Press release: CIOT to government: Tackle tax barriers to land pooling

A new report on large-scale housebuilding misses the significance of tax barriers in putting landowners off ‘land pooling’, says the Chartered Institute of Taxation (CIOT).

The CIOT was commenting following the publication this week of the ‘Independent Review of Build Out’, produced by Conservative MP and former cabinet minister Sir Oliver Letwin for the Department for Housing, Communities and Local Government.

The report focuses on how to close the gap between land that has planning permission (or has been allocated for housing), and actually completing housing developments. To deal with the land that is not being built on, Letwin recommends new planning rules for large sites in areas of high housing demand, including greater variety of housing, and new powers for planning authorities. He argues that more distinctive settings, landscapes and streetscapes on larger sites can accelerate demand and hence improve overall build out rates.

John Cullinane, CIOT Tax Policy Director, commented:

“Addressing the tax barriers to land pooling should be part of the strategic approach to accelerating land supply.

“The Letwin review makes a range of proposals for speeding up large-scale housebuilding, but misses the role played by complex tax barriers that hinder the land pooling which is needed to promote the type of housing development recommended by Sir Oliver over more traditional models.

“Under the traditional model of housing development in the UK, landowners effectively compete to ensure that their land is used for the most profitable part of the development (usually high end private housing), rather than for less profitable uses such as affordable homes, or good design features such as parkland or effective transport links.

“In contrast, land pooling involves landowners pooling their land interests (either by agreement or via a pooling vehicle) and sharing the profits of development according to the proportion of land they have provided for the development, with the aim of improving the marketability of the land overall.

“Part of the value of land pooling is promoting more sustainable development by equalising values through a pooling process. This approach recognises that all the land is integral to the development, whether used for high value prime residential property, or for community infrastructure, or for green space or transport links.  

“A level playing field in tax terms between traditional models and the various routes to land pooling is more likely to lead to sustainable developments that reflect diverse tenures and good design.”  


Notes for editors

  1. The Independent Review of Build Out was announced at Budget 2017, and the publication of the final report was part of the 2018 Budget.
  2. The CIOT’s response to the government’s white paper, ‘Fixing our broken housing market’ outlining the tax barriers to land assembly can be read here.
  3. The ‘Better Budgets’ report (here) co-authored by CIOT, the Institute for Fiscal Studies, and Institute for Government in January 2017 criticised the fact that there is ‘one set of norms and rules for the way in which most policy is made in government – and a different set of rules and norms for Budgets and tax policy.’ It called for tax policy to be subject to the same sort of scrutiny that applies to other policy decisions and set out many ideas for achieving this. The tendency for tax issues to be sidelined in public policy reviews of important areas such as sustainable housing development is very much of a piece with the issues addressed in that report.
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