The Scottish Land Commission has called for a “fundamental rethink” of speculative and market-driven approach to identifying and allocating land for development, saying it was “now time to stop talking about ‘land value capture’ and start talking about ‘land value sharing’ instead.” 

As the government’s planning bill reaches stage three, the land reform body has advised that “a more collaborative approach to development, in which the public and private sectors share risks and reward,” should be a long-term aim.

The commission also recommends initial steps to improve the way in which development land value is reinvested to support viable and high-quality places, recommending that the Scottish government:

• Undertakes a national review of developer contributions (Section 75 payments) that are often used to fund on-site infrastructure, needed to make developments acceptable in planning terms;
• Implements a new infrastructure levy as set out in the planning (Scotland) bill that could help fund infrastructure improvements; 
• Requires that masterplans in the new masterplan consent areas (MCAs) provide detailed costings for the infrastructure they need;

The recommendations follow on from recent policy debate around land value capture; recognising that land increases in value depending on surrounding infrastructure, its location and planning rights, and that this increase is captured to fund infrastructure. Ways in which land value capture could be used to generate public benefit, was one of the first things the commission was asked to investigate by government, when it was created in 2017.

Shona Glenn, Land Commission head of policy, argued that the Masterplan Consent Areas (MCAs) proposed in the current planning bill could provide an opportunity to put the recommendations into action. “The debate about how publicly created uplifts in land value should be shared between society and private landowners is one that has waxed and waned for decades,” said Glenn.

“There is a strong public interest justification for pursuing policies that would enable more of the publicly created increases in land values to be used to help make places where people want to live. Our research over the last year shows there is no quick fix and, whatever happens, there still needs to be an adequate supply of land brought forward for development. Longer term, we need to find ways to establish a more collaborative approach to place-making,” Glenn said.

The recommendations follow 18 months of research, including a joint report from the Scottish Land Commission and Scottish Futures Trust.

Click here to download the full report.