CIH response to the MHCLG consultation on Compulsory Purchase Process and Compensation Reforms

A significant barrier to boosting affordable housing is 'hope value', which increases land costs based on its potential for future development. This often leads to inflated land prices and impacts the ability to build social housing, by pricing social housing providers out and/or reducing viability, and therefore whether all or any of the required social housing is built. CIH welcomed reforms to remove hope value for certain circumstances in the public benefit, including social housing, as outlined in the Levelling-up and Regeneration Act 2023.

The use of ‘public benefit’ includes three circumstances to remove hope value (social housing, healthcare and schools), which will provide a significant incentive for local communities to support development and therefore for local authorities and partners to build social homes. There is a desperate need for more social homes, and for safe and decent hospitals and schools, all of which deliver public benefit. These resources are particularly valuable in conjunction with boosting social infrastructure for communities, in addition to delivering the government’s housebuilding target of 1.5 million new homes.

There are several reasons why the delivery of social housing should be included in the overall public benefit category:

• Tackling homelessness - social housing has been identified as critical to reducing the rising problem of homelessness, as housing costs, particularly in the private rented sector, and loss of private rented tenancies are the most common causes of homelessness.
• Reducing costs for local authorities on temporary accommodation (TA) - many local authorities are facing significant risks due to TA costs, both in terms of overall solvency and in delivery of other public services.
• Decency and affordability - secure, decent and affordable homes are central to people's wellbeing, including children of which there are currently over 159,000 in temporary accommodation waiting for a secure home. There is also an urgent need to develop and invest in specialist and supported housing to meet current and future housing, support and care needs.

Building truly affordable housing is the only permanent solution to reducing homelessness and eliminating the reliance on temporary accommodation for many families in need. This is particularly relevant with the government’s focus on New Towns, where large-scale housebuilding projects and use of land will be crucial in boosting delivery at the pace required to meet the government’s target of 1.5 million homes. It is therefore important that the three existing categories, including social housing, remain in scope for removing hope value in the public benefit.

We recognise and acknowledge concerns about the appropriate balance between private rights and public interest in proposals to remove hope value and make reasonable compensation. We support retaining social housing, healthcare and schools within the scope of public interest, but would urge government to provide clarity on which other resources, such as amenities, would also be in scope in the expanded proposals. There are concerns that other types of development could be considered more subjective in terms of public benefit, and therefore would be contingent on legal disputes and determining case law.

Any delays in determining when hope value can be removed legally may cause confusion around the existing uses in the public interest outlined in the Levelling up and Regeneration Act 2023, and could delay the boost to housebuilding and meeting the government’s 1.5 million homes target. Social housing has faced increased uncertainty, disruption and policy change in recent years, which has led to reduced development of much needed homes and disrupted services for tenants. It is vital that the government act on this level of uncertainty, as evidenced in the recent long-term rent settlement consultation, and do not implement policy changes that could remove the incentive to build new housing and cause further delays in the planning system. We therefore would argue that the government should keep the current three circumstances in which to remove hope value, to deliver security and legal certainty to develop social housing.

Beyond the proposed reforms of the consultation, it is important to note the limitations of CPO due to the lack of resources in local authorities. As noted in our previous consultation responses, such as the National Planning Policy Framework, local authorities have significant financial and operational pressures in the current environment, particularly in planning departments.

As such, very few councils have dedicated CPO teams, and the broader issue of under-resourced planning departments must be considered in conjunction with these reforms. This is evident in local authorities’ limited capacity to use CPO powers to tackle empty homes, which could unlock much needed social homes. In order to use these powers to their full potential, local authorities must be provided with adequate resource. Our members also reflected the need for Homes England to support local authorities by equipping them with the expertise and guidance required to use CPO effectively, and exploring possibilities for the use of grant for CPO opportunities, such as to unlock empty homes.

Whilst it is necessary to reform and streamline the planning process, the government’s reforms will only be effective if the resources, skills, and people are available to appropriately use these powers and unlock more land for much needed social housing.

For more information about the consultation please visit the government's website.

For more information on the response please contact Megan Hinch, senior policy officer, megan.hinch@cih.org.