Trends of property rights protection and spatial planning in european countries

Lincoln Institute of Land Policy.

International Conference  Land policies and property rights

Property rights in Europe after WWII

                  The question of the relationship between planning and the protection of property rights is a central question in the management of urban growth or urban regeneration in western Europe since the very beginning of planning, i.e. approximately the second half of the 19th century.

The key problem raised by the interference between the right of property and the planning and zoning activity became really sensitive in the beginning of the 20th century, at least in Great Britain, Germany and France, and to some extent in Spain and Italy.

The first element of this protection is the guarantee of property, and the related exception, that exist in practically every country, the possibility to expropriate under a set of strictly defined conditions. The legal definition and the practical process for expropriation are to a large extent similar in several European countries. This topic will be treated in another part of the book, so we shall not elaborate on it here.

The other key aspect of the protection relies on the impact of planning and zoning on the value of property, increasing or decreasing the value of a property, especially the allocation of development rights by local plans. It can be noticed here that a different tradition with respect to property rights has led to  a different type of relationship in northern Europe as compared to southern Europe.

We shall focus here mostly on some of the main countries of continental Europe, France, Germany, Spain, Italy, with possibly some comments on other countries, notably Sweden and the Netherlands.This will also be further elaborated by Barrie Needham in his commentary.

It would not make much sense to include in this presentation all countries of  the European Union: among the 27 members, history, tradition, the legal system, as well as economic mechanisms do not have much in common in the Baltic countries, Great Britain, Portugal, Bulgaria or Austria.  That is why we try to focus on some key features of the main countries, and also the recent development of European law with respect to property.

The origins of property rights in Europe

One important point to keep in mind is the very different genesis of the right of property in different parts of Europe, with main differences between northern European countries, southern Europe, and Germany with a specific history of the emergence of property rights.(Needham, 2006)

It would be too long to recapitulate here a thorough analysis of these differences, but one of the emerging feature is that in most original Constitutions, the definition was close to the definition in the US Constitution, i.e. a very strong statement about the guarantee of property, (in the French civil code, “un droit inviolable et sacré”), with a possible exception, the right to expropriate, when some evident public interest requires it ( “nécessité publique” in the  French declaration of human rights.)

In France for example, the Civil Code of 1904, that explicated the right of property, allowed peasants to get out of the feudal system, in which the “serfs” did not have any property in the sense of “fructus and abusus”. It is important here to notice that, at the difference from the United States, where property has been created to a large extent “ex nihilo”, in France it has officialised the fact that peasants had a new right on the property they were cultivating, through the transformation of so called “possession” into property, i.e. that can be sold and mortgaged, thus becoming a “droit réel”.

On the second point, the balance between the guarantee of property on one side, and the possibility for the state to expropriate, in case of necessity in the public interest, different European countries have displayed very different evolutions, especially if one refers to the evolution in the US with the jurisprudence about takings: some countries, such as Denmark, have introduced a general legislation about “takings”, stating that “if a regulation goes too far, some compensation is due to the landowner”. Such a legislation can be paralleled to the well known US case “Pennsylvania Coal vs Mahon”, introducing the concept that, if “compensation goes too far”, compensation must be paid. The notion has been applied in Denmark in a very restrictive way, thus limiting the amount of compensation to be paid.

On the opposite, other countries, such as France or Italy, did not introduce such a possibility. Article L 160-5 of  the French “code de l’urbanisme” states that “regulations and norms that results from this code, including the prohibition to build anything, do not open a right to compensation” ( Renard, 1993)

Then there is a paradox, that must be analysed more thoroughly: countries such as France and Italy, where a general right to compensation is denied, have practices, both legal and …negotiated, that allow to introduce some form of compensation. On the opposite, some countries, such as Denmark, that have introduced in their legislation  some general principle of compensation, have applied it in a very restrictive way, only in  specific cases, where the “planning blight is very severe as compared to neighbouring landowners, and also long lasting. So this general principal appears as something like a safety belt for extreme cases, but not at all as a general practice.

So, if we compare more globally countries in northern Europe to southern Europe, it can be said roughly that the balance between “the guarantee granted to the owner” and the “social obligation of property owners” is probably more in favor of landowners in the south of Europe.

