Land Value Capture Via CPO

There has been much consternation in some circles about DLUHC’s 6 June 2022 consultation paper Compulsory purchase – compensation reforms: consultation which, amongst other things, proposes introducing an amendment to the Levelling-up and Regeneration Bill so as to “to allow acquiring authorities to request a direction from the Secretary of State that, for a specific scheme, payments in respect of hope value may be capped at existing use value or an amount above existing use value where it can be shown that the public interest in doing so would be justified.”

Key passages from the consultation paper:

29. An option for the framework of seeking a direction might be as follows:

a. Before a public sector acquiring authority:

a. makes a CPO; or

b. applies for other types of Order seeking compulsory purchase powers,

it may apply for a direction from the Secretary of State in relation to a specific scheme.

b. The direction sought may, in relation to the proposed scheme, have the effect of:

a. taking no account of AAD [appropriate alternative development] in a valuation; or

b. limiting the payment of any effect of AAD to no more than a specific percentage over the existing use value.

c. In seeking a direction from the Secretary of State, the authority would need to:

a. identify the scheme;

b. provide details of the estimated land value that would be captured as a result of issuing a direction for the scheme; and

c. evidence how that land value would be applied to the scheme for the public benefit and/or how certainty over the level of compensation payments in respect of prospective planning permission will benefit the scheme.

d. In considering an application for a direction then Secretary of State may appoint a person with requisite expertise to make a recommendation as to whether to issue a direction.

e. Any disputed compensation that relates to AAD would be settled by the Upper Tribunal (Lands Chamber) on the basis of the terms of the direction.”

“…we would welcome views as to whether the proposals set out should go further and look to cap or remove hope value generally or in relation to specific types of schemes. “

Should the government decide, following consideration of the consultation responses, to take forward this proposal, our intention is for the power to make such directions to be introduced as an amendment to the Levelling-up and Regeneration Bill.”

Land owners, wherever their land is in England and Wales, may find that it can be compulsorily acquired at less than market value. And, on the subject of market value, what effect will that risk have on the value attributed to land in the first place (above existing use value)?

There have been some trenchant criticisms, for instance, as set out in my partner Raj Gupta’s Compulsory Reading 8 June 2022 blog post and Jonathan Stott’s blog post A few thoughts on Government’s proposal to limit compulsory purchase compensation to less than market value. Yes, really!

I can certainly see that care is needed to ensure that:

• the use of the procedure by acquiring authorities is procedurally fair, transparent and justified in public policy terms by the benefits thereby unlocked that could not otherwise have been achieved

• the sheer risk that the procedure may be used, anywhere, will not spook lenders.

However, the wider policy aspiration to achieve greater land value capture, in the public interest, is not new or a particular surprise. See my 31 August 2018 blog post Market Value Minus Hope Value = ? and the Government’s subsequent Response to the Housing, Communities and Local Government Select Committee inquiry on land value capture (November 2018):

The Government agrees that there is scope for central and local Government to claim a greater proportion of land value increases. The Government’s priority is delivery, in line with the Housing Minister’s commitments to provide more higher quality housing more quickly.


Changes to land value capture systems can have profound impacts on the land market in the short term, even where they are sensible for the longer term. Accordingly, the Government’s priority is to evolve the existing system of developer contributions to make them more transparent, efficient and accountable. It will of course continue to explore options for further reforms to better capture land value uplift, providing it can be assured that the short-run impact on land markets does not distract from delivering a better housing market.”

Or, even further back, my blog post Money For Nothing? CPO Compensation Reform, Land Value Capture which quotes, for instance from a Conservative Party press release issued a week before its May 2017 manifesto:

To further incentivise councils to build, the Conservatives also intend to reform compulsory purchase rules to allow councils to buy brownfield land and pocket sites more cheaply. At the moment, councils must purchase land at “market value”, which includes the price with planning permission, irrespective of whether it has it or not. As a result, there has been a more than 100% increase in the price of land relative to GDP over the last 20 years and the price of land for housing has diverged considerably from agricultural land in the last fifty years. Between 1959 and 2017, agricultural land has doubled in value in real terms from £4,300 per acre to £8,900 per acre, while land for planning permission has increased by 1,200%, from £107,000 to just over £1,450,000. Local authorities therefore very rarely use their CPO powers for social housing, leaving derelict buildings in town centres, unused pocket sites and industrial sites remain undeveloped.”

The proposals have grown over time – this is no longer simply about brownfield land and “pocket sites”.

What do we think? Will this be a workable tool that might enable authorities to secure development with reduced land costs such that affordable housing and other essential social and physical infrastructure can be provided? Or a proposal that will give rise to more heat (litigation) than light and that interferes unacceptably with the rights of land owners as against the rights of society more generally?

There are so many angles to this: political, economic, commercial and legal. Which make this an ideal topic for our next clubhouse session: 5pm on Wednesday 15 June 2022. We will have an array of well-known commentators, including Rebecca Clutten QC, Caroline Daly, Raj Gupta, Colin Cottage, Henry Church and Richard Asher. Link here.

And if you missed our webinar last week “Will the Bill deliver more or less housing? Yes or no?” featuring Simon Gallagher (Department of Levelling Up, Housing and Communities), Zack Simons (Landmark Chambers), Kathryn Ventham (Barton Willmore now Stantec) Meeta Kaur and myself, there’s a youtube link here.

