Housing spokesperson Andy Wightman MSP said the party has long campaigned for reform of the planning system, to counter the current set-up where the price of land rockets once it receives planning permission.

Holyrood’s local government and communities committee, of which Mr Wightman is a member, yesterday agreed to amend the government’s Planning (Scotland) Bill so that the amount councils pay to landowners in new “masterplan consent areas” is not inflated by the prospect of development.

Andy Wightman MSP said: “With average house prices seven and a half times the average salary we must take every opportunity we can to help people afford to buy or rent a home. Giving local councils the power to buy land at existing use value rather than the inflated value caused by planning permission is an important tool in the box.

“A classic example is the Waterfront in Edinburgh where there are swathes of vacant land that have been allocated for housing for years. Developers have been biding their time while the land value rises and the city’s housing crisis worsens. This land should be available for the council to buy at its current value so it can get on with the job of building affordable housing for ownership and rent.”

The Scottish Conservatives, who brought forward the amendment, said the Land Value Capture will enable local authorities to significantly increase their ability to build more communities.

Land Value Capture enables local authorities to benefit from the increase in value of land through planning permission. Usually, when a plot of land is granted planning permission, its value increases substantially. Land Value Capture is a way of making sure that more of this increase in value is used for the benefit of the community.

The amendment, moved by Graham Simpson, Scottish Conservative housing spokesman, sets out that where a planning authority establishes a Simplified Development Zone, it may include provision for compulsory purchase.

The amendment sets out the practicalities of this approach, how the purchase price is to be fixed, and requires ministers to set out the rest of the detail about the process by regulations.

Alexander Stewart MSP and Monica Lennon MSP as well as Andy Wightman MSP supported the amendment.

Graham Simpson MSP said: “The inclusion of land value capture in this bill will enable councils to invest the money gained through their decisions to grant planning permission on affordable housing, new roads and better infrastructure.

“Importantly, this amendment also ensures that compensation is payable to those whose land is purchased.

“I believe that this amendment will help transform the landscape of residential and economic development in Scotland.

“Most crucially, this will enable more houses to be built, more communities to be created and more people will have more opportunity to own their own home.”

However trade body Homes for Scotland said the “premature” move to include a ‘land value capture’ measure is unlikely to swell council funds.

Responding to the vote, Homes for Scotland director of planning, Tammy Swift-Adams, said: “Land Value Capture is a topical subject with broad political support but, unfortunately, this amendment is a premature and poorly thought through way of trying to achieve it.

“Whilst it has been clear since Stage 1 of the Bill that the opposition parties were keen to use the Planning Bill to get the words ‘land value capture’ into legislation, it is disappointing they’ve done it in a way which seeks to disadvantage one set of landowners over others - as the proposed approach will only affect people whose land will, at some stage in the future, be designated by a council as a ‘Masterplan Consent Area’.

“It is also somewhat misleading since the compensation landowners get when land is compulsorily purchased is usually much lower than the full market value they’d have got from developing it or securing planning permission themselves. So the additional cash being anticipated for affordable housing etc isn’t likely to add up to as much as supporters might be hoping. In fact, the amendment could mean some people getting more compensation than would otherwise have been the case.

“There is every chance that the Scottish Land Commission, which is currently exploring options for Land Value Capture will, in time, conclude that changing compensation arrangements would be counterproductive. This amendment is blind to that possibility and undermines the evidence-based, inclusive approach being undertaken by the Commission, which itself is clear that Land Value Capture is a concept rather than a specific policy measure and is probably going to be best achieved in different ways in different locations and circumstances.

“In any case, a form of Land Value Capture is already in place in Scotland. The country’s home builders alone contribute over £80 million pounds worth of “planning obligations” each year in relation to affordable housing, school places and other infrastructure – all of which already comes off the value of land.

“Furthermore, councils already have access to compulsory purchase powers, which they have successfully used to help deliver development, including social housing. Making those powers more complex won’t encourage their further and more wide spread use.

“Today’s amendment has the unfortunate hallmarks of making law for the sake of it, not because it is genuinely expected to help deliver more homes for the people of Scotland.”

The committee also agreed an amendment from Mr Wightman which means that changing a property from a person’s home to a short-term let will require full planning consent based on clear criteria. Local councils would determine such applications on the basis of local policy, and the changes would not affect homeowners or occupiers who only rent out a room.

Mr Wightman added: “We also know that the uncontrolled and rapid rise in short-term lets in our cities and our rural communities is depriving families and individuals of badly-needed long-term homes. I am pleased that the minister has agreed to discuss this matter further as the Bill progresses through Parliament.”