 Such a broad statement should be refined. Harvey Jacobs (Jacobs, 2006) gives an interesting comparison between European and US systems in that respect.

The definition and the contents of the right of property on land

         In most western European countries, the right of property on land has been defined or redefined after the second World War. Most countries include in their Constitution some type of very solemn definition of the guarantee of the right of property, such as in France (“un droit inviolable et sacré”, as stated in the Declaration of the rights of mankind) , or Italy or Spain.

It can be noticed here that the definitions differ from country to country inasmuch as the balance between the interest vested in the right of the owner and the general interest are concerned, and the definition can vary to a large extent from one country to another.

         To illustrate this point, we can take the examples of Germany and Sweden, which represent two examples of a different equilibrium in the balance between the interest of the owner and the general interest.

         In Germany, the basic law about land and planning ( the “Baugesetzbuch”), stating the guarantee of property in its article 14, limits this right in two ways,first by stating that “the content and limits of the guarantee shall be defined by the laws”, and moreover that “property entails obligations, and its use shall also serve the public good”. This is clearly more balanced between the general interest and the interest of landowners that the French or Italian definitions.

         The situation in Sweden is still different: as in most countries, property is guaranteed, with an exception when there is some urgent public need. But on the other side applies a very general principle, “allemansrätt” in Swedish, which means “the  right of anybody on the territory of Sweden”. This very general principle makes explicit the fact that the whole territory of Sweden is in a way a public good, and that everybody is entitled to use it freely, obviously under  a series of conditions guaranteeing the free and exclusive use of a property by the owner, but expressing a state of mind-visible in the patterns of urban development-where the balance between the public interest and the interests of landowners are differently related. “private property-no entry” is not an obsession. The notion of “sustainable land use policy” enters more easily in such a socio-legal context. It follows from such a principle that the capital gains on land are mostly recouped by public authorities as illustrated by previous examples.

In most eastern of south European countries, the basic principle remains that the owner receives the benefits of the valorization of his land. Of course there is a series of  devices, especially some forms of taxation, that allow to recoup part of the betterment, but keeping the basic principle.

Some attempts have been made in those countries to change the rule of the game. Three such examples are presented here.

Does the landowner own the development rights attached to a piece of land?

         Here again, the situation differs to a large extent according to the country, and the solution to the problem has undergone some evolution in recent times. In fact, the main changes happened in the second part of the twentieth century, when strong urban pressure led to soaring land prices. The specification of development rights in local plans then led to sharp differenciation in land prices, thus raising a problem of equity among landowners.

         According to one concept, which is fairly widespread in northern Europe, ownership of land does not include a right to the “development value” that results from urban growth in general and the provision of infrastructure in particular. This is, for example, what happens in Sweden or the Netherlands, but by means of different mechanisms (long-term land reserves for Swedish towns, key role of towns in the development process in the Netherland, at least until recently), most of the value added by urban development being collected by the community.

The other concept, which prevails for example in several countries in southern Europe (there is no "pure" case and it is therefore difficult to be more precise here) consists in allowing the original landowner to keep the capital gain, subject to some form of tax collection - for example value added tax or tax on capital gains. In such systems, the introduction of urban development regulations or their amendment will generally be perceived as an additional  constraint on previously held rights (vested rights?), the assumption being that ownership was at the outset unconditional, and in particular included the development rights. The reality is not that clear. However the argument continues to be used, according to which zoning restrictions are a “loss” for the landowner by “reducing” the value of the property.

          One possible legal technique to solve this problem of inequity can be the redefinition of the contents of the right of property, separating partly or totally the development rights from the property of land, thus “socializing”, totally or partially, development rights.

This has occurred in different ways in Great Britain in 1947, France in 1975 and Italy in 1977. But none of these attempts has been really successful in the long run.

1947 TCPA in Great Britain

In Great Britain, the priority, after WWII, given a situation of severe housing crisis, has been  to “recoup betterment”, following the terminology of the “Uthwatt” report of 1942, through the full nationalization of development rights[1]: this was a key point of the  “Town and country Planning Act” of 1947.
During a  transitory period, until the anticipated monopoly of local governments in the land development process, the developer had to pay, when getting the planning permission,  a “development charge”, difference between the market price of development land and  the agricultural value of land. Moreover, a fund had been created in order to compensate, once for ever, landowners for the loss of the development value of their lands.