Simon Ricketts, 11 June 2022

Personal views, et cetera

Extract from photo by Valeria Fursa courtesy of Unsplash

Does LURB Herald A More Zonal Approach to Planning After All?

I’ll explain what I mean in a moment.

But first some preliminaries.

LURB of course seems to be the now accepted acronym for the Levelling-up and Regeneration Bill, laid before Parliament on 11 May 2022.

The Bill proposes a wide range of legislative measures across local government, regeneration, planning and compulsory purchase.

Aside from the Bill itself it’s worth having to hand:

⁃ the Explanatory Notes

⁃ the Government’s policy paper

⁃ the Government’s response to the Select Committee report on the planning white paper

My Town Legal colleagues have put together a fantastic (I think) 17 page summary of the main planning and compulsory purchase provisions of the Bill. Thanks Safiyah Islam and the following contributors:

• Part 3, Chapter 1 – Planning Data – Aline Hyde

• Part 3, Chapter 2 – Development Plans – Emma McDonald

• Part 3, Chapter 3 – Heritage – Cobi Bonani

• Part 3, Chapter 4 – Grant and Implementation of Planning Permission – Lucy Morton

• Part 3, Chapter 5 – Enforcement of Planning Controls – Stephanie Bruce-Smith

• Part 3, Chapter 6 – Other Provision – Stephanie Bruce-Smith

• Part 4 – Infrastructure Levy – Clare Fielding

• Part 5 – Environmental Outcomes Reports – Safiyah Islam

• Part 6 – Development Corporations – Amy Carter

• Part 7 – Compulsory Purchase – Raj Gupta

* Relevant clauses in Part 2 (Local Democracy and Devolution), Part 8 (Letting by Local Authorities of Vacant High-Street Premises), Part 9 (Information About Interests and Dealings in Land) and Part 10 (Miscellaneous) Victoria McKeegan

If you would like to receive further detailed updates from time to time please email town.centre@townlegal.com.

I held a Clubhouse session on 12 May 2022 where I discussed the changes and their possible implications alongside Catriona Riddell, Phil Briscoe, Nick Walkley and Meeta Kaur. It is available to listen to here.

For a deeper dive into the compulsory purchase elements, do join our next Clubhouse session at 6 pm on Tuesday 17 May 2022, where my colleagues Raj Gupta and Paul Arnett will be leading a discussion with special guests Charles Clarke (DLUHC, previous chair of the Compulsory Purchase Association), Henry Church (CBRE, and current chair of the Compulsory Purchase Association), Caroline Daly (Francis Taylor Building), Virginia Blackman (Avison Young) and Liz Neate (Deloitte). Some line up! Join here.

Raj and Paul have also started a blog, Compulsory Reading, focused on CPO issues. The first post is here and, guess what, this will be compulsory reading if your work touches at all on the intricate and changing world of compulsory purchase law.

Phew! So what was I getting at in the heading to this post? Surely any fule kno that there was once a government white paper in August 2020 that, amongst other things, proposed a more zonal approach to planning – with local plans throwing all areas into three hoppers: protected, restricted and growth – but that the political lesson learned was that this would be a vote loser and so the zonal approach was abandoned by incoming Secretary of State Michael Gove in the wake of the Chesham and Amersham by-election?

The idea of growth areas (where allocation would amount to automatic development consent) has certainly been abandoned, but the consequence of a number of the proposals in the Bill in my view leads us more towards a system where there is much less decision making flexibility in relation to individual planning applications and appeals. Instead, planning decisions will need to be made in accordance with the development plan and national development management policies “unless material considerations strongly indicate otherwise”.

So developers will need to make sure that:

⁃ development plans (local plans, neighbourhood plans) etc allocate the necessary land.

– the associated mandatory local design codes are workable

⁃ they can work within the constraints of whatever national development management policies the Government arrives at.

If development accords with these requirements, planning permission should be a doddle. If not, you plainly need to overcome a heavy presumption against. Our current flexible system (sometimes good, sometimes bad) will take a big lurch towards being rule-based or, dare I say it, zonal.

This may be a Good Thing or it may be a Bad Thing. Much depends on whether development plans, local design codes and national development management policies are properly tested for their realism. There will be even more focus on testing the soundness of local plans.

However, when it comes to local plan making, there are some major unresolved uncertainties:

⁃ First, what housing numbers do local authorities need to plan for? The Government still aspires to a 30 month local plan preparation to adoption timescale but that is only going to work if you have a largely “plug in and play” approach to the numbers, as was envisaged in the White Paper. What will happen to the standard methodology? We don’t get know. The Government’s policy paper says this:

The changes in the Levelling Up and Regeneration Bill will require a new National Planning Policy Framework for England. The Government continues to listen to the representations of MPs, councillors and others on the effectiveness not only of the formula but the surrounding policies. Alongside Committee stage of the Bill, it intends to publish an NPPF prospectus setting out further thinking on the direction of such policies.

What numbers are we planning for as a country? Are we still targeting 300,000 homes a year? The Government’s response to the Select Committee report on the planning white paper says this:

The Government is determined to create a market that builds the homes this country needs. Our ambition is to deliver 300,000 homes per year on average and create a market that will sustain delivery at this level. There is compelling evidence that increasing the responsiveness of housing supply will help to achieve better outcomes. There seems to be consensus that 250,000 to 300,000 homes per annum should be supplied to deliver price and demand stability. For example, a 2014 joint KPMG and Shelter report highlighted that 250,000 homes per annum were needed to address price and demand pressures.”

