With Planning Approval Comes New Value: How Can Communities Gain Too?

David Fagleman writes about the idea of "development gain"—the value created when developments achieve planning approvals—and how local governments could stand to profit from the bump in value along with developers.

"There are two reasons why it’s important that this gain is captured (a friendlier way of saying ‘taxed’). Firstly, the rise in the value of land is usually a result of public investment in the surrounding area: it’s therefore a windfall the landowner has done little to earn.

"Secondly, new homes will increase the demand on the surrounding infrastructure. Improving and expanding it should be at least part-funded by the gain, or it will fall on the state to do so. Even in times of plenty, this isn’t the ideal situation."

The article focuses on examples from the United Kingdom, so the article relies on terminology that differs from the jargon of U.S. rules and regulations, but the idea is the same: value capture is both an opportunity and a necessity.