Based on an erroneous assumption, the inelasticity of land supply, this drastic legislation resulted first in land hoarding by landowners, who did not accept to reduce in such a drastic way the proceeds of the sale, and then to some extent sold to a higher price than agricultural value, thus increasing the price of new housing, until the political change of 1951,  when this regime was repealed.

The same idea, to recoup betterment, has been reintroduced twice, especially  in 1976, with the development land tax act, in a more limited way, but also soon repealed by the following government.

The 1975 Legal Density Ceiling in France  (Plafond Légal de Densité, PLD)

The 1975 Town and Country Planning Act instituted in France the legal density ceiling (PLD), whereby limits are set to a landowner's development rights, independently of other constraints resulting from regulations. That is, the developer, when he gets a building permit with a floor area ratio greater than the ceiling, has to `buy' from the authority the development rights in excess of the ceiling. Initially, the PLD was fixed at a density of one square meter of floor area per square meter of land, except in Paris where it was 1.5. When regulations allow a higher floor area ratio, the developer may build at a density higher than the PLD, on the condition that he pays a fee equivalent to the market price of the area of extra land that would be needed in order not to exceed the PLD. The purpose is again to recoup (partially) betterment, and also to finance local authorities.

The PLD was aimed at reducing the increase in land values from which centrally located plots with high density benefited. The idea was to discourage high density schemes by fiscal means that also brought extra resources to the local councils, thus providing at the same time some recoupment of `windfall gains' resulting from zoning.

The results have not been convincing, the proceeds have been quite limited, the main effect has been to limit density to avoid this payment, thus increasing urban sprawl. The PLD has been repealed in 2000.

1977 “concessione di edificare” in Italy

A third illustration of this type of policy has been the reform of the legal and fiscal framework in Italy in 1977 (‘Concessione di Edificare’).

A first legal step resulted from the October 22, 1971 statute stating that the property of land would not include the development right in the future, theoretically vested in the public authority, but it came into effect, albeit in a very limited way, through the January 28, 1977 statute, stating that land use is “sold” by the state ( “concessione di edificare”): the developer is supposed to purchase the development right to the public authority granting the permit.

This legal construction has been rapidly destroyed by the Constitutional Court, first by a decision of January 1980, declaring illegal the separation between the right of property and the right to develop and build a piece of land, and then canceling, as a consequence, all local plans that had been approved before 1977.

This chain of decisions has to some extent  fragilized the Italian planning system for the next decade.

In terms of equitable redistribution, or betterment recoupment, the principle is well admitted, at the same time these three experiences show that the practical implementation of such a principle remains a serious challenge.

The “regulatory taking” issue in some European countries

          Roughly speaking, a majority of  countries in Western Europe, particularly in southern Europe, have adopted the principle that constraints on urban development are not liable to compensation. As expressed in the French Urban Code for example, this principle applies "to any constraint affecting the road system or prompted by health, aesthetic or any other considerations and concerned with such matters as land use, heights of buildings ... or prohibition of development in given zones” (article 160-5 of the Urban Development Code).

         A constraint on the right to make use of a given piece of land is not considered grounds for compensation unless it infringes a “vested right” (for example withdrawal of a building permit already granted) or a change in the previous state of the site resulting in “direct, material and indisputable damage to property”.

         This latter comes close to taking, and in fact rarely applies, only under very restrictive circumstances. So the rigorous application of this principle of no compensation, which makes landowners subject to unequal treatment, has naturally met with considerable opposition and has led to the generation of de facto and de jure loopholes. In France for example, the introduction in 1976 of procedures for the “transfer of development rights” comes under this heading and was attacked as a breach of the principle of no compensation.

