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Rural landowner organisation challenges figures on planning profits

Claims that landowners make billions of pounds of profit from selling land with planning permission are distorting the view of how the value of land is captured, it is suggested.

A new report by the Centre for Progressive Policy and the National Housing Federation says landowners are making billions of pounds of profit every year for getting planning permission on their land, raising prices and making it difficult to build new affordable homes.

It says that landowners in England made more than £13 billion in profit in 2016/2017, up from £9 billion in 2014/2015, a rise of around £4 billion in just two years.

The report also says that landowners’ total profits are more than the global profits of Amazon, McDonald’s and Coca Cola combined and more than the combined profit of the six biggest energy suppliers in the UK made in 2017 which was £913 million.

It adds that agricultural land now becomes 275 times more expensive once it receives planning permission, even before a single home is built while two years ago, planning permission increased the value of farmland by around 100 times.

But the Country Landowners Association (CLA), which represents landowners, farmers and rural businesses in England and Wales has challenged the claim.

‘These figures do not present an accurate view of the price land is sold for, nor do they accurately reflect the extent to which the state already captures the increased value of residential land compared to agricultural land,’ said Christopher Price, CLA director of policy and advice.

He pointed out that the Government data on land values that underpin the assumptions in the report itself states the figures ‘may be significantly higher than could reasonably be obtained for land in the actual market’ and strongly recommends the figures are used only for policy appraisal.

The National Housing Federation and the Centre for Progressive Policy are urgently calling on the Government to radically reform the way that land is bought and sold to help tackle the housing crisis.

They say that Ministers should change the law to allow public bodies to capture the increase in the value of land that comes when it is granted planning permission and this money could then be used to fund much-needed infrastructure and social housing.

‘This research shows the astronomical sums that landowners have been able to pocket, before they even build a single new home. At the same time, the numbers of people in desperate need of social housing is sky rocketing. We have to build 90,000 new homes for social rent every year to meet this need,’ said David Orr, NHF chief executive.

But the CLA believes that a range of measures are needed. ‘It is clear that we need to build more houses. We are keen to be part of the debate to help solve the housing crisis but it requires looking at a range of measures rather than a quick fix,’ said Price.

‘While there is an uplift in the value of the land, the current system already captures a high proportion of this value to fund affordable housing, GP surgeries, schools and other infrastructure. These planning obligations are a pre-requisite to any development going ahead and exist to mitigate the impact of development. The Government has recently taken steps to ensure developers contribute fully to these obligations,’ he explained.

‘The current system achieves an equilibrium which ensures landowners are incentivised to sell land, that developers build and social infrastructure like affordable homes and schools are catered for,’ Price added.

‘We are concerned that using these misleading figures as the basis to extract further value will break this equilibrium and stall land coming on to the market, holding back the delivery of all types of homes,’ he concluded.