⁃ Secondly, what will replace the duty to co-operate, which will be abolished? What will the new duty to assist really amount to? Can authorities adjoining urban areas with high unmet housing needs simply turn away from meeting those needs?

⁃ Thirdly, what if the allocations in the plan prove to be undeliverable or do not come forward? The safety net/potential stick of the five year housing land supply requirement (and presumably the tilted balance) in the case of up to date plans is to be abolished according to the policy paper:

“To incentivise plan production further and ensure that newly produced plans are not undermined, our intention is to remove the requirement for authorities to maintain a rolling five-year supply of deliverable land for housing, where their plan is up to date, i.e., adopted within the past five years. This will curb perceived ‘speculative development’ and ‘planning by appeal’, so long as plans are kept up to date. We will consult on changes to be made to the National Planning Policy Framework.”

Much is to be resolved here before we can begin to work out whether the proposals in the Bill will be an improvement on the present position.

Of course, the Government recognises that more work is needed. The following forthcoming consultation processes are identified:

Technical consultations on the detail of the Infrastructure Levy and changes to compulsory purchase compensation.

• A consultation on the new system of Environmental Outcomes Reports which will ensure we take a user-centred approach to the development of the core elements of the new system, such as the framing of environmental outcomes as well as the detailed operation of the new system.

• A technical consultation on the quality standards that Nationally Significant Infrastructure Projects will be required to meet to be considered for fast-track consenting and associated regulatory and guidance changes to improve the performance of the NSIP regime.

Proposals for changes to planning fees.

Our vision for the new National Planning Policy Framework (NPPF), detailing what a new Framework could look like, and indicating, in broad terms, the types of National Development Management Policy that could accompany it. We will also use this document to set out our position on planning for housing, and seek views on this, as well as consulting on delivering the planning commitments set out in the British Energy Security Strategy.”

I hope this serves as some sort of introduction to the Bill and a taster as to some of the issues which will be occupying so many of us as the Bill passes through its Parliamentary stages. I don’t expect it to be on the statute book before early 2023, with a fair wind, and most of its provisions will not be in force until 2024 at the earliest. Final health warning: Bills change – we can expect plenty of amendments, omissions and additions over coming months.

Aside from my earlier plugs for our newsletters and the Planning Law Unplanned clubhouse sessions, I would also recommend two other blog posts: those of Nicola Gooch and Zack Simons . None of us has come up with a satisfactory LURB pun yet but I’m sure we all have our teams working on it.

Simon Ricketts, 14 May 2022

Personal views, et cetera

Beauty, Infrastructure, Democracy, Environment, Neighbourhoods

Oligarchs Out

In the 21st century, London has increasingly been a safety deposit box for the wealthy of the world – so many people with incomprehensible amounts of wealth, including (but not exclusively) the so-called Russian “oligarchs” (“one of a small group of powerful people who control a country or an industry”).

Just look at some of the properties we’re talking about: The London mansions owned by Russian oligarchs from ‘Billionaire’s Row’ pad to estate almost size of Buckingham Palace (MyLondon, 4 March 2022). See also this BBC piece this morning (5 March 2022): The mega-rich men facing global sanctions.

Obviously, if you come by your wealth legitimately so be it, but the sums these people apparently own would suggest at best that something is wrong with the very structure of capitalism, and at worst…well draw your own conclusions. And to what extent is this all assisting the evils of the Putin regime – and its equivalents briefly eclipsed in the news cycle?

The UK financial sanctions list (4 March 2022) currently identifies 196 Russian individuals, with the reason for each person being on the list.

For a good introduction to the complex and evolving world of sanctions, I found DAC Beachcroft’s 4 March 2022 briefing UK Sanctions – The Evolving Response to the Russian Invasion of Ukraine and what it means for UK businesses particularly useful:

Prior to 10 February 2022, the Regulations allowed the UK Government to ‘designate’ (that is, to impose sanctions on) a person who is or has been involved in ‘destabilising Ukraine or undermining or threatening the territorial integrity, sovereignty or independence of Ukraine’. Individuals and entities that are so ‘designated’ are listed on the UK Consolidated Sanctions List (“the UK Sanctions List”) along with confirmation of the reasons for designation.

Asset freeze” sanctions “seek to impose prohibitions or requirements for the purposes of:

1. freezing the funds or economic resources owned, held or controlled by certain individuals and entities;

2. preventing financial services being provided to or for the benefit of certain individuals or entities;

3. preventing funds or economic resources from being made available to or for the benefit of certain entities or individuals; or

4. preventing funds or economic resources from being received from certain individuals or entities.

On 10 February 2022, the UK Government expanded its power to designate entities and individuals from a wide variety of sectors as it gave itself the power to designate persons ‘involved in obtaining a benefit from or supporting the Government of Russia’, including:

1. Carrying on business as a Government of Russia affiliated entity

This will include any entity which is owned directly or indirectly by the Russian Government or in which the Government of Russia holds directly or indirectly a minority interest or which has received some form of financial or other material benefit from the Government of Russia.

2. Carrying on business of economic significance or in a sector of strategic significance to the Government of Russia

This includes the Russian, chemicals, construction, defence, electronics, energy, extractives, financial services, information and communications and transport sectors.