         However it can be noticed here that the legal system vary from one country to another, that there are very few European comparative studies on this topic, and the recent “symposium on regulatory takings in land use law; a comparative perspective on compensation right”, edited by Rachelle Alterman   ( Alterman, 2006) stresses the difficulty of summarizing such a comparison:   “The differences are significant and often unpredictable. They exist even though nine of the eleven countries under scrutiny  belong to the EU. If one imagines a hypothetical scale of degrees  of compensation rights, only a few of the countries take one of the two extreme positions along that scale and say either a stark “no” or a broad “yes”. Most countries hold some middle-ground position along the scale and have their own matrix of specific policies, and each country’s set of laws and policies differs significantly from every other’s equivalent set.”

         This is reflected to some extent at the level of the European Union, in the application of the European Convention on Human Rights, and more specifically the 1st amendment to the protocole n°1 of this convention, inasmuch as a compensation is due “in cases where the prejudice is exceptional and the servitude is disproportionate in comparison with the purpose of general interest of the servitude”. On one side, this amendment seems to introduce a general  principle of compensation, on the other side it appears clearly that it is supposed to remain an exception and, in practice, left to national courts.. This point will be detailed later.

Restrictive zoning without direct compensation

         Most European countries apply a series of zoning devices intended at protecting natural  areas or buildings without direct compensation.

         First, this happens. in most countries through a specific zoning category included in local plans, usually described as “natural areas to be protected because of the interest of landscapes, historical value or ecological interest. Urban development is usually prohibited in these areas.

         In such areas, for instance in Germany, France or the Netherlands, such a classification in local plans does not imply any form of direct compensation as a consequence of the classification.

         More restrictive and long lasting protections have been introduced in several countries, under the form of “listed buildings”, protected for their architectural and/or historical interest, that at the same time imply restrictive regulations and some form of indirect compensation.

         Such is for example the case in France for the restrictive regulations resulting from two legislations enacted in 1913 and 1930, about “sites et monuments historiques”. For such buildings, any transformation or improvement must be approved by a specific body, and there is some form of compensation on the form of subsidies that can be as high as 50% of the overall cost of the work.

         However, in spite of this compensation, the maintenance cost of such buildings is often very high, and private property owners have some difficulty in countries such as France, where there are over 8000 listed buildings. For them, the price of losing any right to develop their property can be high, and this attitude gave rise to a different method, the transfer of development right.

An ambiguous answer: the “transfer of development rights”[2]

         One of  the possible answers to the inequity raised by zoning relies in the separation between tradable development rights, distributed evenly in the area, and the effective right to develop, that can be used only after having purchased, when needed, development rights to an owner who has not the effective possibility to develop. Such was the basic rationale behind the introduction of the TDR mechanism, as a way to make “acceptable”  by landowners a restriction of development rights.

         In comparison with other fields where tradable permits apply such as air or water, land has some quite distinct features, not least because the many entangled legal instruments that govern it play a large part in determining its price. The method has been applied in an explicit way in some European countries, mainly, as far as we know, in France and Italy, and the results there are quite limited in terms of the areas that have been protected through this mechanisms.

         However, it can be worth to extend the analysis since the concept of tradable rights has come to the fore as a topic in recent years, particularly in the general context of climate change, the greenhouse effect and air pollution, a contributing factor to the latter. An important threshold was crossed in late 1997 with the Protocol adopted in December at the Kyoto Conference, which envisaged trading in quotas or emission credits.

         A primary conceptual difference should first be noted between a tradable permit attached to land and a tradable emission quota. In the case of pollution, the object of the trade is an entitlement to emit an ongoing level of pollution, measured for example in tons of nitrogen dioxide discharged into the air per year. What is involved is a continuing processso that the relevant quotas themselves may go on being bought or sold ad infinitum. The idea behind tradable land rights is quite different, since the right concerned is sold outright or for a very long period. Admittedly, it is only saleable in part, or may be bought back at a later date, but the purpose of the transaction is in no way to engage in an ongoing process.

         This will obviously have a major impact on the way the instrument is employed with respect to allotting rights and the conditions for buying them back. The concept therefore has to do with property law as applied to geographical space, and reveals a major difference between the legal systems originating in Roman law, based on the indivisibility and absolute nature of land ownership, and the different view of the main variants of Anglo-Saxon law, in particular North American law, which considers land ownership as a "bundle" of rights, some components of which can be treated separately, such as development rights, air rights or mineral rights.

The rationale behind TDRs: creating a market or compensating restricted landowners?

