Land Policy Instruments for the Provision of Social and Affordable Housing

Overview of the Report and Its Origin

The publication “Land Policy Instruments for the Provision of Social and Affordable Housing” is authored by Phil O’Brien, Alice Earley, Lucy O’Hara and Julie Lawson. All authors are affiliated with reputable research institutions: the UK Collaborative Centre for Housing Evidence (CaCHE) at the University of Glasgow, the Geary Institute for Public Policy at University College Dublin, and Just Cities Urban Consulting. The work is published by EqualHouse and was produced under the European Union Horizon Europe research and Innovation programme (grant 101132325). It aims to identify, analyse and compare land‑policy tools that can support the delivery of affordable and social housing across the EU27 and the UK.

Context: Land as a Core Housing Cost

Land represents the single largest cost component in housing production, accounting for up to 70 % of total development expenses in many European cities. Increases in land prices have been linked to 80 % of post‑war housing booms in advanced economies. The report therefore treats land policy as a foundational determinant of affordability, inclusion and equity, arguing that strategic public interventions—through planning, taxation, land banking, value capture and other instruments—can reshape housing outcomes.

Key Policy Instruments Examined

Five land‑policy instruments are analysed in depth:

1. Public Land Banking – acquisition, servicing and resale of land by public bodies to lower costs for developers and secure sites for affordable housing.
2. Public Land Leasing – long‑term leases that retain public ownership while allowing private development, generating ongoing lease revenues and enabling value capture.
3. Community Land Trusts (CLTs) – nonprofit entities that own land and lease it to occupants, preserving long‑term affordability.
4. Inclusionary Zoning – regulatory requirements that a proportion of new residential units be set aside as affordable, often linked to density bonuses or developer contributions.
5. Land Readjustment – consolidation and re‑allocation of fragmented parcels to create developable sites, with the possibility of earmarking portions for public uses. Each instrument is described in terms of definition, implementation mechanisms, strengths, weaknesses and illustrative case snapshots from Austria, France, Germany, the Netherlands, Spain, the United Kingdom and other jurisdictions.

Evidence of Impact and Effectiveness

• In Vienna, the Wohnfonds Wien land bank has facilitated large‑scale, subsidised development while preventing speculative price spikes.
• Barcelona’s inclusionary zoning mandates 30 % affordable floor area in new projects over 600 m², leading to a measurable rise in affordable units between 2018‑2021.
• Helsinki’s “Home Town” programme targets 25 % of annual housing output for subsidised rental, supported by a strong public land ownership model (≈70 % of city land).
• German land readjustment, operating since 1902, captures a share of uplift for public amenities and has been described as “fair” and “efficient” by local stakeholders. The report notes that the effectiveness of each tool depends on local land‑value dynamics, institutional capacity and political commitment. Instruments that rely on high land values (e.g., inclusionary zoning, value capture) may be less viable in weaker markets, while active tools such as land banking can generate affordable supply even where market pressure is moderate.

Governance, Legal Frameworks and Challenges

Successful deployment requires clear legislative bases, robust pre‑emption or acquisition powers, and transparent valuation methods. Weaknesses identified include: bureaucratic complexity of land banking, risk of inadequate public interest focus, potential for legal disputes over lease renewals, and the need for strong community participation in CLTs. Land readjustment can encounter resistance from fragmented owners and may involve lengthy negotiation processes.

Linkages to Sustainable Housing Goals

The authors argue that land‑policy instruments complement financial subsidies, tax measures and personal supports, forming an integrated toolkit for sustainable housing. By reducing land‑related cost pressures, these tools can lower embodied carbon in construction (through infill development), promote mixed‑use, compact urban forms and improve social mix—key objectives of the EU’s Sustainable Development Goals for housing.

Conclusions and Recommendations for Europe

• Adopt a mixed‑instrument approach, tailoring active (land banking, leasing) and passive (inclusionary zoning, readjustment) tools to local market conditions.
• Strengthen legal frameworks that enable public acquisition, pre‑emption and long‑term leasehold arrangements.
• Enhance capacity of municipalities and community organisations to design and manage CLTs and land‑bank operations.
• Align land‑value capture revenues explicitly with affordable‑housing programmes to ensure self‑financing.
• Foster cross‑border knowledge exchange, as exemplified by the Horizon Europe consortium, to disseminate best practices and avoid duplication. Overall, the report provides a comprehensive, evidence‑based roadmap for European policymakers seeking to leverage land as a strategic resource to deliver socially inclusive, affordable and environmentally sustainable housing across the continent.