3. Owning or controlling directly or indirectly or working as a director or trustee of a Government of Russia affiliated entity or an entity falling within any of the other above categories.

As described in Commons Library briefing Countering Russian influence in the UK (25 February 2022), the so-called “golden visa” scheme has now been scrapped:

On 17 February, the Government announced the immediate closure of the Tier 1 (Investor) visa to new applicants. The visa offered up to five years’ permission to stay in the UK and a route to permanent residence, in return for a minimum £2m investment. A review of all investor visas granted between 2008 and April 2015 was announced in 2018. The Government has said results will be published “in due course”.

Russians are the second most common nationality granted investor visas since 2008, although they accounted for a much smaller proportion of applicants since 2015. Just over 2,500 investor visas have been issued to Russians since 2008 (roughly one fifth of all such visas issued). People granted investment visas before 2015 may have now completed the residence requirement for permanent residence (and possibly British citizenship).”

Events have of course prompted the Government belatedly to fast-track the Economic Crime (Transparency and Enforcement) Bill. Its 2nd Reading will be on 7 March 2022. As set out in its explanatory notes, the Bill’s main objectives are to:

Prevent and combat the use of land in the UK for money laundering purposes by increasing the transparency of beneficial ownership information relating to overseas entities that own land in the UK. The Bill therefore creates a register of the beneficial owners of such entities. The register will be held by Companies House and made public.

Reform the UK’s Unexplained Wealth Order (UWO) regime to enable law enforcement to investigate the origin of property and recover the proceeds of crime. The measures in the Bill aim to strengthen the UK’s fight against serious economic crime; to clarify the scope of UWO powers; and to increase and reinforce operational confidence in relation to UWO powers.

Amend financial sanctions legislation, including the monetary penalty legal test and information sharing powers to help deter and prevent breaches of financial sanctions.

However, is this going far enough? There have been pieces in the media reporting that the French government had “seized” a Russian oligarch’s yacht. There is no detail as to what the precise legal status of that action was – there would need of course to be a solid legal basis for confiscation (presumably without compensation) but it is interesting that Boris Johnson and Michael Gove have been reported to be looking at the potential to bolster the Economic Crime Bill so as to facilitate the confiscation of UK property owned by Russian oligarchs (see for instance Michael Gove calling for UK to seize London homes of Russian oligarchs CityAM 27 February 2022 and Michael Gove considers options for seizing oligarchs’ property The Times 3 March 2022). Is this just tough talk and no action? I know you may not want to hear this but… any legislation, and individual decisions made under it, would need to be tightly framed to be consistent with the European Convention on Human Rights (and in a rule of law based, democratic, society that is surely right):

Everyone has the right to respect for his private and family life, his home and his correspondence.

There shall be no interference by a public authority with the exercise of this right except such as is in accordance with the law and is necessary in a democratic society in the interests of national security, public safety or the economic well-being of the country, for the prevention of disorder or crime, for the protection of health or morals, or for the protection of the rights and freedoms of others.” (Article 8).

Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law.

The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.” (Article 1 of the First Protocol)

Of course, confiscation without compensation may be properly framed as necessary in the public interest but this will need care.

The London Mayor issued a press statement on 26 February 2022, Mayor demands seizure of property connected to oligarchs, supporting the confiscation of assets but going further in terms of measures to seek to minimise the number of empty homes in the capital (surely these measures are essential to ensure that we can look in the eye those who say that there is no need for additional new homes?) and to penalise foreign buyers more generally (jury out as far as I’m concerned – baby, bathwater etc):

“The Mayor has previously criticised the Government’s failure to deliver on the promise of a register of overseas property ownership and has now set out further measures to charge those who buy property in the UK with no intention of living here and leave them empty while London faces a housing crisis.

As well as the register of overseas ownership, the Mayor is calling for:

Seizure of property assets held by allies of President Putin

Raising the amount overseas owners have to pay for leaving their home empty by increasing the council tax ‘empty homes premium’

Raising capital gains tax on overseas buyers from 28 per cent to 40 per cent

Increasing the taxes paid by overseas companies investing in property by increasing the Annual Tax on Enveloped Dwellings

For further reading, there is this article in yesterday’s edition of the Economist: The rise and fall of Londongrad (behind pay wall, 5 March 2022).

Finally, there are some ways to support the people of Ukraine.

This week’s Clubhouse event will be at a slightly earlier time, at 5pm on Tuesday 8 March. Its theme is “BREAK THE BIAS – women in planning/law”, to mark this year’s International Women’s Day theme. We have various speakers including Meeta Kaur, Nikita Sellers, Caroline Daly, Nicola Gooch and Zenab Hearn. Link here.

Simon Ricketts, 5 March 2022

Personal views, et cetera

Liberty Leading The People (Delacroix)

Stay Alert! A Quick Guide To All Those MHCLG Announcements

On 13 May 2020, MHCLG published:

Guidance: coronavirus planning update

Guidance: Coronavirus compulsory purchase

Guidance: Coronavirus community infrastructure levy

Guidance: construction site working hours Q&A

Guidance: consultation and pre-decision matters

Guidance: plan-making

Guidance: neighbourhood planning

On the same day, the Planning Inspectorate updated its guidance on site visits, hearings, inquiries and events.