Central to the creation of a market in development rights is the issue of the financial and fiscal implications of land use regulations. In urban and peri-urban areas, the value of a piece of land lies in the rights attached to it, which are conditioned by zoning and other environmental regulations, by which the price of land can be strongly affected.

As far as urban and peri-urban areas are concerned (the problem being most acute in the latter), the response has differed from country to country. Roughly speaking, most countries in Western Europe have adopted the principle that constraints on urban development are not liable to compensation, unless it infringes a vested right or contradicts “investment backed expectations”.

The way case law in this matter has developed over time matches the gradual change that has taken place in property rights law, in which a distinction is made between what is private property in the strict sense of the term (and may thus be put on the market) and what is common property. With respect to this point, it appears that the TDR can  appear more as a way to compensate restricted landowners, in order to make zoning more “acceptable”, than really developing a market in development rights where buyers meet sellers and prices adjust to supply and demand.

What is really traded?

         Postulating the existence of transferable rights assumes that there is something to trade, in other words that one of the parties is ready to relinquish an attribute of his property (the right to build for example) to another owner. Whatever the circumstances, no market will operate unless the exercise is worthwhile, in other words unless there is a demand for rights. This raises the issue of initial allotment of rights. Two concepts can be distinguished, depending on the methods used to value land and real estate, which are themselves based on the way property is conceived.

         Such is the context in which it is possible to conceive of trading a "right" that is assumed to be in existence but the actual use of which has not been authorised. This point is essential to understanding the crucial importance of the original allotment of rights and the conventional nature of that allotment.

         The application of this technique in western Europe has led to limited results, quite limited in scope, controversial in their results. ( Renard, 2007)

Some criteria for an evaluation

         As a whole, trials of the practice have not yet reached a critical mass that would allow statistically reliable conclusions to be drawn. Even though there are a fairly large number of examples in the United States, they are in different geographical areas, have different aims, use different operating methods and, naturally, show different results. Many examples of the practice - generally on an informal level - occur among  small groups of owners and operate by consensus without any formal legal or institutional framework being involved.    Such examples, generally occurring in built-up areas, have a long history in the form of TDRs in the United States, and private law constraints in France. On the other hand, use of the method in a vast geographical area by means of a universally applicable mechanism formally established in advance is still fairly limited . However, most have features specific to themselves that make it difficult to reach general conclusions.

         The examples that have been analysed and the information available on other schemes nevertheless enable some assessment of the practice of attaching tradable rights to land. After an examination of the real nature of the rights being traded, a look will be taken at the key link between tradable rights and zoning. In addition, a consideration of the way these rights markets operate and the prices (market prices?) they generate will illustrate the distributive effects of the system.

         The aims attributed to most schemes are generally environmental or architectural. The most frequent is nature conservancy. Many examples, often small in size, focus on architectural merit and the preservation of listed structures. Nevertheless, the most frequent case remains nature conservancy, preservation of sites of outstanding natural beauty and protection of agricultural land in the vicinity of built-up areas.

         Indeed, it is often in terms of surface area preserved for conservation in perpetuity that the success of a programme is measured, an area conserved in perpetuity being taken to mean one that has transmitted all its development rights and is thus closed to development. However, this particular aim is frequently merely the backdrop to the prime objective of the technique which is redistribution, namely to provide compensation for the constraints which society places on the use of property, or in other words to render acceptable the inequalities created by zoning laws, which by their nature cause development rights to be distributed inequitably.

         The goal of nature conservancy, or the preservation of structures of architectural merit, is the prime objective of the regulatory procedure. The transferable development rights technique is therefore more to be regarded as an intermediate instrument to facilitate implementation of a plan. The technique may also serve as a legal safety net for the planner. Even if the scheme is not in operation, the mere fact that it is in place will enable disputes over compensatiçon for constraints to be avoided.

The legal nature of TDRs

         In all countries that have made use of transferable development rights of one sort or another, the legal status of those rights has been a point of contention, and of litigation. Are they an integral part of property (even when destined to be used at another site) or are they merely a financial instrument to provide compensation for value lost as a result of a constraint? This is an important point, both because of its impact on the legal appreciation of the issue (in France or Germany for example, it is unlawful for planning restrictions to be liable to compensation except in very special circumstances) but also because of the way it is applied and in the way compensation is assessed.

