Financing restricted to goods for which tax debt applies and to the amount of the tax debt (plus any possible accrued interests; penalties and fees). 

Expensive type of financing because of the provision for the risk of creditors increasing tax revenues on lands; high level of risk for borrowers related to the non-achievement of forecasts. 

Increases management complexity, especially when looking at revaluation methods and changes in land value. High implementation and management costs. Tax is made visible which makes it very unpopular, especially since it affects all the landlords and that its proceeds are not redeployed. In practice, it tends to privilege individual over collective housing and residential over business properties.

It is difficult to consensually evaluate the amount of capital gains realized, and its territorial boundaries. Strong opposition from land owners, with the poorest experiencing payment difficulties. It is hard to capture capital gains that are only virtual if taxation happens at the same time that the investments adding value to the land take place. When capital gains are captured at the time of the transfer, it results in tax revenues that are difficult to collect and to directly redeploy to other investments. Furthermore, this tax can impede land and property transfers, thus contributing to market inflexibility, decline in supply and upward pricing pressure.  

This mechanism leads to territorial inequalities, as richer territories are able to finance greater investments, and are reluctant to implement offset mechanisms, such as tax equalization. 

It is difficult to evaluate the investment impact on properties (in terms of capital gains and relative quality-of-life benefits), and thus the distribution of costs among land owners as well as the area boundaries within which landlords have to contribute financially. This can lead to strong opposition from landlords, which can be reduced by providing greater visibility to the investment and by unraveling the relationship between taxation and investment. There is the issue of poor land owners unable to pay the tax, which can be addressed through means-tested tax exemptions. 

Capital gains on land value are captured only at the time of the handover (because otherwise those gains would only be virtual, difficult to measure, evolving and disconnected from actual revenues, which makes it questionable in legal terms and difficult to implement politically). This tax can act as a brake on properties and land transfers (owners waiting for looser regulations to sell), thus contributing to market inflexibility, decreasing supply and price increase.  

Within this framework, the local governments’ and project developers financial contribution vary considerably , depending on the power balance between public and private entities. This power balance is influenced by several factors: public officials’ level of qualification and integrity, dynamism of the real estate market, competing projects, etc). In case of a Community Benefit Agreement, the issue of local interlocutors’ representativeness may arise. Project benefits and the distribution of added value linked to it can occur at the expense of local public authorities’ share, and risk of pandering to special interest groups.

Concerns only new constructions, so is used intermittently. Identifying the appropriate level of private involvment may prove a challenge. For residential development, the cost is generally transferred to the final purchaser (within the market boundaries). But a lot more difficult and arbitrary to identify, hence not extensively implemented

Concerns only new constructions, so is used intermittently. Identifying the appropriate level of private involvment may prove a challenge. For residential development, the cost is generally transferred to the final purchaser (within the market boundaries).