CPO reform: will the changes help build more affordable homes?

Goodbye to ‘hope value’

The headline change is that councils, combined authorities and Homes England would not have to pay ‘hope value’, which factors in the value of future planning permission, when purchasing land for affordable or social homes.

The previous government’s Levelling-up and Regeneration Act 2023 had already given certain public authorities new powers to disapply ‘hope value’, yet that still had to be approved by a government minister.

Now, the government has confirmed that ‘hope value’ can be removed on CPOs without central government involvement on sites for affordable housing. It came after 61 of 160 respondents said they supported the move.

Will Jeffwitz, head of policy at the National Housing Federation, said: “We’re pleased to see the government continuing to progress these changes to streamline the use of CPO powers and to capture more of the value of land to put towards much-needed affordable housing delivery.”

Ian Scott, assistant director at Kent-based landlord Town & Country Housing said the removal of ‘hope value’ from CPOs presents a “vital opportunity” to new social housing.

“By enabling councils to acquire land at fairer prices, this reform ensures that projects delivering public good are not burdened by speculative land costs. At heart, it empowers councils to be able to unlock sites that would otherwise be financially unviable.”

Concerns remain it could backfire

However, 40% of respondents opposed the idea, with some warning that removing hope value will have a “negative effect” on landowners bringing forward their land for housing. 

Catherine Williams, planning director at Home Builders Federation, said that while “simplification” of the process is welcome, it was disappointing that some concerns raised during the consultation have not been taken into account. 

“As we look to increase housing supply we need to ensure changes do not reduce the amount of land that comes forward for development.”

The consultation also confirmed plans for inspectors to sign off on removal of hope value, where objections have been lodged.

This was supported by 64% of respondents. Where there are no objections, councils will be able to take the decision themselves, in a bid to speed up the process. 

Ms Williams said in light of this that the government “needs to ensure that inspectors, who now have significant decision powers over schemes that could be extremely complex such as new towns, have the appropriate specialisms”.

Tom Hunt, chair of the Local Government Association’s inclusive growth committee, said CPOs are an “important tool” available to councils to secure land, to develop key infrastructure or sites for much-needed housing.  

He added: “Councils recognise that CPOs should be used as a last resort, and it is vital that a fair price for the land is agreed – a balance must be struck between protecting the rights of the landowner and the ability of local authorities to deliver for their communities.”

No general powers for ministers on brownfield

The consultation suggested ministers in England and Wales should be able to issue “general directions” for removing hope value for sites which meet certain criteria, such as neglected brownfield.

Councils put forward proposals for schemes that would benefit, such as the Grosvenor Hotel in central Bristol, a neglected site that has become a public safety hazard.

In its response, the government said the evidence on submitted sites was at a “high level” and did not address specific public benefits that could be delivered by removing hope value.

Instead of general directions, the government said it would achieve its aim of supporting affordable housing through other changes to the CPO system.

Will it spark more building?

The CPO reforms are designed to help the government with its target of building 1.5 million homes. A report by the New Economics Foundation research body found scrapping hope value would slash the cost of building 90,000 social homes a year by £4.5bn. 

The LGA’s Mr Hunt said: “These reforms will help councils deliver on essential infrastructure, housing, and help local government play its core role, driving forward growth for the country.” 

Yet Claire Fallows, partner in planning at law firm Charles Russell Speechlys, said that while the changes will “simplify the procedure” for applying for directions to remove hope value, the system remains complex.

“The government recognises that compulsory purchase can be key in unlocking difficult sites and remains keen to speed up the process in order to encourage its use by local authorities,” she said.

“However, the use of such directions must be fully justified and it seems unlikely that they will be routinely used to help deliver more affordable housing.”