The Department for Levelling Up is bearing down on land values

Whilst the government’s ambition is to level up, the eponymous bill remains flawed and lacks ambition for rural areas. One particular concern is the government’s determination to limit development value paid on land that is compulsory purchased.

We should have moved beyond the post war approach to providing land for minimal value ‘for the good of the nation’. In those times it was the state building much-needed infrastructure, now it is big multi-national companies that seek to make money out of all these developments. However, the government continues to look for ways to reduce the compensation paid to landowners. It is those landowners who are stuck with the schemes on their land, schemes that can profoundly affect their business and homes, and yet the proposed legislative changes would severely limit their ability to financially benefit from the schemes.

At the end of last year, the government announced that the Law Commission would be reviewing compulsory purchase and compensation. It’s unclear from government and the Law Commission whether this will be just a review to streamline and consolidate existing legislation or a more fundamental review – we suspect the latter.

Regardless of the Law Commission, Michael Gove, the Levelling up Secretary, is currently pushing the Levelling up and Regeneration Bill through parliament. Clause 175 redefines the process for claiming any development value that related to the land at the time of acquisition. This used to be a relatively straightforward process of applying for a certificate of alternative development from the local authority, who would indicate the potential appropriate alterative uses. If the clause goes through, this process will move to a scheme that is more akin to the claimant having to submit and pay for a full planning application in order to justify that development value. This is a big shift of cost and risk from the state to the land-owning claimant.

Last week came a government amendment introduced in the House of Lords that would allow the acquirer to pay no compensation for hope value (the value attributed to potential development in the future) where land is required for affordable housing, healthcare and education. The government’s belief, with no economic justification, is that if you pay less for the land you can deliver so much more. The reality is that land purchase is only a very small proportion of project costs, and move savings could be made by looking into profit elements that arise out of the larger proportion of development costs.

The CLA has briefed peers on these two proposals, as well as on many other issues, and met with the Department for Levelling Up, Housing and Communities (DLUHC) lead on compulsory purchasing and the bill team. Some peers have said that they will speak to support our position. We have an amendment submitted for a statutory duty of care which will make companies take into account and mitigate as best as they can the impact of the scheme. For landowners and rural businesses, part of this will also be paying compensation promptly.

As always, case studies on your experiences of compulsory purchase are extremely helpful to our campaigning – civil servants and politicians really take notice when looking at current or recent cases. So please send these to andrew.shirley@cla.org.uk.