On 14 May 2020, the Town and Country Planning (Development Management Procedure, Listed Buildings and Environmental Impact Assessment) (England) (Coronavirus) (Amendment) Regulations 2020 were made and came into force that day. The Regulations were accompanied by an Explanatory Memorandum.

The highlights

Validation and determination of applications for planning permission

No changes have been made to the timescales for determining planning applications. Developers are however encouraged to agree extensions of the period for determination. Local authorities have been urged to give priority to validating urgent COVID-19 related applications for planning permission and associated consents.

Publicising applications for planning permission

Temporary regulations (expiring on 31 December 2020) were made and came into force on 14 May to supplement existing publicity arrangements for planning applications, listed building consent applications and environmental statements for EIA development. There is now flexibility to take other reasonable steps to publicise applications and environmental statements if the usual specific requirements cannot be discharged relating to site notices, neighbour notifications, newspaper publicity or availability of hard copy documents. Steps can include the use of social media and electronic communications and they must be “proportionate to the scale and nature of the development”. Guidance has also been issued on this topic.

Planning Conditions

MHCLG has made it clear that planning conditions should not be a barrier to allowing developers and site operators flexibility around construction site working hours to facilitate safe working. Where only short term or modest increases in working hours are required, LPAs are encouraged to use their discretion to not enforce against a breach of working hours conditions. Where longer term measures or other significant changes are required, applications to amend conditions should be made, which LPAs should prioritise and turn around in 10 days. Requests to work up to 9 pm Monday to Saturday should not be refused without very compelling reasons.

Community infrastructure levy

The existing CIL regulations of course allow charging authorities limited flexibility to defer CIL liability. Amendments will be made to the regulations “in due course” to increase flexibility, but that will still depend upon charging authorities deciding to exercise the new discretion available to them. Authorities will be able to defer payments, temporarily disapply late payment interest and provide a discretion to return interest already charged. However, these changes will only apply to small and medium-sized developers with an annual turnover of less than £45 million. It remains to be seen how this limitation will be addressed in the regulations, for example where a special purpose vehicle, potentially offshore, has assumed liability. The new instalment policies for deferred payments will only apply to chargeable development starting after the changes come into effect, but they are anticipated to apply to “phases“ of the development starting after that date. The announcement on 13 May added that “existing flexibilities and the government’s clear intention to legislate should give authorities confidence to use their enforcement powers with discretion and provide some comfort to developers that, where appropriate, they will not be charged extra for matters that were outside of their control.”

Section 106 planning obligations

Local planning authorities are encouraged to consider the deferral of section 106 obligations, e.g. financial payments. This will require variations to existing section agreements and undertakings. Local planning authorities are encouraged generally to take a “pragmatic and proportionate” approach to the enforcement of section 106 planning obligations

Virtual Committees

These are already enabled, by way of Regulation 5 of the Local Authorities and Police and Crime Panels (Coronavirus) (Flexibility of Local Authority and Police and Crime Panel Meetings) (England and Wales) Regulations 2020. MHCLG is working with the Planning Advisory Service (PAS) to provide further practical advice on the way these meetings are managed.

Planning Appeals

PINS issued a further update on 13 May. Site visits are being commenced and PINS is considering whether there are types of cases that can proceed without a site visit. The first digital appeal hearing took place on 11 May as a pilot and PINS is aiming for 20 further examinations, hearings and inquiries in May and June. It is also exploring hybrid options – a mix of in person and by video public/telephone hearings and is considering “social distance” events.

Local Plans

MHCLG is working on ways to address the local plans process in order to meet aspirations to have all local plans in place by 2023. In particular, the use of virtual hearings and written submissions is being considered.

Neighbourhood Plans

Regulation 12 of the Local Government and Police and Crime Commissioner (Coronavirus) (Postponement of Elections and Referendums) (England and Wales) Regulations 2020 prevents any neighbourhood planning referendum from taking place until 6 May 2021. Updated guidance was issued in April allowing neighbourhood plans awaiting referendums to be given significant weight in decision making.

Nationally Significant Infrastructure Projects

The government is working with consenting departments to support the continuation of decision-making to minimise the impact of current restrictions on the consideration of DCO applications and the Planning Inspectorate has updated its guidance.

Compulsory purchase orders

There is now pragmatic advice as to the service of documents. Acquiring authorities are encouraged to allow more time for responses to requests for information about interests in land or submitting objections to CPO. There is also encouragement to authorities to act responsibly regarding business and residential claimants, particularly regarding the timing of vesting orders and payment of compensation, which is particularly relevant when considering evictions. Authorities are reminded of their obligation to make advance payments of compensation in accordance with statutory time limits given cash flow difficulties which claimants may currently face.

Concluding remarks

To my mind, this is all welcome and congratulations are due in particular to the relevant civil servants. Of course, there is more to be resolved, for instance the vexed question of extending time limited planning permissions (see my 4 April 2020 blog post Pause Not Delete: Extending Planning Permissions) as well as the Regulations in relation to CIL, but it is good to see this progress. No wonder MHCLG’s Simon Gallagher was prepared to come on this week’s Have We Got Planning News For You!

Whether by serendipity or, now I think about it, of course, good planning, the RTPI published on 15 May 2020 its research paper Pragmatic and prepared for the Recovery: The planning profession’s rapid response to Covid-19. This last week has been a good start.

