Report calls for reform of land compensation rules to boost housebuilding

Enabling local authorities to purchase land at prices that do not reflect prospective planning permission would 'loosen up the land market, prevent hoarding and douse speculation', according to a report.

Land: report calls for changes to 1961 Land Compensation Act
Land: report calls for changes to 1961 Land Compensation Act

The report, The Land Question: Fixing the dysfunction at the root of the housing crisis, by the Civitas think-tank, says that the "pursuit by landowners of the highest-value developments for their sites is frequently at odds with the delivery of more affordable homes and speedier construction".

The report says that landowners, "in possession of a geographical monopoly, have a power of constraint over the development priorities of the community. In high-value areas and rising markets they are especially incentivised to drip-feed new residential land over an extended period of time". 

The document says that the key to this changing this lies in reform of the Land Compensation Act of 1961, "which enshrines in law the right of landowners – in the case of compulsory purchase by the state – to be reimbursed not only for the value of their site in its current use but for any prospective use to which it might be put in the future".

It says that revising the 1961 Act, "so that assessments of market value do not incorporate prospective planning permissions, would reframe incentives in the land market by enabling public authorities to acquire development sites at prices closer to its existing use value".

This would enable developers to "get hold of land at prices that are compatible with planning obligations, the provision of more affordable homes and quicker build rates", and it would also make it "much easier and much cheaper to embark on a new generation of council housebuilding and/or a new programme of new towns and garden villages".

The think-tank says that "enabling local authorities to purchase land at prices that do not reflect prospective planning permission, would loosen up the land market, prevent hoarding and douse speculation".

The report concludes that there are "good reasons for protecting private property from the overweening state, but the windfalls that landowners are collecting by exercising their right to withhold land are unearned and detrimental to the country’s housing objectives".

"If we want housing development to follow the course that is required then we will need to challenge their right to do that", it says.


Have you registered with us yet?

Register now to enjoy more articles and free email bulletins

Sign up now
Already registered?
Sign in

Join the conversation with PlanningResource on social media

Follow Us:
Planning Jobs