House prices in Britain are high whether measured by historical or international standards. High house prices also mean high rents, and that in turn means a very large bill for housing benefit. The only way to make houses more affordable is to increase the supply of new houses. The old system of top-down targets has proven a failure: the regional spatial strategies did not deliver the houses we needed. Instead the coalition government wants to create a system whereby local authorities will have an incentive to permit development, so that local communities will choose to support, rather than oppose, development.
Community land auctions are part of that set of incentives. They are are akin to competitive tendering. The local authority invites offers of land, and accepts those that are good value. Good value is a combination of price and appropriateness for development, where the latter incorporates sustainability criteria, as well as desirability for the final purchaser. The council grants planning permission, and then re-auctions the land that it accepted for development, keeping the difference in value.