Consultation on further changes to compulsory purchase process and compensation: making compulsory acquisition easier

In the flurry of activity relating to planning reform before Christmas, the Government issued a consultation paper on further changes to the compulsory purchase and compensation process. The consultation closes on 13 February 2025.

The consultation follows reforms recently introduced by the Levelling-up and Regeneration Act 2023 which include a power to allow for the removal of value associated with the prospect of obtaining planning permission (known as “hope value”) from compensation assessments. The power only applies where a direction has been obtained from the Secretary of State, which may be sought where it is in the public interest to do so provided other tests are also met.

The current Government is keen to do more to encourage the delivery of new and affordable homes. The consultation indicates that the Government’s particular concern is that suitable vacant or underused land is not coming forward for development, or that it is coming forward, but the affordable housing being offered is below minimum requirements.  As such, the reforms are intended to make it easier to promote compulsory purchase orders (CPOs) including those seeking removal of hope value.

Extending the powers where hope value can be removed

There is already a long list of CPO powers in relation to which a direction to remove hope value can be sought in relation to regeneration, housing, education and health proposals. These include the commonly used power under the Town and County Planning Act 1990 of compulsory acquisition for planning purposes. It is proposed to extend the list to include CPOs made under section 125 Local Government Act 1972 on behalf of town and community councils to facilitate affordable or social housing. The consultation refers to appetite by such councils to bring forward small housing schemes with back-to-back agreements with registered providers of affordable housing.

Making it easier to give a direction removing hope value

At present, the Secretary of State must give a direction removing hope value. However, where no such directions are sought, CPOs can be confirmed either by an inspector on behalf of the Secretary of State or, if there are no objections, by the acquiring authority itself. To speed up the process, the Government proposes to allow inspectors to confirm CPOs which include directions removing hope value and to allow acquiring authorities to do so where there are no objections; and to allow inspectors to undertake the decision making on the making of the direction itself.

Providing a general power for removal of hope value

The Government is considering whether a general power could be introduced allowing the Secretary of State to make a direction to remove hope value for sites meeting certain criteria, where justified in the public interest. The Government anticipates that this could apply to brownfield land in built up areas which is suitable for housing delivery but where there is no extant planning permission for residential development and to land allocated for residential development in an adopted plan which has not come forward for development.  

The Government therefore seeks examples of sites where permission has not been sought particularly sites considered unviable with minimum affordable housing provision or where costs associated with hope value has rendered them unviable. Views are sought on the likely benefits and consequences, and categories of site proposed.  

Clarifying ambiguity on compensation

The Government proposes to amend the legislation to make it clear that, where compensation is to be assessed on the basis of market value excluding hope value, the calculation of other heads of claim such as home loss payments which relate to market value should reflect the market value excluding hope value.

Technical changes

The Government also proposes a suite of technical reforms intended to speed up and simplify the process including:

• Allowing service of CPO notices and documents electronically with consent
• Limiting the information required to be published in newspapers
• Allowing acquiring authorities to confirm their own CPOs where there are no outstanding objections but where certain non-controversial modifications are required
• Extending the power to appoint an inspector to determine whether to confirm or refuse a CPO to orders made under the New Towns Act 1981
• Amendment to temporary possession provisions in the Neighbourhood Planning Act 2017 to ensure that orders under other regimes can continue to include their own temporary possession provisions
• Allowing an expedited vesting process (of 6 weeks rather than 3 months) where land is not legally occupiable due to its physical condition or where there are no responses to notices or objections to a CPO
• Rebalancing of loss payments in favour of occupiers rather than investment property owners and exclusions from home loss payments for neglected properties acquired for refurbishment

Unintended consequences

Whilst the intent of the legislation is to simplify and speed up what is a complex and lengthy compulsory purchase process (ultimately to encourage the delivery of housing and other schemes in the public interest), the Government needs to be careful to avoid unintended consequences. This applies particularly to the provisions relating to the removal of hope value. Bringing forward development is expensive and often risky - developers will not want to invest in difficult sites where there is a prospect that the land could be subject to compulsory acquisition. The use of compulsory acquisition powers should remain a last resort.