Labor is drawing up plans that would force landowners to sell plots at a fraction of the potential market price in a bid to lower the costs of building homes in England, according to party officials.
Shadow settlement secretary Lisa Nandy intends to reform how land is valued when councils take it over through ‘compulsory purchase orders’ (CPOs), if Labor wins the next general election.
Labor’s proposal for comprehensive land reform would go further than recent government moves to allow ministers to make landowners sell their properties cheaper on limited occasions.
Housing construction is set to be one of the main topics in the upcoming elections, with Labor leader Sir Keir Starmer promising to dramatically increase construction to ease the country’s real estate crisis, while the Conservatives are more cautious.
Nowadays, many potential first time buyers are unable to get on the housing ladder due to the high prices.
CPOs allow public agencies or local authorities to compel property owners to sell if the land is deemed necessary to build homes or critical infrastructure.
Under the proposals, a future Labor government would introduce legislation allowing local authorities to purchase land at a price that does not reflect the value of potential planning permits.
This would overturn the Land Compensation Act 1961, which bars councils from purchasing plots of land for development at their agricultural value.
Currently, local authorities acquiring sites through CPOs must factor “hope value” into their purchase price. This is the added value based on the expectation that the land will receive planning permission in the future.
Since then, the gap between the value of farmland and licensed fields has widened dramatically.
Land is worth £22,520 per hectare where farmland can average £6.2m per hectare with permission – 275 times as much – according to the think tank of the Center for Progressive Policy.
“We want local areas to capture a lot more of the uplift and benefit from it than they currently do when development happens,” said a Labor aide.
We want to reverse the balance of power. It looks like the scales are tilted towards. . . Landowners, we want to redirect it towards communities that want to build more homes,” the aide added.
Labor contends that the plan will bring England more in line with the land valuation systems of Germany, France and the Netherlands.
The proposals are likely to anger some landowners, especially those with suitable fields for development. But Hugh Ellis, director of policy at the Town and Country Planning Association, a charity, said Britain’s ‘new towns’ program of the 1940s and 1950s was successful because development companies could buy vast tracts of land at agricultural value.
He said Labor was “absolutely right” in looking at potential reforms, arguing that landlords enjoyed “an absolute license to print money”.
“The workers need to strike the right balance with the landowners, giving them some sort of uplift but nowhere near the extent that we’ve seen over the last 15 years.”
In 2018 a government review by Sir Oliver Letwin, a former minister in the government, stopped short of recommending that the authorities be allowed to buy land at its agricultural price.
The government launched a consultation in 2022 to determine or devalue hope. In April this year, it announced new powers allowing the settlement secretary to limit or suspend Hope Value compensation payments, on a scheme-by-scheme basis.
This new rule is to be introduced through an amendment to the Settlement and Renewal Bill. At the time, the ministry said a “planned by scheme” approach would allow cases to be assessed in relation to the European Convention on Human Rights.
The Department for Settlement, Housing and Communities said hope value payments can often add up to councils’ costs.
She added, “Our reforms will ensure that the taxpayer gets the best value for money, by removing ‘value hope’ where justified and in the public interest.”
“It will ultimately be for the Secretary of State to decide whether the compulsory purchase order can be approved and whether removing the HOPE value is appropriate.”
