London

Overview

London is the site of some of the best-documented modern examples of publicly funded infrastructure generating land value uplift that is mostly captured by private landowners rather than the public. A joint 2017 study by Transport for London (TfL) and the Greater London Authority (GLA), using Land Registry transaction data with local controls, found that the Jubilee Line Extension, the Docklands Light Railway (DLR) extension to Woolwich, and the upgrade of the North London Line into the Overground network produced land value uplifts of 52%, 23%, and 6% respectively, relative to comparable areas without the improvements.[1] A separate Nationwide analysis of mortgage data found a "transport premium" of up to 10.5% in property prices near London Underground and rail stations, rising with proximity to a station.[1]

Crossrail and Future Schemes

At the time of the 2017 report, Crossrail (the Elizabeth Line) was still under construction; the study found no clear residential land value uplift yet but did find commercial property uplifts of roughly 1–2.5% per year relative to controls, and a 50% increase in the density of new housing built within 500 metres of Crossrail stations compared with areas further away.[1] Looking forward, the same study estimated that a sample of eight prospective TfL projects — including Crossrail 2 and the Bakerloo Line extension, with a combined capital cost of roughly £36 billion — could generate around £87 billion in land value uplift, only a fraction of which existing UK tax and planning instruments (business rates, Stamp Duty Land Tax, the Community Infrastructure Levy) are designed to capture.[1]

An Illustrative Account

The report opens with a widely cited passage from property investor Don Riley, describing the effect of the Jubilee Line Extension on office properties he owned near two of its stations: "Those two stations raised the value of my properties by more than all the taxes that I had paid into the public's coffers over the previous 40 years."[1] The anecdote is offered by TfL/GLA as an illustration of the underlying pattern documented statistically elsewhere in the report, not as a rigorous measurement in itself.

Why Jubilee Line Extension Estimates Diverge

Published estimates of the Jubilee Line Extension's land-value uplift diverge widely, and part of the spread comes from the estimates measuring different things rather than from measurement error alone. In a World Bank review, George Peterson reports that one commissioned study found the uplift impossible to estimate from the available data, that a second (Jones Lang LaSalle, 2004) put the gain at Canary Wharf anywhere between £300 million and £2.7 billion, and that a third, supported by the Lincoln Institute, put it at only £40 million.[3] That £40 million is a residential house-price uplift from Mitchell and Vickers' study, which used Canada Water as a surrogate for the mainly commercial Canary Wharf and North Greenwich; the authors themselves call bracketing those stations together "dubious," and their £9 billion residential total for the whole line assumes all land was in private residential use and could be several billion pounds higher or lower.[4] The estimates therefore measure different things — a range of land values at one commercial district and a residential price effect extrapolated from a surrogate station — and the gap between them should not be read as a pure disagreement over a single quantity.

Georgist Relevance

London's transit-driven land value uplifts are frequently cited in the Georgist and land value capture literature — including in Fred Harrison's Ricardo's Law, which uses a London home's house-price appreciation as a worked example of untaxed windfall gains (Ch. 1) — as a concrete, present-day illustration of the unearned increment that land value capture policies such as a betterment levy or land value tax aim to recover for the public that created it.

See Also

• Land Value Capture — the general policy family these London findings motivate
• Betterment Levy — one-off UK mechanism proposed to capture this kind of uplift
• São Paulo — a city that captures zoning-created value at the point of grant, through charges and auctioned building rights, rather than through a betterment levy
• Harrison, Ricardo's Law — uses London house-price data as a worked example of the tax clawback thesis
• Unearned Increment — the underlying concept these uplifts illustrate
• Smith, Brown, Dunning & Lord: How Land Value Capture Supported Crossrail — an independent academic evaluation of the Mayoral Community Infrastructure Levy's role, complementing the 2017 TfL self-report above
• Gibson: Revenue from the Community Infrastructure Levy, 2010 to 2025 — national CIL receipts series showing London, with the Mayoral levy, taking 58% of everything collected in England

Sources

1. Transport for London and Greater London Authority (2017), Land Value Capture: Final Report, February 2017 — used for the Jubilee Line Extension, DLR, North London Line, Nationwide transport-premium, Crossrail, and eight-project uplift figures, and the Don Riley quotation. Full report (london.gov.uk, PDF)
2. Fred Harrison (2006), Ricardo's Law: House Prices and the Great Tax Clawback Scam, Shepheard-Walwyn, Ch. 1 — discovery source; used for the London home-price worked example. wiki summary
3. George E. Peterson (2009), Unlocking Land Values to Finance Urban Infrastructure, World Bank/PPIAF (Trends and Policy Options No. 7), pp. 37–38 — used for the Jubilee Line Extension's £3.5 billion cost, the three divergent uplift estimates (one study finding the uplift impossible to estimate; Jones Lang LaSalle 2004, £300 million to £2.7 billion for Canary Wharf; Mitchell and Vickers 2003, £40 million for Canary Wharf) and the observation that studies of the same project can differ drastically (A-claim, for what the report states). Full text (World Bank)
4. Stephen R. Mitchell and Anthony J. M. Vickers (2003), The Impact of the Jubilee Line Extension of the London Underground Rail Network on Land Values, Lincoln Institute of Land Policy Working Paper WP03SM1, abstract and pp. 17–18 (Table 1) — used for the residential-only scope of the £40 million and £9 billion figures, the use of Canada Water as an approximation for Canary Wharf and North Greenwich, the "dubious" caveat (p. 17), and the statement that commercial uplift could not be quantified (A-claim, for scope and method; the estimates themselves are working-paper results not subject to detailed review).