One of the new Labour government’s central polices is a considerable increase in affordable and social housing.
It is widely recognised that that the slowdown in housebuilding in the final years of the Conservative government resulted in a reduction in much needed affordable and social housing, both for rent and sale and that, with rents and house prices rising, urgent action is needed to address this.
In Labour’s general election manifesto as part of an aspiration to, ‘Deliver the biggest increase in social and affordable housebuilding in a generation’, the Party pledged to, ‘Further reform compulsory purchase compensation rules to improve land assembly, speed up site delivery, and deliver housing, infrastructure, amenity, and transport benefits in the public interest’.
Less than a fortnight after Labour came to power, a summary of the future Planning and Infrastructure Bill was published, repeating the manifesto commitment regarding affordable housing and compulsory purchase. The publication of the draft Bill is expected in the autumn.
Initial reactions
When Labour initially announced the policy in June last year it met with concern from much of the property industry.
At the time, the British Property Federation raised the issue of protracted legal challenges and the risk of regeneration being delayed or not progressing due to dispute. It stated that any incoming government would be unable to deliver such a policy in its first term.
Similarly the National Federation of Builders raised concerns about changes to land use which may not be compatible with broader development plans.
The National Housing Federation, on the other hand, saw potential benefits in diverting ‘landowner profits into desperately needed new social housing and community infrastructure,’ which, it said, could only be achieved through a reduction in land values across the market. This, of course, could come at the detriment of many sectors of the property industry and have unintended consequences.
Can compulsory purchase be made fair?
Accepting that the policy will concern landowners and others who benefit from the sale of land (the Church, universities and charities being among the country’s largest landowners), the manifesto had pledged to, ‘Take steps to ensure that for specific types of development schemes, landowners are awarded fair compensation rather than inflated prices based on the prospect of planning permission’.
But can compulsory purchase work in such a way that it is fair? The very fact that the acquisition is made through the CPO process suggests that it goes against its owner’s wishes. It is important to look at the policy in more detail and reflect on the implications of the landowner alongside the need to resolve the housing crisis.
The place for compulsory purchase in planning
The use of compulsory purchase is not new, but more recently it has tended to be used for large scale infrastructure schemes considered to be in the national interest – such as HS2 or the Olympic Park – rather than housing schemes. Labour has committed to building a ‘new generation of new towns’ and for this purpose some compulsory purchase would almost certainly be necessary. But new towns do not appear to be on the immediate policy agenda and the Planning and Infrastructure Bill seems to encourage the use of compulsory purchase for much smaller scale housing schemes. Small scale housing schemes and housing delivery from SME developers is already well down on where it was just a few years ago, as many players have left the market given the high costs – which include CIL, biodiversity net gain, Section 106 contributions and affordable housing – alongside the time and risk associated with applying planning, unpredictable local politics and high build costs.
Compulsory purchase in existing legislation
We should not overlook the fact that compulsory purchase for housing formed part of the previous government’s key piece of planning legislation, the Levelling Up and Regeneration Act (LURA). The enactment of the compulsory purchase regulations within of LURA broadened compulsory purchase powers for local authorities and Homes England by allowing the removal of ‘hope value’ in land purchases as is proposed by the current government. However, the new rules still require an authority to apply to the Secretary of State to demonstrate that the removal of hope value is in the public interest. This leaves local authorities with uncertainty as to what development would be in the public interest, and ultimately whether their application will be approved by the Secretary of State (albeit the answer was more likely to be ‘no’ under the Conservative administration than it is today). By comparison, Labour plans to legislate so that public bodies can use compulsory purchase powers to acquire land without the need for individual approvals by a Secretary of State, effectively removing this area of uncertainty.
The right solution to the wrong problem
So in view of Labour’s approach whereby local authority-led compulsory purchase for housing purposes is more likely to be realised, the question being asked by landowners and their teams, is whether compulsory purchase is acceptable, in a market economy in which companies are not generally forced to sell against their will and without agreeing a price.
My belief is that compulsory purchase exists for very specific purposes and is not the right solution to this specific problem.
The housing crisis hasn’t been caused because we haven’t got enough land but because we have not seen the large-scale schemes that are necessary to make a difference.
Using compulsory purchase to create small-scale social housing schemes which might occupy a few acres of land is an unnecessary amount of legislation and expense which would achieve little in the face of the considerable housing shortfall. In reality, very few local authorities will have the funds to put this into practice.