Simon Ricketts, 16 May 2020

Personal views, et cetera

(Thank you to Town’s Michael Gallimore and Lida Nguyen for allowing me to draw from a client note prepared earlier this week).

Market Value Minus Hope Value = ?

Stop me if you’ve heard this song before but…

The clamour continues for Parliament to revise the principles of compulsory purchase compensation, currently set out in section 5 of the Land Compensation Act 1961.

None of the clamourers have, as far as I know, set out precisely what amendments they would make to section 5, but the concern appears to be that the principles allow land owners to benefit unduly from a windfall, by allowing them in part to be compensated for the hope that planning permission would have been granted for a valuable form of development on the land being acquired, were it not for the compulsory acquisition, and that this is unfair; goes beyond what might be considered to be “market value”, and/or is holding back the development of new homes.

This isn’t a new song. In my 20 May 2017 blog post, Money For Nothing? CPO Compensation Reform, Land Value Capture, I tried to read between the lines of what was being said in the February 2017 housing white paper and in the May 2017 Conservative manifesto on the question of reforming the compulsory purchase compensation process.

But the volume is getting louder.

The issue is being considered by the House of Commons Communities and Local Government Select Committee in its land value capture inquiry, the final session of which is on 5 September 2018, with evidence to be given at that final session by planning minister Kit Malthouse.

A pan-political coalition of 16 NGOs including Shelter, the National Housing Federation, the TCPA, CPRE and Crisis wrote an open letter to the Secretary of State on 18 August 2018 calling for reform. It was reported in absurd terms on the Sun that day:

A little more (but not much more) detail is set out in Shelter’s blog post An unlikely coalition for land reform (21 August 2018). Shelter has been lobbying on this issue, from the time that its head of policy and housing development was Toby Lloyd, now Theresa May’s housing adviser within Number 10.

The IPPR think tank (one of the signatories to the open letter) has also now published a report The Invisible Land: The hidden force driving the UK’s unequal economy and broken housing market (28 August 2018). It has the same tune:

I hesitated before writing this blog because the response is so obvious.

The law does not operate at all in the way that these people assume. No real life examples are given. Indeed, there is no indication that any practising CPO surveyor or lawyer has assisted with either the Shelter-led group’s work or the IPPR’s work. Show of hands?

The law is as set in, for example:

⁃ the written evidence submitted to the Select Committee inquiry by the Compulsory Purchase Association. The evidence includes examples of claims made following the Olympic Park CPO.

⁃ Jonathan Stott’s blog post Land value capture – Wild goose chase could lead to changing compulsory purchase legislation for the worse (11 June 2018)

⁃ Richard Harwood QC’s article (August 2018) (with his April 2018 paper given to the Compulsory Purchase Association on Land Value Capture a useful more detailed and wide ranging read).

It’s odd how the pendulum slowly swings. The refrain always used to be that the compensation system, providing the land owner with equivalence and nothing above that to reflect the compulsory nature of the acquisition, encouraged elongated objections and disputes in a way that apparently was not the case in, for example, France. Parliament (under a Labour Government), sought to address that in the Planning and Compulsory Purchase Act 2004 by introducing home loss payments, for qualifying residential occupiers, amounting to 10% of the market value of their interest up to £61,000 and, for qualifying property investors and business owners, basic loss payments amounting to up to 7.5% of the market value of their interest up to £75,000, together with additional occupier loss payments amounting up to 2.5% of the market value of their interest up to £25,000. In retrospect, the numbers were probably not large enough materially to affect the behaviour of those faced with compulsory purchase but the principle is perfectly logical given the monies to be saved by the public purse in removing or reducing objections to compulsory purchase.

It’s not rocket science to deduce that threatening to acquire land at less than market value (ie less than what the owner could have received for the land if he or she had chose to sell it on the open market – albeit of course the last thing he or she usually wants is to sell it!) would lead to:

⁃ owners being even more likely to hold out against compulsory acquisition in whichever way they can.

⁃ if the hope of securing permission for development is to be ignored (accepting that a land owner can never claim compensation for any value generated by the scheme underlying the compulsory acquisition – we are only talking about the prospect of development in the no scheme world), land owners and promoters of development not risking their own money in the promotion of land for development. Why would they, if the acquiring authority is going to be able to step in and effectively take the benefit of that work for free?

Maybe the problem is one of terminology. Do people think that “hope” value is something that is just that, hope, rather than a forensic examination of whether, and if so, what, development would have been likely to be approved if the scheme underlying the CPO had been cancelled on the valuation date? Maybe they should read some decisions of the Lands Chamber of the Upper Tribunal (the Lands Tribunal, in old money) or of the courts, for instance last year Bridgend County Borough Council v Boland (Court of Appeal, 14 July 2017). Do they think that the Tribunal has ever been over-generous to a claimant in reaching its determination as to what might have been approved in the no scheme world? Examples would at least take the debate forward.

The IPPR paper points to Germany by way of example, where the German zoning system obviously largely removes the concept of hope value – you’re zoned or you’re not. But that is not at all our UK planning system. Should it be? Well that’s another interminable debate and shall we get Brexit out of the way first before, er, we move towards a continental planning system?

