The taxing problems of land value capture, planning obligations and viability tests: some reasonable models?

Given their importance in the formation and implementation of planning policies in the UK, this paper focuses on the use of development-viability tests to determine how land value uplifts could be distributed between landowners and the community. Following a discussion of planning obligations as a quasibetterment tax that can both capture and create land values, alternative approaches to operationalising benchmark land value (BLV) are evaluated. The effects of different approaches to BLV on potential land value capture are simulated to identify and compare implied betterment tax rates and to estimate viable affordable-housing proportions. It is concluded that different approaches to BLV have a range of strengths and weaknesses. The susceptibility of viability models to error and bias renders planning processes based on them vulnerable to opportunistic behaviour and prone to miscalculation.