A new order?

In an ordinary town hall, much like town halls up and down the country, a decision was made last week that has the potential to shift the power balance between councils and landowners.

Birmingham City Council has decided to challenge developers by adopting a policy in which it seizes, or threatens to seize, unbuilt-on land from developers using compulsory purchase orders (CPOs). The council intends to use the sites to build housing through its development company, Birmingham Municipal Housing Trust.

The aim is to forcefully encourage developers to do their bit to increase the number of homes in the city. The council hopes that just the threat of a CPO will galvanise landowners into building homes.

The policy is radical but leading councillors believe it is necessary as the demand for housing in Birmingham is urgent. There are around 20,000 households on the council’s housing waiting list, more than 1,500 in temporary accommodation, and by the council’s own estimate 89,000 homes need to be built over the next 15 years. To date, land has been identified for 44,000 homes. Building homes on empty sites could go some way to solving the housing shortage. The council has estimated there is space for 8,000 homes on sites currently sitting empty.

Meeting resistance

This move by the council has already been met with opposition. Conservative councillors officially objected to the policy, partly because they felt it would discourage developers from buying sites in Birmingham. The opposition councillors succeeded in having the policy called in to be looked at by the council’s scrutiny committee but it was waived through last week by the executive team. Conservative group leader Robert Alden told the cabinet meeting no analysis had been done “to see what is going to be the impact on larger house builders and their willingness to invest in the city once the council has a policy of CPOing sites off them”.

But the council sees the new CPO policy as more of a threat to cajole developers into building homes, rather than a policy it will make use of regularly. This may be partly through necessity - CPOs can be expensive, time-consuming and require sign-off from the government.

Clive Skidmore, head of housing development at the Labour-led council, stresses he would prefer to enter into a voluntary deal with landowners in which they agree to sell the land to the council so it can get on with building homes, rather than going through an “adversarial and expensive” CPO process.

According to Mr Skidmore the council’s policy to CPO empty homes, which has been in place since 2010, has only resulted in a CPO for one in 10 vacant properties. In most cases the owner takes action to renovate the home to avoid the CPO process. He hopes the same policy will work for empty sites.

Mike Kiely, president of the Planning Officers Society, is sceptical about how effective using the threat of a CPO will be if the council never acts on it. “The trouble with a threat you never carry out is eventually you’ll be found out,” he points out.

This is echoed by Elizabeth Boyd, from planning consultancy Tetlow King, who says unless the council intends to launch a CPO it is an “empty threat”.

Ms Boyd says Birmingham’s policy is “a bit extreme”. She acknowledges Birmingham has “major issues” with housing delivery “so I can see where the gesture is coming from” but adds it is a “massive legal process and really expensive”.

She also says if a developer resists the CPO then this could lead to a court battle which would result in expensive legal fees. “That might be fine for the developer but the council doesn’t want to face a large legal bill,” she adds.

Empty sites

Mr Skidmore says part of the reason why land sits untouched in the city is because “very often” it is not owned by housing developers but by speculators who sometimes do not have experience in building homes.

He says that as a result of the boom in the housing market a decade ago, land has been bought to be held as an asset. When the recession arrived, the owners just sat on it.

The Home Builders Federation (HBF) has perhaps surprisingly welcomed Birmingham’s move. A spokesperson says the council has thought through the policy carefully and can be trusted to use CPOs only when necessary. But the HBF also cautions against other councils following in Birmingham’s footsteps. A spokesperson says other councils might not take the “in-depth thought which underpins the Birmingham approach”.

Others are eyeing up Birmingham’s bold move with interest. Mr Kiely says a lot of other councils would consider adopting a similar policy to tackle the problem of developers sitting on land.

However, he says councils are “very unsure” because of the expense and time it takes to get a CPO through.

Mr Kiely says his organisation has been calling on the government to introduce legislation that would make it easier for councils to CPO developers after a certain period of time if developers had not started building. He says the government has taken an interest but this will only be borne out if they bring forward new legislation. “The proof will be in the pudding,” he adds.

“There is a concern among councils that CPOs are quite an expensive process and there is a probability they won’t be successful. It would be much better if it was a tool that we were clear we could use, with government backing,” he adds.

Legislative changes to the CPO process are afoot through the Neighbourhood Planning Bill that is making its way through parliament, but some councils say this is tinkering at the edges rather than making the process quicker and easier.

Birmingham’s innovative policy approach could provide the inspiration councils need.