UKPF’s editorial board members are highly sceptical that the Labour Party plan to allow cheaper compulsory purchase orders (CPO) for councils, will produce the results anticipated.
Labour leader Sir Kier Starmer has announced plans to give local authorities powers to CPO land without having to factor in the value of potential planning permissions. Labour says it wants to ‘back the builders, not the blockers’.
But members of our panel predict potential legal obstacles and see it as unworkable and potentially unfair.
Philip Waddy, managing director of WWA, said: “Good luck with this plan. Landowners forced to dispose of land through compulsory purchase at nil uplift will take the Government to court through a class action – and in my opinion will win.
“Better to CPO at a realistic price – if not 100 per cent market value. What’s needed to boost housebuilding is for the state to start building again – good old fashioned council housing designed to decent standards and primarily for rent.
“The housebuilders won’t build in scale during a downturn so the housing crisis will get deeper and deeper unless Government intervenes.”
David Jones, managing director of Evans Jones, said: “Labour’s proposal to allow councils to purchase land without considering the value of potential planning permissions through compulsory purchase orders (CPOs) is well-intentioned.
“In light of the current challenges in delivering affordable housing, providing councils with more opportunities to acquire land is a positive step.
“This aligns with Kier Starmer’s plans to grant councils greater powers to build on Green Belt land, potentially unlocking valuable areas of unused land.
“However, I have concerns about the effectiveness of this process. CPOs can be lengthy and complex, resulting in delays that limit the impact on addressing the housing crisis.
“The timeline for implementing this system and any potential legal issues also raise uncertainties.
“In practice, forcing a landowner to sell land feels a somewhat draconian response. Development brought forward upon compulsorily purchased land would still need to accord with the development plan.
“In most cases where land has potential for development it will already be promoted by landowners or promoters. I, thus, do not see this policy proposal generating significantly more land for housing.”
Brian Dowling, partner for Boyes Turner, said: “The proposal to reform ‘hope value’ has been put forward previously by the Labour Party but is now more relevant as 2024 looms.
“Compulsory purchase powers exist for good reason, but essentially involve economic harm and significant disruption to an arbitrary selection of people in a given area, for the greater good. So there need to be fair compensation rules and it is hard to see how excluding hope value from CPO valuations is fair.
“A lot of CPO and site assembly work involves peoples’ homes and gardens. If the CPO involves regeneration of an urban area, there is a fairly high chance that the affected people are vulnerable or in poverty. So this policy will involve poorer homeowners and individuals losing out unless they are specifically excluded.
“I don’t agree that the gap in value between open land and land with residential planning permission is intrinsically unfair. Gains get taxed, one way or another, so it doesn’t seem right to present this as a windfall or a target for ‘value capture’.
“Property has a value based on its potential use, and if the state made it easier to get and implement planning permission, values would be lower and more homes would be built.”
“Finally, it isn’t yet clear that it would be lawful to deprive people of the value of their property in this way. So a public body trying to use these powers might find their development held up in our courts or the European Court of Human Rights.”
Karen Jones, partner at Blandy & Blandy, said: “CPO has been an underused resource and has the potential to unlock difficult development sites which otherwise have potential to deliver much needed development.
“Making it easier for local authorities to use powers in such tricky situations might be a better focus for Government reform rather than seeking to remove adequate compensation for landowners.
“The current process takes huge resources of both time and money and a better emphasis would be to review CIL and S106 to allow more community funding.
“If CPO follows existing procedures but cuts down compensatory provision at the end of the process, it will not deliver as Labour hope. CPO is, and should remain, a last resort power as it deprives individuals of their property and interferes with fundamental rights of ownership.”
Hugo Haig, director of Lochailort, said: “When would it be right not to pay the proper price for land? Let alone the absolutely chaotic delivery, or lack off, thereafter.”
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Hugo Haig nails the problem. ‘When would it not be right to pay the proper price for land ?’ he asks. Which is why a Labour government will struggle to deliver their policy. Instead landowners will sit on their hands, until a change of government produces a policy reversal. But another decade of housing supply stasis is not in the best interest of the next generation of home owners or tenants. Nor does it help economic growth.
There is another view. Hope value is created by local communities, not by landowners, and needs to be returned to them. So a mechanism is needed to return it whilst following Haig’s principle, of paying the proper price to prevent unfair outcomes. This means always paying full open market value, including any hope value that exists when the land is bought. To avoid local councils paying hope value, a valuer will tell you to buy somewhere between 10/20 years ahead the prospect of planning consent becomes so uncertain hope value is extinguished. When this happens, open market value and existing use value are the same. Shrewd councils, with a clear spatial policy about their areas will seek out, and buy strategic sites on this principle.
A successful spatial housing policy needs consistent local, cross-party support and a generational based vision of where long term housing should and should not be located. The 15 year local plan cycle is too short. The current haphazard call for sites system needs to be replaced with a spatial policy based on one or two generations ahead. Key sites will be in the ownership and control of the local council.
Does seem too radical? Here in England we have two successful examples of this approach. The spatial policies followed by the Commission of New Towns: financially so successful the CNT paid back to the Treasury all the capital it borrowed plus interest plus land worth £1 billion at 2004 prices. The other is the ability of London’s landed estates, created over generations, to create premium values by building places where people like to live, to shop and to enjoy being out and about. Alternatively look at the rural example of Poundbury, developed by the Crown Estate, achieving price premiums of about 30%.
Can the main political parties in Westminster and locally work together for the future? The run up to the general election might offer a clue?