Councils gain compulsory purchase powers without paying hope value

Councils have new powers to use compulsory purchase (CP) to acquire land without accounting for any hope value in the compensation payment to the landowner.

This applies only to land destined for social and affordable housing purposes, or for educational or health uses.

While this will affect some farmland, planning advisers expect it will more likely be used on brownfield and other regeneration sites mainly in urban areas.

See also: What to check before starting a permitted development project

For several reasons there are doubts about how widely these powers will be used.

First, CP is a lengthy process which is open to challenge and therefore to cost risks. Second, councils are cash-strapped and short of other resources, including staff.

Levelling up

The powers are contained in the Levelling Up and Regeneration Act (Lura), allowing local authorities to apply to the Secretary of State to remove or limit hope value from compensation payments for land acquired under CP for these limited purposes.

As part of the process, authorities wanting to use the powers will have to submit a statement of commitments setting out what the project would achieve in the public interest within 10 years. 

Hope value is contentious, says planning lawyer Paul Wakefield, a partner with Shakespeare Martineau, as it hinges on the potential future worth of a piece of land rather than its current market value, which is based on existing use.

This means it is difficult to quantify, often requiring expert opinions and lengthy negotiations, along with the costs and delays these impose.

While he thinks the new powers are relatively low risk in terms of farmland sites being subject to “no hope value” compulsory purchase, he raises the question of how it might affect the promotion of land through local plans.

Land promotion risks

“Where land has been promoted and allocated in a local plan, but for some reason it has not come forward and the site is not progressed, then in that scenario, there is potential for the local authority to use those powers and for hope value to be disapplied.”

As a result, Mr Wakefield’s advice is to be proactive about progressing such sites and not sit on them once they have been allocated in local plan.

He is also concerned that the new powers may make developers and promoters hesitant to promote land.

Landowner response

Removing hope value from compulsory purchases is tantamount to asking farmers to bear the cost of fixing a housing crisis they didn’t cause, says Country Land and Business Association (CLA) president Victoria Vyvyan.

“I very much doubt that the house builders who will be contracted by councils to do the work will be taking a lower profit, so once again, farmers will be the only part of the supply chain to lose out.

“Allowing under-resourced local authorities to force landowners to sell their land without hope value will harm the viability of many farms.

“Farmers are already hard-pressed, and compulsory purchase of land at a knock-down price will undermine their business.

“Many CLA members would willingly put forward land for affordable housing development were it not for the expensive, slow and bureaucratic planning system.

“The relative cost of hope value versus total project costs is not significant enough to increase housing delivery.”

Human rights question

In a 2022 consultation response on removal of hope value, the Law Society expressed concern as to whether the compulsory purchase order proposals were justifiable, equitable and compatible with human rights (article 1 of the first protocol of the European Convention of Human Rights and, if it is a dwelling, article 8) when balancing the public interest against individual rights.

Failing to recognise the hope value attached to a property would result in properties being acquired for existing use (value), which will be less than market value, it said, adding that the proposals would potentially violate access to justice for landowners in many cases and delay the CP process through an inevitable increase in court challenges.