Of course, the idea might work as part of a system where all major development is promoted by a public body, whether or not backed by a private sector development partner. But that is a world away from where we are, is alien to our market based economy and likely to lead to long bottle-necks given the lack of suitable resources at present within most local authorities, as well as lead to questionable outcomes in terms of procurement and in terms of sustainable, economically efficient, development. The public sector does not even have the resources to allocate the right land for development without massive input from the private sector in promoting specific sites (terminology problem again – “promoting” isn’t about PR but about spending, at risk, large amounts of money on preliminary technical work, to a significant level of detail, to ascertain constraints, infrastructure requirements and capacity).

And of course, there may be political arguments for acquiring land compulsorily at less than market value. But let’s be clear that such an exceptional political intervention would need to be justified. If the current clamour is in truth a clamour for the state to be able to dispossess people of their property for less than what it is worth, be brave enough to say so, explain why it is necessary in the public interest and then we can have the debate on that footing.

But if the idea is indeed to pick up land at or near existing use value, conceptually that really isn’t difficult under the present system. Be a brave authority by allocating land for a new settlement, covering land in as many ownerships as is necessary, making clear that of course it has to be developed in its entirety to be sustainable and that piecemeal development will not be acceptable. Be clear in your policy making that recourse will be had to compulsory purchase powers where necessary. Set out the extent to which the development is dependent on new infrastructure. Make clear where the new infrastructure would not be coming forward were it not for the new settlement proposal. The practical difficulty lies more with the fact that, for compulsory purchase to be a credible delivery mechanism such that the local plan policy can be shown to be “sound”, most local authorities would need private sector backing and most private sector participants would not underwrite significant compensation liabilities without being pretty certain that there will be planning permission. This is the scratch in the record that you don’t get past. Here’s where you need to lift the stylus and move it on a bit, whether that’s a role for Homes England funding or by allowing significant new settlements to be promoted as an NSIP so that the necessary planning and compulsory purchase steps can take place at the same time.

The frustrating thing is that the compulsory purchase compensation process is far from perfect and much could be done to reduce uncertainty for acquiring authorities and their private sector partners (usually fully underwriting the authority’s liability by way of an uncapped CPO indemnity agreement). The areas where the risk of significant compensation liability can discourage use of compulsory purchase are not questions of what hope value can be attributed to the prospect that the land might have been developed for other valuable purposes in the no scheme world (where the situation arises – not often – the position is usually well documented and can largely be quantified). In my experience the scary risks, where large and unpredictable compensation numbers can in fact arise, are more in such areas as:

⁃ does the land being acquired hold, in the no scheme world, a ransom value over other adjoining land which might have been developed in the no scheme world?

⁃ where business premises are being acquired, is the business likely to claim disturbance compensation on the basis of total extinguishment (by demonstrating that there is not a reasonable relocation opportunity open to it)? If so, the acquiring authority will often have little feel for what the ultimate justifiable compensation figure will be due to lack of access to information that is confidential to the business, other than published accounts.

But my basic pleas are:

⁃ for the Government to take a careful look at how the present system works in practice before making any amendments to section 5.

⁃ for those seeking to justify changes to the system to be more precise about their concerns, based on real examples, and as to what changes they are seeking.

⁃ for Parliament one day to have time to review properly and consolidate compulsory purchase legislation.

Oh and, obviously, the answer to the question was that Market Value minus Hope Value = < Market Value.

Simon Ricketts, 31 August 2018

Personal views, et cetera

Money For Nothing? CPO Compensation Reform, Land Value Capture

To what extent might the state choose to tax land owners, through reducing their compensation entitlement, in order to facilitate the provision of housing or infrastructure, rather than subsidise that provision through more general tax raising? How can the state capture land value gains created by its own infrastructure provision, or due to its own strategic planning for development?
These questions are central to a number of current areas of public policy thinking, including:
– Using compulsory purchase 
– Land auctions and land value capture charges
– Benchmark land values in viability appraisal
– CIL reform
There are some confluences arising in this area between current Conservative party thinking, other political parties, Transport for London and Shelter to name but a few. I’m not sure that land owner interests have yet joined all the dots. Developers may wish to partner more closely and regularly with local authorities with compulsory purchase powers, but in other situations should also be aware of the risks ahead for their businesses if additional costs are not sufficiently predictable as to come off the land price or if they cause land owners simply to hold rather than sell. 
Using compulsory purchase

Compulsory purchase is already a practical mechanism for securing land where there is a compelling case in the public interest for interfering with private property rights. Of course it isn’t easy, and will never be. The power is draconian. The necessary procedural safeguards to protect against its abuse make for a slow, procedurally technical process and for uncertain outcomes.

Another disincentive for local authorities can be the significant compensation costs payable, given the fundamental principle that the land owner is entitled to what the value of his interest would have been were it not for the compulsory acquisition (the ‘equivalence’ principle). Even where compensation liability is being underwritten by a developer partner, the extent of compensation is:
– likely to affect whether the project is viable after all; and
– not ascertainable until all parties are too far in to back out due to the leisurely pace at which a compensation figure is determined (both pre- and post-reference to the Lands Tribunal, aka Lands Chamber of the Upper Tribunal). 
The Conservative manifesto, published on 17 May 2017, refers to compulsory purchase in this one paragraph:
“We will enter into new Council Housing Deals with ambitious, pro-development, local authorities to help them build more social housing. We will work with them to improve their capability and capacity to develop more good homes, as well as providing them with significant low-cost capital funding. In doing so, we will build new fix-term social houses, which will be sold privately after ten to fifteen years with an automatic Right to Buy for tenants, the proceeds of which will be recycled into further homes. We will reform Compulsory Purchase Orders to make them easier and less expensive for councils to use and to make it easier to determine the true market value of sites”

I am guessing that what is planned goes further than making the current system work better. Changes are being considered which would enable in some circumstances greater use of compulsory purchase and, in some circumstances, acquisition at lower values than the equivalence principle would suggest. 
The February 2017 Housing White Paper says this:
“2.43 Compulsory purchase law gives local authorities extensive powers to assemble land for development. Through the Housing and Planning Act 2016 and the Neighbourhood Planning Bill currently in Parliament we are reforming compulsory purchase to make the process clearer, fairer, and faster, while retaining proper protections for landowners. Local planning authorities should now think about how they can use these powers to promote development, which is particularly important in areas of high housing need. 