         The concept of property rights itself has never been finally defined. Many commentators turn to the idea of a "bundle of rights", whereby ownership of land is constituted by a series of autonomous, separable rights - rights to use, to develop, to fly over, to cross, etc. However, this idea does not settle the question of transferable rights in legal terms, namely which of the rights attached to land are by their nature part of ownership(such as the right to farm the land) and which are rights whose attribution may be determined by the social function of the property (such as the right to build).


         In a quite different context, a similar debate has been going on in France, although from a different starting point since the basic principle is that constraints are not liable to compensation. When the 1976 Act was drafted, voices were heard denouncing the risks involved in introducing rights that could be considered as “imaginary” (Lenôtre-Villecoin, 1975). Like the Suitum decision in the United States, this amounts to an attack on the very principle behind the creation of the legal entity of "transferable right". According to J. Lenôtre-Villecoin, "the capacity to transfer an imaginary development right establishes a jus abutendi, or a right of disposal, in a case in which the public interest, in the form of regulation of urban development, is against existence of the right to build at all. 

Zoning and transferable rights

         There is a clear link between the two. The transferable rights procedure is in itself a zoning instrument since it implies a division into transmitter and receiver zones. Greater precision may well be introduced by stipulating that the zones must be of precisely specified dimensions otherwise the whole scheme will be invalidated. If the scheme is to operate properly, owners in both transmitter and receiver zones need to be given the right incentives, which should help to balance supply against demand with respect to development rights.


         In the case of receiver zones, where conventional planning regulations operate as usual, the purpose of zoning is to ensure a high standard of urban development. The quality of urban development is thus the criterion to be taken into account. As the process proceeds, however, it becomes difficult to provide adequate incentives. Many schemes use a system of "bonus zoning", in other words the density authorised increases if transferable rights are purchased. This makes it very tempting for the planner to reduce the "ordinary" density (where no rights have been purchased) and increase the "bonus" density. However, such a policy is likely to fall foul of the principle of vested rights and to lead to litigation. Incentive zoning is thus a difficult process to handle.


         Another sensitive issue is the eligibility of a zone to be designated a transmitter zone, which opens the way to a grant of transferable rights. The subject is one of endless debate with no evident way of settling it on a systematic basis. First of all, it involves agricultural land. Should such land be allocated transferable development rights and if so on whose behalf? Generally speaking, the price of agricultural land could be considered to reflect its productivity, the current net value of its future yield. It is paradoxical to allot "development rights" to land on which farming is expected to continue even if the rights are not to be used on that land. Arguments are often based - this is generally the case in France and in most of the American examples - on the natural beauty and biological diversity of the site. However, this takes no account of existing usage and places owners having quite different relationships with their land on the same footing.


         Although no general conclusion can be reached on the linkage between zoning and transferable rights, note should be taken of the risk of distorting zone demarcations and urban planning regulations in order to make the rights market work. It is important to maintain a proper perspective; the transferable rights procedure is no more than an aid to good urban planning and not an end in itself.


Is the price of rights a “market price”?

         It would be pleasant to be able to answer this question, taking market price to mean the price that would balance supply against demand under conditions of atomicity, transparency, etc. Even in the most successful cases, the number of transactions involved (low) and the time the scheme has been in operation (short) does not allow statistically significant findings to be made. The only firm conclusion, reached in settings as different as Auckland in New Zealand, Torino in Italy, Montgomery County in Maryland or the commune of Taninges in the French Alps, is that prices rise sharply when the procedure is beginning to settle down and then level off or even decline.


         To be more specific on this important point, there has to be a way to make detailed analyses of local markets in order to set the "market price" of a development right on a residual basis (from the market price of the end product, the building, less the costs of the operation, deduction is made the highest likely level of land tax likely and thus the value of the development rights to be purchased). The actual price will probably then be seen to be nowhere near this "market price" unless the purchase of tradable rights is mandatory and there is no alternative nearby (development zone not subject to the transfer system). This comes back to the paradox mentioned earlier, that this system of tradable rights will only work properly in a context where land use is subject to strict planning regulations.