Communities are much more than homes: to function successfully they must provide transport and community infrastructure, and sustainability in everything from active travel to energy efficiency. As such it makes sense if they are delivered at scale.
New towns are unquestionably have a major role by which the housing crisis can be wholly addressed. Delivered with government support, new towns can be considered to the in the national interest, mainly because of the broader infrastructure needs that they address. Take Milton Keynes for example. It was expensive (the initial debt incurred in the early 1970s was only fully paid off in the 2000s) but Milton Keynes has enabled vastly improved East-West transport by road (with East West Rail to follow), along with considerable sporting and cultural facilities. With a population of 230,000 and a large proportion of young families, is has successfully addressed a housing shortage in the northern home counties.
On the whole, people are more supportive of new towns than of piecemeal development, especially if the towns bring services from which they can benefit. There is a strong case to be made for new towns being in the national interest and being delivered with government support, often through specific legislation.
The planning reforms better suited to affordable housing delivery
Left untouched, the current planning system is incapable of delivering Labour’s objective of 1.5 million homes in this Parliament. Recently introduced legislation, from a slowdown in producing local plans to the Building Safety Act, nutrient neutrality rules and biodiversity net gain, has slowed the pace of approvals and therefore the delivery of new homes.
To address the current shortage, the government must focus on reform to the planning system which facilitates building at scale. Many of the proposals in the draft NPPF are welcome, specifically anything which encourages a more regional approach to planning. Specifically, the draft NPPF proposes new mechanisms for cross-boundary strategic planning, including short-term measures to strengthen cross-boundary cooperation ahead of introducing formal strategic planning mechanisms through new legislation. It also seeks to identify priority groupings of other authorities where strategic planning – in particular the sharing of housing need requirements – would provide particular benefits.
An absence of strategic planning invariably causes delays and conflict with schemes more likely to be determined at appeal and this is costly to developers (particularly SME developers) and less likely to deliver community benefits.
The government is absolutely right in its resolve to ‘fix’ the housing crisis; and likewise in its assertion that housebuilding is good for the economy. Various studies demonstrate that 100,000 homes add at least 1% to GDP, and that delivering ‘at scale’ provides considerably greater benefits.
And in addition to the indisputable fact that building at volume is both more efficient and more beneficial across the board, there are many other reasons why piecemeal schemes are less desirable for all parties.
Returning to the need for a more joined-up, regional planning system, individual developments of this nature would result in regional disparity in circumstances in which some local authorities are able to fund acquisition through compulsory purchase and others are not. Some of the wealthiest local authorities are, unsurprisingly, those with the least land available and / or with the residents most likely to object to development. Under-resourced local authorities, on the other hand, will be unable to bring forward affordable and social housing under this model.
Deliverability requires all local planning authorities to be well-resourced. It requires a commitment to support local authorities through the funding of additional planning officers and for funding to be ring fenced so that it achieves the purpose for which it was intended.
A long-term approach
Furthermore, it should be recognised that compulsory purchase is not a quick fix. The CPO process frequently involves lengthy negotiations with multiple landowners, legal challenges and delays. Landowners may choose to challenge decisions through judicial review, further prolonging the process. As such, it is far from the quick and efficient means of unlocking land for new development which is needed.
Other complications typically involve protracted negotiations with owners, extensive public consultation and paperwork. There have been instances where CPOs have taken more than 20 years on some sites. The policy doesn’t have the potential to deliver the homes as quickly or as cheaply as the headlines suggest.
New towns also take many years to progress, but the results of the process are invariably greater. My advice to those currently drawing up the Planning and Infrastructure Bill is to concentrate on the big wins. There are other ways to speed up planning and to ensure that we build a range of housing in the right locations. Don’t break up smallholdings for the sake of ten social housing units, and in doing so destroy a farmer’s livelihood (and potentially cause delay, frustrations and costs which could ultimately achieve a slowdown of housing delivery, not to mention the legal quagmire of applying CPO powers retrospectively on sites that are under contract to developers.
Instead, the government’s considerable majority should be utilised to on speed up the planning system and encourage SME developers to get building, provide for new towns legislation, use centralised planning resources to ensure the best location, size and community benefits to align with public interest and national infrastructure and in doing so, deliver productivity rather than financial hardship and delay.
Is CPO the answer to more affordable and social housing?
