Henry Kelly, economist at sub-national transport body Midlands Connect, maintains that it’s not always easy to work out who would benefit from the uplift in value: “It’s quite difficult. You have developers. You have standard freeholders. Then you might have leaseholders. And then you have tenants, who are probably the people that will end up paying more, because they have the benefit.
“And that’s just the residential side. If you think about the complexity of structure that you will have on a lot of commercial and retail developments, you end up wondering: who are you taxing and how are you taxing them?”
Even Kelly agrees that Land Value Capture will become more popular because of falling levels of Government finance available. However, he highlights another potential issue related to the structure of local government.
“The problem is the link between the planning body and the transport authority. Who’s building the scheme and who is approving it? With two tier local government, that could become quite problematic.”
There’s little doubt that the dwindling amounts of central government funding are pushing local transport planners down the route of alternative fundraising methods, and that LVC agreements such as the ones signed in Northumberland look set to become a common arrangement.
Another solution could be greater utilisation of the ‘rail + property’ model captured in Hong Kong some 50 years ago. But if the Hong Kong model is to be followed, then train operators and the Government will need to ensure they are properly incentivised to invest, through the new Passenger Service Contracts and the wider rail reform that is set to replace the traditional franchising model.
Land value capture deals have the potential to capture more funding, and much earlier than other methods.
Stephen Joseph is of the view that the latest land value capture concept could help to make a difference: “It depends where we go on broader issues such as house building and the planning system, but if you do some of this then you might have housing around public transport rather than roads.” ■
