Affordable housing and planning gain, linkage fees and the rational nexus: Using the land use planning system in England and the USA to deliver housing subsidies

Abstract

The paper examines how the English planning system is being used to reduce land prices for social housing schemes at a time when government subsidies to social rented housing producers are being cut and compares and contrasts this with practice within the USA. The paper describes the key characteristics of the English planning system, recent trends in English housing policy, the role the planning system plays in meeting overall housing requirements and how it has been adapted to meet specific needs. It explains the new arrangements the government has put into place to lower land prices for social housing and argues that this represents a specific tax on development values to provide subsidies for social housing and that the government has had to significantly modify the land use planning system in order to achieve its housing policy aims. The paper compares these changes with practices in the USA, particularly in relation to the ‘rational nexus’ argument. It finds significant parallels and argues that the use of the planning system to help provide affordable housing through de facto and site specific taxes on land values can be justified and does not need to be restricted to cases where the rational nexus argument applies, but that practice in each country reflects underlying differences in attitudes to development rights, market provision of housing and the role of local governments.

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