Equity and efficiency

         The concept of equity has to be considered from the point of view of landowners and from the point of view of the inhabitants of the city as a whole.From the first point of view, tradable rights fulfill an essential function in the absence of a fiscal system capable of recouping  added value. The price of land is very dependent on the development rights allowed by the zoning regulations, tradable rights making it possible to correct inequities introduced by zoning. If the concept of equity is extended to all inhabitants, assessment of the method becomes more difficult and depends on the way property rights are conceived and the tax system allowing them to be put into operation. There are two contrasting situations.


         In some countries, such as in North America and south-western Europe, there is no universally applicable mechanism for recovering capital gains from urban development and/or payments for development rights. The practice of transferring development rights is thus equivalent in such cases to distributing the overall capital gain generated by urban development among the subgroup of landowners only, whereas it might well be expected to return to the community as a whole, in particular when the public amenities that give rise to that added value are funded by the taxpayers.

         This is a limited view of equity, which may admittedly be of help in particular cases, at the cost of a broader notion of equity requiring a general mechanism to recoup “betterment” by a public authority. Unless, which is unusual, land is divided up in a very comprehensive and equal way among the inhabitants.


         The second type of situation, which is found mainly in northern Europe, is founded on the principle that the capital gain by urban development should return - at least in very large part - to the community. Using various methods (see above), the initial procedure that increases the value of land essentially benefits the community rather than the landowner. The equalisation made possible by transferable rights therefore serves no purpose.



The emergence of a European  law of property

         We have previously indicated that some elements of law about the right of property have been introduced in the “European Convention on Human Rights” from 1950, completed in March 1952 by a first “additional protocole” stating  that a compensation is due “in cases where the prejudice is exceptional and the servitude is disproportionate in comparison with the purpose of general interest of the servitude”, thus opening the door to a possible application of takings, but at the same time limiting it in a tight manner.

         It must be noted here that the Convention, as a fundamental text of the European union, can be applied directly by European courts, without the requirement of an intermediate step of a translation-interpretation-adaptation in national legislations, as is the case with the European “directives”.

Three basic principles apply thus apply directly at the European level:

                           The guarantee of property

                           The possibility to expropriate in the public interest

                           The posssibility to restrict land use without compensation for general interest purposes.

         In this field, up to now, European courts have followed the principle of subsidiarity, considering that this is part of the responsibility of national governments, as stated explicitly by a 2004 decision before  the European Court of human rights (CEDH, April 27 2004, Gorraiz Lizarraga et crts c. Espagne):  “Planning and zoning are fundamentally domains of intervention of national governments, especially through regulation of land use in the general interest. In such policies, where general interest is at stake, the margin of appreciation of national governments must be greater than when only question related to civil courts arise.”

         There have been exceptions, quite limited, to this general principle in the evolution of case law of the CEDH.

         A key decision, very often quoted since 25 years, always referred to[3], is related  to the classification of a piece of land as “reserved for public use”, and so supposed to be expropriated in the future, but without indication of some delay.

         After 23 years under this threat, the owner went to the European

 Court, which confirmed the legality of such a classification, but also considered that the delay was “unreasonable, and that the balance between the interest of the municipality and the interest of the owner had been disrupted”, thus violating article 1 since this was considered as a “special and outrageous” burden.

         The challenge of land value assessment in volatile markets

         The very notion of “windfalls for wipeouts” implicitly refers to some “reference” price of land, some type of benchmarking, making it possible to define and measure when there is a windfall and where a wipeout. In the context of  a slow and steady evolution of land and property prices, this can be considered a a reasonable expectation and allows more or less to imagine an equitable treatment of gains and losses.

         It should be taken into account now that land and property markets are more and more volatile, that “irrational exuberance”, to follow Alan Greenspan and then Robert Shiller ( Shiller, 2000) is increasing, not diminishing, as exemplified now by the “subprime” crisis, whose effects are extending now all around the world, requiring at the same time new instruments to analyse the phenomenon, as well as different tools of public policy.

Conclusion : towards a redefinition of the right of property on land

         We are thus brought back once more to the definition and content of property law, the key to the problem. Any treatment of the “windfalls for wipeouts” problems resulting from planning and zoning relies basically on the assumption of an extensive definition of the right of property, including the right to the “capital gain” on land, even if this gain is the result of the general evolution, of urban growth, the construction of infrastructure by public authorities, without any activity of the landowner.

