Do Developer Obligations Stimulate or Stifle Housing Supply? The Case of Community Infrastructure Levy in England

New housing development should be complemented with new and/or improved local infrastructure, requiring a delicate balancing act by local authorities so that the cost of providing such infrastructure does not discourage development and stifle housing supply. Available land value capture tools can exacerbate housing supply constraints when their design, implementation and synergies with other policy tools are lacking. There is a notable gap in the literature studying the impact of new land value capture tools on housing supply. To address this gap, we analyse the introduction of a new land value capture tool, Community Infrastructure Levy, in England. As housing supply, land value capture tools and affordable housing provision are interrelated, modelling their relationship requires careful consideration of endogeneity, which we comprehensively address in our models by specifying a dynamic panel estimator. We find that the provision of exceptional circumstances relief within the CIL policy is a key differentiating factor highlighting the importance of flexibility in land value capture tools.