stock of current valuation methods, and to determine how these might work together as well as with traditional property valuation tools. Chartered surveyors can play an important role in this process alongside government officials and other professionals.
RICS' Land and Resources Group put together an internal paper that contributed to RICS' sustainable housing delivery position last year.
However, the choice between – say – food security and biodiversity, affordable housing or social infrastructure can't be collapsed into an optimisation exercise, however advanced the valuation tool. As one round-table participant observed, land-use decisions 'often come down to political choice based on a set of social values that underpins … political beliefs'.
Government and landowners alike will have to make important trade-offs and move towards a culture of accepting inevitable compromises, to maximise land's potential for the long term.
For instance, a balanced approach must be taken across the different stages of the development cycle to ensure maximum benefit to society as a whole. The value uplift collected by the public purse has a direct impact on the viability of a project and a landowner's ability to provide quality developments.
Landowners in our study therefore cautioned against too much experimentation with benchmark values. Indeed, the recent consultation on changes to the National Planning Policy Framework revealed that those opposed to benchmark land values on green belt land – 50% of respondents – feared it would discourage landowners from bringing their sites forward for development, especially if they were set too low.
Government must work with market to create value
The government says it is committed to transformation, guided by a new set of principles to inform policy with land-use implications. I believe the emphasis on a long-term, joined-up spatial approach is encouraging, given the need to increase certainty for landowners and their investment partners.
Our participants cited risk as the main factor impeding value creation. A forward-looking strategy that embraces the entrepreneurial nature of the market while safeguarding the well-being of communities has the potential to unlock multiple types of value across geographic scales in England.
Ensuring that local plans are kept up to date and linked to the broader national and subregional strategic visions is key to ensuring a more predictable landscape that will promote innovation and investment.
However, the spatial development strategies proposed in the Planning and Infrastructure Bill must be grounded in meaningful democratic participation early in their conception rather than just having local populations comment on a completed draft.
Creating ways for developers to provide quality developments easily will also solidify the government's role as market creator and shaper. As one landowner commented: 'A lot of the value is lost in the fight … If we can move to a model where we are assuming that something's going to go ahead, we can look at ... creating shared values [as well as] a sense of place.'
Lowering risk can encourage investment
Building trust in the public sector as an essential value creator and partner could increase consensus around government intervention as well, and secure further cooperation between landowners and local or national government. Notably, increasing certainty and taking on risk for private or third-sector landowners were cited as two of the most valuable contributions that the public sector could make to the built environment.
One participant implied that this might even increase landowners' willingness to forfeit a greater percentage of return: 'Of course the capital receipt is important to landowners. But if getting development off the ground was easier and less stressful, perhaps their view or expectation of [their] land's value would be less' than it is now, given the time, money, complexity and risk involved in the current 'painful' process.
To ease this pain, local, regional and national governments must share the risks taken in their planning policy and practice.
The English Devolution White Paper is an opportunity for strategic authorities to minimise development risk for landowners early on by preparing sites, for instance, by carrying out land assembly or providing important infrastructure, such as transport and heat networks, upfront. This would increase the feasibility of quality developments and long-term investment for landowners.
However, while the introduction of a mayoral levy under the forthcoming Devolution Bill will support infrastructure funding at the strategic level, it will not improve infrastructure provision at the local level, which is determined by councils' ability to process section 106 and Community Infrastructure Levy (CIL) funding. Certainty at both strategic and local levels is necessary to minimise risk and increase certainty.
Unspent developer contributions were identified as another blocker to development and the redistribution of value to communities. One participant noted 'on every single site I've worked on in London ... the obligation has been made, funds have been transferred to the council, but they do not have the resources to spend it'.
Reinforcing the capacity of local authorities to provide basic infrastructure such as running water, roads and public services is paramount to building cohesive communities and unlocking growth by decreasing the risk of local opposition to development.
'To ease the pain of the process for landowners, local, regional and national governments must share the risks taken in their planning policy and practice'
What's next for land use in England?
While there is clear ambition from government to meet its sustainability objectives through the effective use of land, it has acknowledged the gaps between its aspirations and the current practical policy mechanisms to achieve them. For instance, section 106 and the CIL do not function as they should, and there remains a need for better strategic planning.
Given the diversity of landowners and their needs and objectives, it will be important to take a multi-pronged approach to reform. With this in mind, the government must continue the conversation with landowners across all sectors – beyond the land-use framework consultation – as it introduces new policy mechanisms to reshape the land market, such as strategic planning authorities, mayoral levies or alternative means of value capture.
The regional land commissions referred to in the English Devolution White Paper could provide the infrastructure to guide these conversations in the future, instilling confidence and promoting engagement with a new culture of value creation.
It is also crucial to recognise that the process of value creation is just as important as its outputs. More progressive ways of working can generate valuable outcomes such as risk reduction, capacity-building and partnership creation and consolidation. They should not be a by-product, but rather consciously created through a new land-use culture that embraces the collective ownership of the risks and rewards.
Indeed, effective value creation cannot take place until a broad consensus has been reached on the values that should be fostered through these processes. The government must adopt a proactive approach to holistic value creation, and encourage others to do the same.