Dealing with Betterment Value: Different Trends between Italy and England

Betterment value has always been a controversial subject. In many countries there have been and there are different experiences that deal with the common objective of sharing with the wider community the benefits that derive from the development of land. Different approaches are the consequence of diverse real private property regimes, planning legislations and histories of land ownership. However different the approach, the objective remains unchanged and prompts new research and practices. Approaches vary from the imposition of taxes on the increase in the value of land to compulsory acquisition at existing use value, transfer of development rights involving case-by-case negotiation and in-kind contributions. Bearing in mind such differences, it is believed that learning from other experiences and approaches is still possible. The focus of the present work is therefore on the planning practices used in Italy and England to deal with the question of betterment value trying to capture a portion of betterment created by development of land. The literature review and the original research centre around the practices for dealing with betterment value and, because of this, background and debate on the wider subject of economic rent, its economic theories and diverse causes are deliberately left out. The relevant literature refers to various attempts to tax the increase in the value of land as they have come, one after another, over time, to planning- led approaches mainly through compulsory acquisition and to the currently used negotiation- based mechanisms, based on the transfer of development rights. A short definition of betterment is thus deemed as essential for the purpose of this work and would help understand the differences that exist between betterment value and the broader concept of economic rent. In fact, betterment value can be described as the increase in the value of land determined by changes in the planning regime, which means that it is concerned with planning decisions which determine the rise in the value of land caused by the granting of planning permission for a higher value use (Healey et al, 1995). Thus, the focus is on betterment produced by the planning activity and specifically by the granting of planning permission. Other forms of betterment deriving for example from infrastructure improvements, provision of new services and all the other factors which determine the value of a piece of land (e.g. accessibility) are not taken into consideration for the major part of this work. The importance of capturing at least a part of the increase in the value of land has long been discussed within planning literature with examples from all across the world (Bernoulli, 1946). The issue that underpins the need to recover part of increases in land value has to do with the necessary condition to make developers and landowners contribute to the construction of the public city and share with the wider community part of the unearned increment which has accrued to them. Hans Bernoulli (1946) in his major volume “Die Stadt und ihr Boden - Towns and the Land” pointed out the importance of public ownership of land for the implementation of plans and generally for the realisation of a good land policy. In the preface to the Italian translation of Bernoulli‟s work, Luigi Dodi (1951) wrote: “the awkward question of urban land [...] is at the basis of nearly all of the current planning issues and [...] affects the possibility of bringing about the ideal city”1. Further, Bernoulli wrote: “whoever talks or writes about Planning often easily skips this prejudicial problem and prefers looking at the most attractive part of urban design”2. Interestingly, confirming the existing diversity and various approaches to betterment value, Italy and England have recently changed their respective policies and practices and are currently moving in different directions. Thus, it is the observation of these divergent trends which has prompted this research and which necessarily shows the features proper to a comparative study. The approaches do not vary substantially but the analysis of the trajectories which characterise the two countries is considered of huge interest. Specifically of interest is the fact that Italian planning seems to be adopting an approach very similar to the one which England is currently seeking to abandon because of several and diverse reasons. The research question that prompts this research is: why are municipalities in Italy adopting an approach which is currently subject to reform in another country? The aim is to analyse, compare, explain and assess the potential as well as the issues of the two systems bearing in mind the existing administrative and legal differences between the two countries; fundamental features of a comparative study. This work is intended to be of interest to an international audience who is concerned with the continuing issue of betterment value. By exploring the trends of two different countries it highlights the different approaches that might be adopted and the general issues related to them so as to make it easier to understand the dynamics of current planning-gain practice. Nevertheless, it should be noted that this research does not focus on policy transfer. Through such a form of comparison this research intends to shed light on the current approaches adopted in order to raise awareness and encourage reflection on the current and future issues which are likely to characterise planning-gain practice in Italy through the direct analysis of the Italian context and by comparing it with a country that has already gone through the problems arising from betterment collection by way of a negotiative approach.