         As noted by Donald Krueckeberg (Krueckeberg, 1996): "Property is not just the object of possession or capital in isolation, but a set of relationships between the owner of a thing and everyone else's claim to the same thing. This understanding of property highlights considerations of distributive justice that are particularly important in light of the issues in the contemporary debate about property rights. Rights to personal use of property are fundamental to individual and social well-being: rights to profit from property, in contrast, have always been subject to reasonable constraints for the benefits of the entire community and society. Attempts to establish a contrary case by appealing to natural rights, market necessity, liberty, social utility, or just desert all fail to withstand scrutiny. ... These concepts of use rights and profit rights in property are at the heart of the planning question".

Some references

Acosta, Rodrigo and Renard, Vincent (1993), Urban land and property markets in France, UCL Press, London

Alterman, Rachelle (2006), Introduction: regulatory takings viewed through cross-national comparative lenses, Washington University, Global Studies Law Review, vol 5, n°3.

Comby, Joseph, ed. (1991)   Un droit inviolable et sacré, la propriété, ADEF, Paris

Andelson, R.V. (1991), Commons without tragedy; protecting the environment from overpopulation, Shepheard and Walwyn, London

BOOTH, Philip, Controlling development; certainty and discretion in Europe, the USA and Hong Kong, UCL Press, Londres, 1996

BOSSELMAN, F., CALLIES, D. and BANTA, J, (1973), The taking issue. A study of the constitutional limits of governmental authority to regulate the use of privately-owned land without paying compensation to the owners, Washington D.C., Council on Environmental Quality.

BUITELAAR, Edwin and NEEDHAM, Barrie( editors) (2007) Property rights and private initiatives, special issue of Town Planning review, vol 78, n° 1.

Callies, David L.ed. (1996), Takings; Land development conditions and regulatory takings after Dolan and Lucas, American Bar Association, Washington.

CHUNG, L. (1994), The economics of land-use zoning : a literature review and analysis of the work of Coase, Town Planning Review.

FISCHEL, W. (1978), A property rights approach to municipal zoning, Land Economics, 54.

Hagman, D. and Misczynski, D. ( 1978), Windfalls for wipeouts: land value capture and compensation, American Society of planning officials, 1978

Hardin, G ( 1968), The tragedy of the commons, Science, vol 162, p 1243-1248

Haumont, Francis (2007), Droit européen de l’aménagement du territoire et de l’urbanisme, Bruylant, Bruxelles.

Jacobs, Harvey D. ed, (1998), Who owns America? Social conflict over property rights, The University of Wisconsin Press, Madison.

Jacobs, Harvey D.(2006) The “Taking” of Europe: Globalizing the American Ideal of Private Property?” (Working Paper).  Cambridge, MA: Lincoln Institute of Land Policy.

KRUECKEBERG, D. (1995), The difficult character of property. To whom do things belong ? Journal of the American Planning Association, 61, 301-309.

Lenôtre-Villecoin, J. (1975), ‘Urbanisme et propriété du sol: les propriétaires vont-ils pouvoir monnayer des droits de construire fictifs?’ Les Études, April, 431–40.

Needham, Barrie (2006), Planning, law and  economics ; the rules we make for using land, Routledge, UK and USA

Renard, Vincent (2006), Compensation rights for reduction in property values due to planning decisions, the case of France. Washington University Global Studies Law Review, vol 5, n°3.

Renard, Vincent (2007), Property rights and the “transfer of development rights”: questions of efficiency and equity, Town planning review, vol.78, n°1.

Schiller,B. (2000), Irrational exuberance, Princeton University Press, March

Strong, Ann L.  ( 1979), Land banking, European reality, American prospect, John Hopkins University Press, Baltimore and Cambridge

[1] Final report of the Expert Committee on Compensation and Better­ment, Cmnd 6386, septembre 1942.

[2] This part refers to some extent to the article published in Town Planning Review ( Renard, 2007)

[3] CEDH, 23 Septembre 1982, Sporrong et Lonnroth c. Suède