Myth busting: green belt land value proposals

One of the first actions of the new Labour government was to publish a consultation on amending the National Planning Policy Framework (NPPF). In our review last week, the CLA looked at some of the proposals in the consultation and highlighted the missed opportunity for reforming the planning system for rural areas.

Since the consultation was published two weeks ago, the national media has examined what the government is proposing to bring forward and develop within the green belt. A recent Times article raises three important issues around the topics of reforming the planning system, benchmarking land values, and compulsory purchases. Unfortunately, this article conflated several separate issues and while the tone of the publication correctly picked up the concern of landowners, it is important for the CLA to make clear what the proposals within the NPPF consultation are.

There are also suggestions within the recent article that landowners would purposely degrade their land so that it may be considered ‘grey belt’ and therefore more eligible for development. The CLA refutes this and has stressed that our members are long-term stewards of the countryside and the idea that they would purposefully damage land for a potential short-term profit is preposterous.

The first topic to highlight is the proposal by the UK Government to make development in the green belt easier, particularly on grey belt land, alongside a set of ‘golden rules’ for delivery (e.g. 50% minimum affordable housing delivery). The CLA supports easing the planning process for grey belt sites and other suitable locations within the green belt, however it should be noted that so-called grey belt sites are not solely restricted within the green belt, and in many cases, there will be more suitable sites for development elsewhere. Wider reform of the planning system is necessary for this.

Additionally, there will be greenfield sites within the green belt which may be more appropriate for development than brownfield or grey belt sites. Due to lower ‘pre-build’ costs (e.g. facilitating site access, site clearance etc) and location in relation to existing settlements and infrastructure, these sites could deliver more of the affordable housing and infrastructure to help the government achieve its targets.

The second issue to consider relates to the setting of benchmark land values (BLVs). BLVs are used when a developer is arguing viability with a local authority – this means that the local authority will be asking the developer to contribute things such as infrastructure or affordable housing, either on site or through financial payments, and the developer will be arguing the level which can be provided based on the financial viability of the site. BLVs can be used in calculations for these viability arguments. For example, many local authorities already use a BLV when a site comes forward to determine how much affordable housing could be delivered.

BLVs are not a new concept, however, the NPPF consultation proposes three options for how benchmark land values might be reviewed. The first being that there is a government set BLV to be used in viability assessments of sites brought forward in the green belt. The second is that where land transactions have happened above a set BLV, there is no room for negotiation on whether policy requirements (e.g. % of affordable housing) are financially viable. Thirdly, where land within development has transacted at or below the BLV, and a successful negotiation of viability has occurred (i.e. to deliver less than policy), there is a second viability assessment at a later stage to confirm whether policy can in fact be met. The consultation asks for views on BLVs being set anywhere between three and 40 times the existing use values.

The CLA’s position here is clear, if the government is going to set BLVs, then also in consideration should be setting benchmarks for developer profits too. Often developers argue viability on schemes because of the price they have paid for the land, but there is no attempt to take a cut of the developer profits in order to ensure that policy requirements are met. This is placing all the financial burden of delivering policy requirements onto landowners, and not considering that these payments should in fact be a social and financial responsibility of the developer.

We are cautious about the impact on recent transactions and land currently in the planning process, or soon to begin, being brought forward for development. There is also a risk that in time BLVs could impact the sums developers are willing to pay for land. However, it should be stressed that the concept of BLVs, particularly in relation to affordable housing, including when affordable housing developers obtain grant funding from Homes England, is not new.

Finally, there is the issue of compulsory purchase orders (CPO). The CLA stresses that the concept of CPO of land at ‘no hope value’ for affordable housing, education and healthcare is relatively new, but the legislation to enable this was brought in by the previous government (which the CLA opposed). The NPPF consultation is proposing to look again at the ‘no-scheme principle’ (also known as ‘no hope value’) for sites within the green belt. The plan suggests that there may be instances where the development is ‘for the public good’ for example delivering a high amount of affordable housing, that CPO could occur under a ‘no-scheme principle’. It is not clear what the threshold of ‘delivering public good’ would be for these instances, and this uncertainty concerns us on behalf of members.

Another issue related to CPO within the consultation is what a ‘fair’ value for landowners looks like. There is a suggestion that because land is within the green belt, it has a lower value and therefore the ‘fair’ price landowners receive would be less than if the site were not in the green belt.

The CLA’s position here is that it is out of the landowner’s control if their site is designated within the green belt, and had it not been, they may well have brought it forward for development themselves. So, to further punish them by saying that the price that is ‘fair’ through CPO is lower than if they were not in the green belt, is inherently unfair. However, if the government can give certainty to landowners on which sites obtaining consent is likely and under which policy parameters (issues one and two), then instances of CPO would hopefully be rare as landowners would be more likely to bring forward sites for development themselves.

The CLA will be responding to the NPPF consultation in full after consulting the CLA’s Business and Rural Economy Committee in September. We will include all of our comments on these issues. We have also reached out to the Times to brief them on the proposals and the impact they will have on landowners.