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Economics and Land Use Planning: Insights from Britain

Blog Entry No. 5
October 26, 2016

'Radical Reforms' to the British Land Use Planning System Proposed by Cheshire, Nathan and Overman

This is the final installment in a series of five blog entries showcasing insights and recommendations via excerpts from the 2014 book Urban Economics and Urban Policy: Challenging Conventional Policy Wisdom authored by Paul C. Cheshire, Max Nathan and Henry G. Overman. This entry focuses on recommendations to reform the British land use planning system:

  • So the components of a solution to the problems created by the English system of land use regulation would require a mix of: 
  1. Incentives in the forms of (a) retention of a proportion of taxes on both business and residential property by local government which would be exempt from the national system of revenue equalisation; and (b) impact fees;

  2. Make land price discontinuities a 'material consideration' with a presumption in favour of development being permitted unless (an important unless) the wider amenity values of the land in its current use justified the premium.

  3. Replace development control as a decision- making mechanism with local plans drawn up according to national guidelines and approved democratically by the local community; in short a rule based system. (p. 151-152)
  • "The first requirement for successful reform is to have incentives via the tax system. Such incentives need to be transparent and they need to be significant. There also needs to be a way of directing compensations to those who actually lose out from development. One way of addressing that issue would be a more wholehearted adoption of impact fees." (p. 150)