Land value reforms among Labour plans to tackle housing crisis

Plan to introduce reforms of how land is valued under compulsory purchase orders

Lisa Nandy, Shadow Secretary of State for Levelling Up, Housing and Communities (PA Archive)

Labour would overhaul how land is valued under the compulsory purchase order process as part of efforts to tackle housing shortages.

Under such orders, local authorities can effectively force property owners to sell to make way for major projects or housing developments.

The Financial Times reports that shadow levelling up secretary Lisa Nandy would bring forward legislation to allow councils to purchase land at a price that does not reflect the “hope value” – the value accrued through the expectation of planning permission in the future.

Labour argues that the proposal would not see the state paying below market value.

Rather the proposal would see the policy constraints taken into consideration in the same way that current rules, including the application of “hope value”, impact market price.

Officials believe such an approach would bring England in line with arrangements in Germany, France and the Netherlands.

Housing supply is likely to dominate the months leading up to the next general election.

The prime minister was forced early in his premiership to drop plans for mandatory local housing targets as part of a plan to build 300,000 homes a year in response to a revolt by Tory MPs and activists.

But Mr Sunak remains under pressure to get Britain building in order to increase the supply of homes to alleviate soaring rents and shortages.

Earlier this month, housing secretary Michael Gove admitted the challenges facing those who want to own a home.

“There is a problem and the problem is there simply aren’t enough homes in this country,” he said.

“It is increasingly difficult to get on the property ladder.”

A Department for Levelling Up, Housing and Communities spokesperson said: “We want councils to be able to unlock more land for affordable housing, which is why we are reforming compensation for compulsory purchase orders.

“The current rules can significantly increase costs for councils and our reforms will ensure the taxpayer gets best value for money, by removing ‘hope value’ where justified and in the public interest.

“It will ultimately be for the Secretary of State to decide whether a compulsory purchase order can be approved and if the removal of hope value is appropriate.”