The price of development land across the UK fell marginally between April and June, after no change in the first quarter of the year, which was preceded by a 1.3% rise in values in 2011, according to the latest research from Knight Frank.

Development land prices are broadly mirroring the movement of mainstream house prices in the UK, which have fallen by around 0.3% since the start of the year. Given the lack of house price growth across the UK, there is little reason to expect further increases in land values in the short term. On the other hand, Knight Frank say that the finite supply of development land, caused partly by the backlogs and uncertainty in the planning system, is to some extent putting a floor under land prices.

But there are concerns that the new Community Infrastructure Levy (CIL) which is currently being looked at across the UK could change this balance. Any additional cost levied on housebuilders or developers is likely to have a negative effect on development land values, as this is where such a cost would be recouped. The CIL is being viewed as just such a cost.

Gráinne Gilmore, Head of UK Residential Research for Knight Frank said: “There is disquiet that the levy has yet to be finally decided in many areas, creating uncertainty over what the charge might be. Given the lack of house price growth outside London, there is little reason to expect a rise in land values in the short term.”