Planning, land markets and the state: The financialized politics of land value capture

Abstract

While ‘planning’ and ‘the market’ are often framed as being in autonomous opposition, they are in fact deeply entangled. Indeed, the varying articulations of planning regulation across different historical and geographical contexts can be viewed, in part, as a function of differing ideas regarding the proper integration of planning and development land markets (Shepherd & Wargent, 2023).

Nowhere in planning is this ambiguous relationship between planning and the market more starkly revealed than in land value capture, the policy mechanism that redistributes the value created by the development of land. This land value flows into private pockets, but also into public infrastructure such as schools and healthcare facilities and, in some places, supports the provision of desperately needed inclusionary housing. The volume and direction of these value flows are regulated by the distribution of power in the state-market-private property nexus.  Land value capture is therefore arguably the field in which planning must most directly confront the logic of land markets and the institutional power of market actors.

Although contemporary mainstream policy discussion tends to be technocratic and occupied with utilitarian questions concerning how best to use land values to fund infrastructure (OECD et al., 2022), at its core land value capture is intimately connected with highly contested issues concerning the relationship between the power of property ownership, equality, justice and the common good. At the heart of this is the contested concept of development land value and its connection with theories of rent (Stratford, 2023).

In England, the technical characteristics of this policy area create challenging conditions for the governance and regulation of development land value. However, they also help to de-politicise this policy area (Foye, 2022), focusing discussion on details of policy design rather than principle. However, the deep politics of development land value cannot be contained. They periodically erupt, creating pressure for policy adjustment that state actors struggle to manage. This paper empirically examines the most recent political ruptures in England in the context of the intensifying housing crisis and the use of land value capture to fund inclusionary housing.

Via policy analysis and interviews with policy experts, think tanks, community groups, politicians and property professionals, the analysis unpicks the varying ideological perspectives and power relations that structure land value capture policy and contribute to its frequent dynamic instability and adjustment. We explore how ideology, statecraft and technical expertise have been deployed by private, public and community actors in struggles over the regulation of development land value.

By doing so the paper empirically examines the political and ideological drivers for the fundamental ambivalence of this area of policy (Helbrecht & Weber-Newth, 2018). The paper concludes that by focusing on the division of the spoils of development, contemporary English land value capture policy represents the financialization of urban politics.

References

Foye, C. (2022). Section 106, viability, and the depoliticization of English land value capture policy. International Journal of Urban and Regional Research, 2(22): 269-286. https://doi.org/10.1111/1468-2427.13076

Helbrecht, I. Weber-Newth, F. (2018) Recovering the politics of planning. City, 22(1): 116-129, https://doi.org/10.1080/13604813.2018.1434301

OECD/Lincoln Institute of Land Policy, PKU-Lincoln Institute Center. (2022). Global Compendium of Land Value Capture Policies, OECD Regional Development Studies, OECD Publishing, Paris, https://doi.org/10.1787/4f9559ee-en

Shepherd, E., & Wargent, M. (2023). Embedding the land market: Polanyi, urban planning and regulation. Environment and Planning A: Economy and Space, 0(0). https://doi.org/10.1177/0308518X231203484

Stratford, B. (2023). Rival definitions of economic rent: historical origins and normative implications. New Political Economy, 28(3): 347-362, https://doi.org/10.1080/13563467.2022.2109612