Key lessons

Funding sources for new Garden Cities will be diverse but places can be self-funding over time through the capturing, sharing and reinvestment of land value uplift. While the Garden City model, applied early and comprehensively provides the greatest opportunity for this, there remain opportunities, albeit more limited, to capture land values on smaller sites and those that are some way through the development process.  

A dedicated organisation, with the right staff and skills is essential to oversee the complex task of delivering a new Garden City particularly in its ability to draw together diverse viewpoints and funding sources to create a deliverable programme. Delivery vehicles that commit to high standards and long-term delivery make private and public sector investment an attractive prospect on the right terms. Such a body can also provide reassurance for local people as there is a demonstration of commitment to deliver what is promised.  

It is vital that a proportion of the development values captured through the delivery process are invested in one or more organisations that will look after the development in the long-term, and in the community interest. The right financial model can ensure that funds are available in perpetuity to maintain community assets and provide additionality to the services provided by the council.  

While established mechanisms such as Section 106 agreements and the Community Infrastructure Levy can help to capture land value uplift, the strongest mechanism available to councils at the moment is the setting of strong, clear and evidenced Local Plan policy. Revisions to national policy have made clear that the price paid for land is not a reason for non-compliance with Local Plan policy. While the position is not perfect, it does mean than local authorities can push back on viability assessments; and where costs for developers may be increased by, for example, building accessible homes, they should be translated into reduced land prices. For this mechanism to work, policy must be expressed early and clearly so that land markets can adjust, as well as being tested for viability at local plan examination. 

It is also important to remember that land values are not a money tree, and there are limits to how much landowners will flex. Likewise, developers that have paid too much for land may simply refuse to develop it. In these cases, the power of local authorities to compulsorily purchase land are key, as is the potential use of locally led delivery vehicles such as Development Corporations. It is not realistic for land value capture to pay for every aspect of all new sites. Some will have major infrastructure costs for transport or flood resilience and public grant funding will be required to unlock the land.