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Financing a new Garden City is about more than securing the capital needed to deliver infrastructure and development. It requires a viable proposition that aligns land value, investment, risk and long-term returns, while giving confidence to public and private stakeholders. The financing and delivery model should therefore reflect the particular circumstances of the site, including land ownership, infrastructure requirements, market conditions and the capacity of the organisations involved. The following principles highlight some of the key considerations in creating a financeable and investable proposition.
1. Capturing the increase in land values for public benefit
Land value capture is central to the successful financing and delivery of new settlements. The increase in land value that occurs when land is allocated and developed can help fund the infrastructure, services, community facilities and stewardship arrangements needed to create high-quality places.
While historic Garden Cities and New Towns were often able to capture substantial uplifts from agricultural land values through proactive land acquisition and assembly, the context today is more complex due to changes in planning policy and caselaw around compulsory purchase. Existing uses, remediation costs, planning history, legal frameworks and established landowner expectations can all limit the amount of value available for capture, with value often leaking out through the process of land promotion. In many cases, land already benefits from some degree of “hope value”, as there are costs associated with assessing its suitability for development as part of a local plan, reducing the scope for public bodies to secure uplifts in values through simplistic tools such as CIL and S106.
For local authorities planning for new Garden Cities, the key lesson is that early and strategic intervention matters and this must be through adopted plan policies. Establishing clear expectations around infrastructure, affordability and place quality at the earliest stages of the development process and embedding these in local plan policies helps ensure these requirements are reflected in land values from the outset including in land bids and appraisals. Viability testing these policy requirements through the local plan process will ensure that they are recognised in the planning system.
This is because Planning Practice Guidance states clearly that “The price paid for land is not a relevant justification for failing to accord with relevant policies in the plan. Landowners and site purchasers should consider this when agreeing land transactions.18” If transactions have occurred prior to Local Plans being found sound, it is much harder to capture land value uplifts through traditional developer contributions. National Policy and caselaw are clear too that landowners, who often bear considerable expenditure in developing the evidence for a new Garden City, must be granted a competitive return in any estimate of land value. While opportunities vary between schemes depending on specific circumstances, effective land value capture remains an important tool for funding infrastructure, supporting long-term stewardship and improving the viability of new settlements.
2. Diversity of supply and partnership models
The 2017 Letwin Review found that large-scale developments are often delivered over several economic cycles, making them vulnerable to fluctuations in housing demand and mortgage availability. Bringing together volume housebuilders, housing associations, institutional investors, local authorities and specialist delivery partners can create more resilient delivery structures that maintain construction activity even during periods of market uncertainty. New partnership approaches offer a significant opportunity to accelerate the delivery of urban extensions and new towns by broadening the range of organisations involved in development and reducing reliance on a single sales-led volume housebuilding model. This is particularly relevant now that the £25bn Help to Buy Equity Loan scheme, which operated to support the UK housebuilding market from 2013 to 2023, has closed.
Mixed-tenure development is a particularly important mechanism for increasing build-out rates, securing early and sustained delivery of homes, and of wider placemaking measures. By providing affordable housing, shared ownership, older persons’ housing and purpose-built rental accommodation simultaneously, developers can access multiple sources of demand rather than relying on a single purchaser group, and access early up front capital through forward sales. This allows a greater number of homes to be absorbed by the market at any one time, supporting faster and more consistent rates of construction while also creating more balanced and inclusive communities.
Build-to-rent (BTR) homes, sometimes known as Single Family Rental (SRF) have a particular potential in this context. Institutional investors are often able to acquire and fund large numbers of homes in advance of completion, reducing developers’ exposure to sales risk and enabling construction of homes and infrastructure to proceed at scale. BTR can therefore provide a stable source of demand that complements traditional market housing and affordable housing delivery.
Forward sales arrangements can further support accelerated delivery by allowing homes or development phases to be sold to housing associations, local authorities, pension funds or other investors before construction is completed. This improves cash flow for infrastructure and placemaking, reduces financing risks and provides developers with greater certainty over future revenues. For major urban extensions and new towns, forward funding and forward sales can help unlock infrastructure delivery and support the rapid build-out of multiple phases simultaneously. Together, partnership delivery models, mixed tenure, build-to-rent and forward sales provide a practical route to faster, more resilient and more diverse housing delivery at scale.
3. Building a strong business case
Regardless of whether public or private investment is being sought for a scheme, and considering that in most instances both will be required to deliver the full scale of infrastructure, a robust funding, viability and planning case will be required to show how impediments to delivery will be overcome. A strategic outline business case (SOBC) is the first gateway approval for any central government intervention in a particular project. It is an initial scoping stage to confirm the strategic context of the proposal and make the case for change. It examines a long list of options before producing an optimum short list for analysis at the next business case stage.
Funders and investors are not simply assessing the financial viability of a project; they are evaluating whether it can deliver the outcomes, returns and wider benefits they seek, while managing risk effectively. For new Garden Cities, this means developing a clear narrative that explains why the project is needed, what problems it addresses, and how it will create value over the long term. A strong investment proposition combines a persuasive vision with robust evidence, demonstrating market demand, deliverability, governance arrangements and the capacity of the project team to execute successfully.
Public-sector funders will typically expect proposals to align with HM Treasury’s Green Book principles, demonstrating a clear strategic case, economic benefits, commercial viability, financial affordability and achievable management arrangements. Increasingly, projects are also expected to articulate social, environmental and place-based outcomes alongside traditional measures of value for money using models such as the HAUS framework that forms part of MHCLG’s Appraisal Guide. Guidance from Homes England is also helpful.
Private investors will focus more directly on risk-adjusted returns, delivery certainty and exit strategies, but they too require a convincing story about place, demand and long-term value creation. The most successful projects are those that can translate a shared vision into evidence-based business cases that resonate with different audiences while maintaining a consistent strategic narrative.
