Development Rights Auction Model: Land Value Capture

What is the Development Rights Auction Model (DRAM)?

In 2017 the Government announced a taskforce to investigate a new way of paying for infrastructure projects, such as new public transport.

The taskforce is led by the Ministry of Housing, Communities and Local Government and the Mayor of London's Office. It also includes HM Treasury, the Department for Transport, TfL and London Councils.

The Government asked the taskforce to look at the so called 'Development Rights Auction Model' of land value capture.

Major transport investment can significantly increase the value of land, particularly if it is close to a train station or transport hub. Land value capture is a term used to describe the use of this increase in land value to fund investment in public services, such as transport. The Development Rights Auction Model is one example of an approach to land value capture; but others already exist, such as the Community Infrastructure Levy and Section 106, both introduced in the Town and Country Planning Act 1990.

However, without new approaches to land value capture, the current tax and planning system does not appear to adequately respond to land value creation. This means that investments can generate significant windfall gains for landowners, property owners, developers and early property purchasers, while the costs of the scheme are paid by others.

TfL have prepared a report, which studies The Development Rights Auction Model in detail, and presents TfL's views on this approach to land value capture.