By Ian Barnett, National Land Director, Leaders Romans Group (LRG)
One of the new Labour government’s central polices is a considerable increase in affordable and social housing.
It is widely recognised that that the slowdown in housebuilding in the final years of the Conservative government resulted in a reduction in much needed affordable and social housing, both for rent and sale and that, with rents and house prices rising, urgent action is needed to address this.
In Labour’s general election manifesto as part of an aspiration to, ‘Deliver the biggest increase in social and affordable housebuilding in a generation’, the Party pledged to, ‘Further reform compulsory purchase compensation rules to improve land assembly, speed up site delivery, and deliver housing, infrastructure, amenity, and transport benefits in the public interest’.
Less than a fortnight after Labour came to power, a summary of the future Planning and Infrastructure Bill was published, repeating the manifesto commitment regarding affordable housing and compulsory purchase. The publication of the draft Bill is expected in the autumn.
Initial reactions
When Labour initially announced the policy in June last year it met with concern from much of the property industry.
At the time, the British Property Federation raised the issue of protracted legal challenges and the risk of regeneration being delayed or not progressing due to dispute. It stated that any incoming government would be unable to deliver such a policy in its first term.
Similarly the National Federation of Builders raised concerns about changes to land use which may not be compatible with broader development plans.
The National Housing Federation, on the other hand, saw potential benefits in diverting ‘landowner profits into desperately needed new social housing and community infrastructure,’ which, it said, could only be achieved through a reduction in land values across the market. This, of course, could come at the detriment of many sectors of the property industry and have unintended consequences.
Can compulsory purchase be made fair?
Accepting that the policy will concern landowners and others who benefit from the sale of land (the Church, universities and charities being among the country’s largest landowners), the manifesto had pledged to, ‘Take steps to ensure that for specific types of development schemes, landowners are awarded fair compensation rather than inflated prices based on the prospect of planning permission’.
But can compulsory purchase work in such a way that it is fair? The very fact that the acquisition is made through the CPO process suggests that it goes against its owner’s wishes. It is important to look at the policy in more detail and reflect on the implications of the landowner alongside the need to resolve the housing crisis.
The place for compulsory purchase in planning
The use of compulsory purchase is not new, but more recently it has tended to be used for large scale infrastructure schemes considered to be in the national interest – such as HS2 or the Olympic Park – rather than housing schemes. Labour has committed to building a ‘new generation of new towns’ and for this purpose some compulsory purchase would almost certainly be necessary. But new towns do not appear to be on the immediate policy agenda and the Planning and Infrastructure Bill seems to encourage the use of compulsory purchase for much smaller scale housing schemes. Small scale housing schemes and housing delivery from SME developers is already well down on where it was just a few years ago, as many players have left the market given the high costs – which include CIL, biodiversity net gain, Section 106 contributions and affordable housing – alongside the time and risk associated with applying planning, unpredictable local politics and high build costs.
Compulsory purchase in existing legislation
We should not overlook the fact that compulsory purchase for housing formed part of the previous government’s key piece of planning legislation, the Levelling Up and Regeneration Act (LURA). The enactment of the compulsory purchase regulations within of LURA broadened compulsory purchase powers for local authorities and Homes England by allowing the removal of ‘hope value’ in land purchases as is proposed by the current government. However, the new rules still require an authority to apply to the Secretary of State to demonstrate that the removal of hope value is in the public interest. This leaves local authorities with uncertainty as to what development would be in the public interest, and ultimately whether their application will be approved by the Secretary of State (albeit the answer was more likely to be ‘no’ under the Conservative administration than it is today). By comparison, Labour plans to legislate so that public bodies can use compulsory purchase powers to acquire land without the need for individual approvals by a Secretary of State, effectively removing this area of uncertainty.
The right solution to the wrong problem
So in view of Labour’s approach whereby local authority-led compulsory purchase for housing purposes is more likely to be realised, the question being asked by landowners and their teams, is whether compulsory purchase is acceptable, in a market economy in which companies are not generally forced to sell against their will and without agreeing a price.
My belief is that compulsory purchase exists for very specific purposes and is not the right solution to this specific problem.
The housing crisis hasn’t been caused because we haven’t got enough land but because we have not seen the large-scale schemes that are necessary to make a difference.
Using compulsory purchase to create small-scale social housing schemes which might occupy a few acres of land is an unnecessary amount of legislation and expense which would achieve little in the face of the considerable housing shortfall. In reality, very few local authorities will have the funds to put this into practice.
