With the development sector sustaining significant losses, sites stalling and the industry contracting, it was both poorly timed and disappointing for Shelter to launch a broadside against developers at the very moment the country needs them solvent.
The housing sector and the myriad stakeholders should try and work together, instead its latest report reads less like serious policy sector wide engagement and more like an attempt to deflect the failure of the land value capture thesis by pointing the finger at the private sector.
That is a shame. Not all of the Report’s wider recommendations are unreasonable. But the section ‘planning and speculation’, essentially a finger pointing exercise at the private sector, evaporates under even modest real-world scrutiny.
I am not going to address Shelter’s headline point: that in their world view, when more housing is built, prices rise, not fall. This has already been addressed in an excellent piece by Chris Worrall – Chains Don’t Lie. Instead, I’ll focus on their second argument – that developers are cheating the system.
The Shelter report assumes we live in a world where profit is abundant. It assumes value is constantly being generated. Value is then captured by developers through opaque mechanisms to the detriment of society. There is no acknowledgement that development can, and frequently does, result in losses.
That omission is not minor. It is foundational. Shelter’s central claim is that developers are exploiting viability “loopholes” to reduce affordable housing contributions. They base this on flawed analysis and misunderstanding. Read on.
Viability loop holes: The evidence
The evidence base for Shelter’s overarching claims are remarkably thin. The report relies on a sample of just 23 land transactions between 2023 and 2025. These are deals that completed. But development markets are defined as much by what doesn’t transact as what does.
For every completed deal, there are dozens—often hundreds—of bids that fail because they do not meet landowner expectations or developers are not willing to overpay. Ignore those, and you fundamentally misread the market.
What Shelter presents as evidence of overpayment is, in reality, a snapshot of the few deals that cleared. The far larger dataset—the failed bids—would show something very different: a cautious market struggling to make schemes stack.
The BLV confusion
The report doesn’t explain the important difference between Benchmark Land Value (BLV) and market transaction price. By not doing so it misleads a lay reader. Why? Because it’s main argument here is that the BLVs are lower than the actual price paid in the transactions it has tracked. Therefore, society is missing out on more goodies.
However, BLV is not what a developer has paid for land. It is the policy mechanism used to assess what the land value premium might be to support planning obligations. BLV is an EUV+ valuation. This is never explained.
Nor does Shelter explain BLV is independently set by the Council and its advisers, not the developer. Developers don’t just plug any old number in and then run to the bank as the report indirectly suggests.
In other words, affordable housing contributions are not assessed on what land cost. They are assessed on what policy says land ought to be worth. What has actually been paid is, in viability terms, largely irrelevant.
Where there is a gap between BLV and market price, this does not demonstrate “gaming”. It demonstrates friction. And that friction also tells you something important: Landowners are not often willing to sell at values flattened by the EUV+ model.
We should be worried about BLVs but for different reasons to Shelter’s
Shelter is able to demonstrate some sizeable gaps between price paid and BLVs. There are of course cases where developers get it wrong and overpay. There are also cases where developers bet on future growth and overpay in the expectation that prices will catch up. That is the developer’s risk. That risk doesn’t sit with society and the community as Shelter appears to suggest.
But remember before we roll our eyes at greedy property buyers: developers are like any business, they need inputs for their outputs. If they just completely stop buying land then they just go out of business and we lose skills and capacity. Building businesses, protecting balance sheets and recycling profits into the next set of schemes also sometimes drives overpayments above BLVs. The alternative is relocation of business to other asset classes or shutting down resi development. All of this is happening.
What is being demonstrated in Shelter’s thin evidence base is the benchmark land values have now been flattened to such an extent that developers are forced to take punts on growth to get sites into housing supply. If benchmark land values are pushed too low, the result is not more affordable housing as Shelter believes. Instead, it is fewer transactions, fewer sites coming forward, and less housing overall. That is what has happened in London where the land market shut down several years ago.
Shelter is right about one thing. The system is not delivering what it should. But the problem is not that developers are extracting too much, it is a system designed for perfection.
