The chequered flag for hope value – but not land and planning reform

If you're a fan of Formula One, (Me! Me! Me! Way before Drive to Survive) or of most motor racing series, you’ll know what the chequered flag means. For those of you who don’t, the chequered flag is waved when a race or session has ended. For example, they see it as they cross the start/finish line. Some drivers, especially if they're in the lead, are elated to see the flag wave. Others are just plain old relieved as they barely finished the race, and for them, the sight of that flag means they made it.

Let me stop there, as this can turn into a blog about F1!

You may have heard that the Levelling Up and Regeneration Bill, now an Act, received Royal Assent. The bill and its myriad controversial pieces were introduced into Parliament in May 2022. After 17 months and multiple information sessions run by the Department of Levelling Up, Housing and Communities, calls for written evidence, public consultations and countless parliamentary debates, the bill finally received Royal Assent on Thursday and with it, a significant reform to the 1961 Land Compensation Act. The removal of ‘hope value‘ saw the chequered flag.

So why should you or your community care? It's simple. Reducing homelessness is in the public's interest. When we're all living in a safe, secure, affordable quality home, the entire community thrives.

Removal of 'hope value' is good news

If a local authority wants to acquire land using a Compulsory Purchase Order (CPO) to build infrastructure that can benefit the community, like social housing, or even a health or education facility, they're faced with a massive barrier – the cost of land. ‘Hope value’ plays a big part in that. It factors in what the land could be worth if, hypothetically, planning permission had been granted to build high-value properties like luxury homes.

But let’s dig a bit deeper.

Let’s imagine that a council has a large number of homeless families. These families are forced to live in expensive and poor-quality temporary accommodation, which can include hostels and B&Bs, because there are simply not enough social homes.

Stay with me.

There’s a derelict bit of land, with a disused petrol station that’s all boarded up. The council wants to buy that land so it can build social rented homes. This will reduce their costs and give people the foundation of a genuinely affordable and secure home, helping families break out of the cycle of homelessness.

But the landowner is sitting on the land, hoping that a luxury developer is going to pay them millions for that land, and refuses to sell to the council at a fair price.

Despite the clear community need for that land, if the council wants to use its compulsory order to buy the land for social homes, it's forced by law to pay the same price as a developer of luxury homes. Even though the land is really not worth it, and is a community eyesore, ‘hope value’ would make it unaffordable for the council to build desperately needed social homes.

Let's recap: to address homelessness and social housing waitlists, councils need to build more social homes. To build those homes, councils need land. With ‘hope value’, they're forced to use your taxes to pay a high premium for an imaginary scenario, which would not benefit your communities.

More planning reforms needed

But wait! Maximising the delivery of social homes is still a few laps away from seeing the chequered flag. We all know councils have limited resources. A huge amount of the available funding for potential social housing development would have been spent on the cost of land.

The Levelling Up and Regeneration Bill begins to change the story of hope value. Public entities, like local councils, will be able to pay a fair price and address the housing emergency by building genuinely affordable social homes.

The bill would allow the secretary of state to scrap hope value for councils and other public bodies in cases where the site being developed is for health, education or affordable housing. If approved by the secretary of state, the development must be built within a certain time. If not, hope value must be repaid. This specific requirement for hope value to be removed in the interest of public benefit, specifically for affordable housing, health and education, would help hold councils to account for using a CPO.

This is a major win for Shelter and others who have been campaigning for years to get real changes to the land and planning system. More importantly, it's a win for the 1.2 million households on social housing waitlists and the 131,000 children in temporary accommodation. But there's still more to do on land and planning reforms – the chequered flag is not waving for that yet.

Amending the 1961 Land Compensation Act to remove hope value is not the end. Parliament didn't seize the opportunity to make further changes to our broken planning system. For example, it failed to make sure that rich developers contribute their fair share in delivering genuinely affordable social homes (by requiring them to build the homes on-site of their development). It also didn't change the definition of affordability, which should be tied to local incomes.

Shelter will continue to fight for better land and planning laws that centre people’s housing needs in a growing housing emergency. With the loss of 14,000 social homes last year, these laws must become a vehicle to build the truly affordable homes communities need.