Earlier this month, the Government outlined plans to change the laws governing compulsory purchase orders in order to make currently derelict or brownfield land available for the development of council houses a move that it is said will help 1.2 million families. While I agree with the general principal that something must be done to improve the delivery of new housing, providing council's with the tools to take an active part in ensuring that delivery is to be encouraged, I am concerned about the proposed changes to the basis of compulsory purchase compensation. Currently, someone who has their land acquired compulsorily is entitled to be compensated for the open market value of that land. If the land has planning permission or has development potential, this is reflected in the open market value assessment. Tearing up this well-established principle would not only fly in the face of the principle of fair compensation, but could also have unintended consequences in terms of market activity that could well prove detrimental, rather than beneficial, to the delivery of housing. In practice, the proposed change is also likely to be far more difficult to implement than your report suggests; reversing the general principal that a landowner is entitled to be fully compensated for the loss of his or her land will meet stiff resistance and significant legal challenge. One issue to bear in mind is the fact that councils are increasingly seeking to develop land with private sector partners. Something I support as a general principle. However, if councils were able to purchase land at below market value, private developers could end up benefiting from the discount land prices as much as the public sector. While in principal the Prime Minister's plan may seem a well-meaning way to ease housing shortage, it would signal a radical move away from the current system, which is designed to protect people and their property, rather than profit from their loss. Colin Cottage, Partner and Head of Regeneration & Infrastructure Colin's comment were also featured in Property Week and Estates Gazette.
Proposed CPO reforms could face "legal challenge"
By Glenny LLP