From ‘much needed’ to ‘pure fantasy’: reactions to Labour’s building plan

1 day Labour Party plans to increase house-building by slashing the amount that landowners get paid in compulsory purchase orders has met with a mixed reaction.

The Guardian newspaper reported this week that, if it wins power at the next general election, Labour will change the law to allow local authorities to buy development land for a fraction of what they currently have to pay. Land owners would only get what their land is worth without planning permission; the so-called ‘hope value’ premium will go. Even a hint that farm land might get planning permission can increased its value from thousands of pounds per acre to millions.

Commenting on Labour’s proposals, Roger Mortlock, chief executive of countryside campaign CPRE, said: “Our current house-building model is broken. It leads to sprawling, piecemeal development, making a fortune for some landowners and developers and doing little to address the root causes of the affordability crisis affecting so many low and middle income families. Reforms to the way the land market operates could help to change all this.”

He continued: “Hope value needs to go. It’s one of the primary reasons no government in the past two decades or more has managed to build anything like enough genuinely affordable homes. Rural areas have a particularly acute problem of a lack of affordable housing. However, the devil will be in the detail, and these proposals must be focused on delivering a new generation of social housing.  

 “It’s a big if – but if we can get meaningful land reform, it offers a better chance of building more of the homes that are desperately needed than the current system. The potential for this kind of development is huge. It could lead to the regeneration of urban brownfield sites in a way that meets the housing and transport needs of people who live and work in our cities.

“We need well planned developments, where the profits from rising land values are invested in public green spaces, walking and cycling infrastructure, community facilities, and well-designed homes that people can afford to live in, rather than accruing primarily to landowners. Getting rid of hope value should slash the cost of land, making it easier to build attractive new homes that are carbon neutral or negative.”

Those at the sharp end were less impressed by Labour’s plan, however.

Jon Stott, managing director of Ardent Management Chartered Surveyors and a former chair of the Compulsory Purchase Association, says that Labour’s proposal would create more barriers to building.

“The proposal to compensate landowners in a manner that ignores hope or development value would see Labour take the Conservative party’s ill-thought-out ideas which, under the Levelling Up & Regeneration Bill, would only apply in limited circumstances, and apply them across the board,” Jon Stott said.

“The Conservative party’s proposal is bad enough, but this would be far worse. Not only does the proposal seek to solve a problem that doesn’t exist, it will actually create new problems.”

He said: “Too many local authorities are already disinclined to promote compulsory purchase orders (CPOs) – not least following recent decisions in Barking and Maidenhead where CPOs were denied – but this would see them attract far more opposition and ensure they are far more controversial, which would increase risk and reduce local authorities’ appetite to promote CPOs in the first place. That would mean that development that is in the public interest, that would facilitate social, environmental or economic benefits – including much-needed new homes – would simply not come forward.

“Also, it is going to be wholly unfair on the landowners who promote land for development under current local plans who will be left significantly out of pocket should that land be compulsory purchased. In my nearly 20 years’ advising local authorities and also claimants on a wide range of regeneration and infrastructure projects, I can’t think of a single instance of a landowner being over-compensated in the manner that those lobbying for this change seem to think is a regular occurrence.”

Lawrence Turner, director in the Bristol office of planning consultant Boyer, said: “The problem with Labour’s proposals is that compulsory purchase takes a long time to process and is very costly and resource-intensive for local planning authorities.

“Other complications typically involve protracted negotiations with owners, legal challenges, and extensive public consultation and paperwork. I have seen instances in Bristol where I am based, where CPOs have taken more than 20 years on some sites. Unfortunately, this policy doesn’t have the potential to deliver the homes as quickly or as cheaply as the headlines suggest.”

Ian Barnett, national land director at residential property developer Leaders Romans Group, said: “There are several reasons why we aren’t building enough houses as a country – the availability of land or even the price of land are relatively minor barriers to housing delivery.  The majority of landowners make their land available for development; the price of which is determined by the market, itself determined by the planning status which includes factoring in the cost of any financial obligations payable to the local authority.   In reality, buying agricultural land unconditionally with simply ‘hope value’ is relatively uncommon given the planning system’s uncertainty and lengthy timeframes.  Aside from compulsory purchase orders for agricultural land creating all manner of legal challenges, it should be remembered that the mechanism for local authorities to extract more value for communities is already in place and they have the ability to generate revenue through Section 106 agreements and the community infrastructure levy (CIL).   Proper resourcing of local authority planning departments, and planning for development in the right areas through joined up regional planning should be the priorities for any future government.”

Rico Wojtulewicz, policy chief of the National Federation of Builders (NFB) and the House Builders Association (HBA), said: “The HBA has recommended reforming compulsory purchase order (CPO) rules in almost every government consultation response since 2015. As the author of those responses, it would be easy to suggest we back Labour’s proposal to purchase land at closer to existing use value.

“However, alongside CPO reforms, every one of those consultation responses has included a caveat that the major challenge to more housing is not the price of land but the opposition to land use.”

He said: “If land price was the main problem, councils would buy at market price and build homes themselves. However, it’s far easier to allocate sites submitted by landowners and developers and then blame them for not building enough affordable homes, taking too long, over-stressing the local infrastructure or profiteering.

“This is also the reason why local planning authorities choose large sites outside of communities to meet housing supply. It is political suicide or a considerable electoral challenge to encourage the building of fifty smaller sites in 13 council wards, when you can build the same number of homes on three sites in two wards outside the urban area.

“When the politics of using land means building densely is opposed, new towns are unthinkable, green land is sacrosanct, pitting roads, services and amenities against affordable homes is politically expedient and the private sector is a great scapegoat for failure, the premise that a lower land price will fix the housing crisis is pure fantasy.”