Communities are much more than homes: to function successfully they must provide transport and community infrastructure, and sustainability in everything from active travel to energy efficiency. As such it makes sense if they are delivered at scale.
New towns are unquestionably have a major role by which the housing crisis can be wholly addressed. Delivered with government support, new towns can be considered to the in the national interest, mainly because of the broader infrastructure needs that they address. Take Milton Keynes for example. It was expensive (the initial debt incurred in the early 1970s was only fully paid off in the 2000s) but Milton Keynes has enabled vastly improved East-West transport by road (with East West Rail to follow), along with considerable sporting and cultural facilities. With a population of 230,000 and a large proportion of young families, is has successfully addressed a housing shortage in the northern home counties.
On the whole, people are more supportive of new towns than of piecemeal development, especially if the towns bring services from which they can benefit. There is a strong case to be made for new towns being in the national interest and being delivered with government support, often through specific legislation.
The planning reforms better suited to affordable housing delivery
Left untouched, the current planning system is incapable of delivering Labour’s objective of 1.5 million homes in this Parliament. Recently introduced legislation, from a slowdown in producing local plans to the Building Safety Act, nutrient neutrality rules and biodiversity net gain, has slowed the pace of approvals and therefore the delivery of new homes.
To address the current shortage, the government must focus on reform to the planning system which facilitates building at scale. Many of the proposals in the draft NPPF are welcome, specifically anything which encourages a more regional approach to planning. Specifically, the draft NPPF proposes new mechanisms for cross-boundary strategic planning, including short-term measures to strengthen cross-boundary cooperation ahead of introducing formal strategic planning mechanisms through new legislation. It also seeks to identify priority groupings of other authorities where strategic planning – in particular the sharing of housing need requirements – would provide particular benefits.
An absence of strategic planning invariably causes delays and conflict with schemes more likely to be determined at appeal and this is costly to developers (particularly SME developers) and less likely to deliver community benefits.
The government is absolutely right in its resolve to ‘fix’ the housing crisis; and likewise in its assertion that housebuilding is good for the economy. Various studies demonstrate that 100,000 homes add at least 1% to GDP, and that delivering ‘at scale’ provides considerably greater benefits.
And in addition to the indisputable fact that building at volume is both more efficient and more beneficial across the board, there are many other reasons why piecemeal schemes are less desirable for all parties.
Returning to the need for a more joined-up, regional planning system, individual developments of this nature would result in regional disparity in circumstances in which some local authorities are able to fund acquisition through compulsory purchase and others are not. Some of the wealthiest local authorities are, unsurprisingly, those with the least land available and / or with the residents most likely to object to development. Under-resourced local authorities, on the other hand, will be unable to bring forward affordable and social housing under this model.
Deliverability requires all local planning authorities to be well-resourced. It requires a commitment to support local authorities through the funding of additional planning officers and for funding to be ring fenced so that it achieves the purpose for which it was intended.
A long-term approach
Furthermore, it should be recognised that compulsory purchase is not a quick fix. The CPO process frequently involves lengthy negotiations with multiple landowners, legal challenges and delays. Landowners may choose to challenge decisions through judicial review, further prolonging the process. As such, it is far from the quick and efficient means of unlocking land for new development which is needed.
Other complications typically involve protracted negotiations with owners, extensive public consultation and paperwork. There have been instances where CPOs have taken more than 20 years on some sites. The policy doesn’t have the potential to deliver the homes as quickly or as cheaply as the headlines suggest.
New towns also take many years to progress, but the results of the process are invariably greater. My advice to those currently drawing up the Planning and Infrastructure Bill is to concentrate on the big wins. There are other ways to speed up planning and to ensure that we build a range of housing in the right locations. Don’t break up smallholdings for the sake of ten social housing units, and in doing so destroy a farmer’s livelihood (and potentially cause delay, frustrations and costs which could ultimately achieve a slowdown of housing delivery, not to mention the legal quagmire of applying CPO powers retrospectively on sites that are under contract to developers.
Instead, the government’s considerable majority should be utilised to on speed up the planning system and encourage SME developers to get building, provide for new towns legislation, use centralised planning resources to ensure the best location, size and community benefits to align with public interest and national infrastructure and in doing so, deliver productivity rather than financial hardship and delay.
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