Councils can apply to remove ‘hope value’ in CPOs

Councils using compulsory purchase orders (CPOs) can now apply to remove 'hope value' costs, under reforms that came into force on Tuesday (30 April).

The law change, set out in the Levelling-up & Regeneration Act 2023, allows bodies such as Homes England and councils using CPOs to ask the Secretary of State to remove hope value.

Councils applying for removal can do so under the condition that the development is in the public interest and is facilitating affordable or social housing, health or educational uses.

Hope value estimates the cost land could be worth if it was developed on in the future, meaning councils are forced to pay potentially thousands more to buy land for housing or developments and get stuck in lengthy disputes about costs.

Kate Henderson, Chief Executive of the National Housing Federation, said the reforms would enable councils to buy cheaper land and "allow them to build more of the desperately needed affordable homes the country needs, in the right places for the people who need it most".

She added: "To solve the housing crisis and unlock the land needed for these homes, these changes must sit alongside wider reforms to planning policy which should form part of a nationally coordinated fully funded long-term plan for housing."

Levelling Up Minister Jacob Young said: "We know we need to build more homes and alongside our Long-Term Plan for Housing, these changes will help us do that, unlocking more sites for affordable and social housing, as well as supporting jobs and growing the economy."  

The policy has, however, raised concerns from some who have warned that removing hope value could expose a council to litigation.

In an overview of the 2023 Act, law firm Sharpe Pritchard warned: "The assessment of land value excluding 'hope value' could well lead to potentially increasing legal challenges and unintended consequences thereby making the CPO process riskier for local authorities."

The Law Society also questioned the policy in a 2022 consultation response, which said: "We have concerns as to whether the compulsory purchase order proposals are justifiable, equitable and compatible with human rights (Article 1 of the First Protocol of the European Convention of Human Rights and, if it is a dwelling, Article 8) when balancing the public interest against individual rights, as failing to recognise the hope value attached to a property will result in properties acquired for existing use, which will be less than market value."

Adam Carey