How to CRTB #2 – Creating Value

I said in a previous post it was ironic that the Coalition spending-cuts have hit a programme aimed at supporting community run pubs. It isn’t ironic, of course – in fact it’s ideologically consistent with the whole thrust of the ‘Big Society’ which favours local initiatives over national intervention. The basic idea behind the Community Right to Build (CRTB) is to capture the value-uplift of development within the community that sanctions it, and to use that value to fund community projects of one sort or another – rather than have them funded by government. It works something like this:

Land has no intrinsic or fixed value; what you can use the land for makes it more or less valuable. A piece of farmland might be worth £5,000-10,000 per acre, but if a planning permission to develop that land for houses or other commercial uses is granted, its value will leap by a factor of ten, maybe even a hundred. In the normal run of things the land-owner and their development partner will share most of this value-uplift by selling the land for development. In a Community Right to Build project, development will only happen if it can attract wide support from local residents, so a clear public benefit (rather than private profit) will have to be demonstrated. A community-minded land-owner might donate or sell land cheaply to a CRTB group for new homes to be built and rented affordably to local people, or the CRTB project might sell the land on for open-market housing, using the profit to fund a community project elsewhere in the village – the purchase of a derelict pub or shop, perhaps, or improvement to sports facilities or the village hall.

Working out where the value in a CRTB project will be created is straightforward for an experienced developer or development consultant. Judging appropriate levels of reward to the various beneficiaries (land-owner, consultant team, CRTB project), openly and reasonably, will be more tricky…but is key to securing the necessary breadth of support across the community.

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