2.44 We propose to encourage more active use of compulsory purchase powers to promote development on stalled sites for housing. The Government will prepare new guidance to local planning authorities following separate consultation, encouraging the use of their compulsory purchase powers to support the build out of stalled sites. We will investigate whether auctions, following possession of the land, are sufficient to establish an unambiguous value for the purposes of compensation payable to the claimant, where the local authority has used their compulsory purchase powers to acquire the land.

2.45 [ ]

2.46 We will keep compulsory purchase under review and welcome any representations for how it can be reformed further to support development.”
Note the references to encouraging the use of compulsory purchase where development has stalled, and investigating the use of auctions to establish land value (more on that later in this blog post).
Revealingly, in the week before the publication of the manifesto there was a press release with this passage in its “notes to editors”:
“To further incentivise councils to build, the Conservatives also intend to reform compulsory purchase rules to allow councils to buy brownfield land and pocket sites more cheaply. At the moment, councils must purchase land at “market value”, which includes the price with planning permission, irrespective of whether it has it or not. As a result, there has been a more than 100% increase in the price of land relative to GDP over the last 20 years and the price of land for housing has diverged considerably from agricultural land in the last fifty years. Between 1959 and 2017, agricultural land has doubled in value in real terms from £4,300 per acre to £8,900 per acre, while land for planning permission has increased by 1,200%, from £107,000 to just over £1,450,000. Local authorities therefore very rarely use their CPO powers for social housing, leaving derelict buildings in town centres, unused pocket sites and industrial sites remain undeveloped.
I’m guessing at the following policy strands for a future Conservative government from these various statements:
1. Further encouragement for use of CPO powers in the right circumstances, including particular encouragement where a “Council Housing Deal” is in place (guaranteeing social housing with a fixed-term right to buy for tenants) and possibly where private sector development is shown to have stalled (link this and the “delivery” elements of the Housing White Paper and this could be quite a stick to wield).
2. Further process reform likely.
3. Reform likely of the process for determining the compensation price to be paid, so that (1) figures are known earlier on, (2) the land auctions model is followed (see later in this blog post) to determine values in appropriate circumstances and (if those ‘notes to editors’ are to believed) (3) in some circumstances authorities will be able to acquire land for less than it is worth (possibly ruling out hope value unless planning permission or a certificate of appropriate alternative development under section 17 of the Land Compensation Act 1961, has actually been obtained). 
The last point (still speculation) has caused consternation and excitement in equal measure. The principle of equivalence is at stake, but equally this opens up the prospect of securing land for development at an undervalue so as to achieve affordable housing at no cost to the state. Money for nothing (unless you are the land owner). Shelter for example have been lobbying for a similar approach. Their May 2017 paper Financing the infrastructure and new homes of the future: the case for enabling acquiring authorities to purchase land for strategic development under a special CPO compensation code May 2017 lobbies for Government to:

enable acquiring authorities to purchase land for strategic development under a special CPO compensation code. This would involve three changes:

1)  An amendment to the National Planning Policy Framework to allow planning authorities to designate land for strategic development; 

2)  An amendment to Section 14 of the 1961 Land Compensation Act to disregard prospective planning permissions on land designated for strategic development; 


3)  An amendment to Section 17 of the 1961 Land Compensation Act to restrict the use of certificates of alternative development on land designated for strategic development.”

Shelter’s delight at the references in the Conservatives’ recent policy announcements is plain to see from their subsequent 16 May 2017 blog post Compulsory purchase and council homes – a new direction for housing policy?
Do the Conservatives really intend such a radical market intervention, or do they misunderstand how the compensation system currently works? The reference in the press release’s “notes to editors” that “councils must purchase land at “market value”, which includes the price with planning permission, irrespective of whether it has it or not” is of course wrong. The prospect of planning permission for development in the “no scheme world” is taken into account in arriving at a valuation but the existence of a planning permission is never assumed. 

However logically necessary the concept is, the “no scheme world” (or “Pointe Gourde”) rule been much criticised for being difficult to apply in practice. Its complexities were most recently explored by the Supreme Court in Homes & Communities Agency v JS Bloor (Wilmslow) Ltd  (22 February 2017), where Lord Carnwath said this:
The rule has given rise to substantial controversy and difficulty in practice. In Waters v Welsh Development Agency [2004] 1 WLR 1304; [2004] UKHL 19, para 2 (“Waters”), Lord Nicholls of Birkenhead spoke of the law as “fraught with complexity and obscurity”. In a report in 2003 the Law Commission conducted a detailed review of the history of the rule and the relevant jurisprudence, and made recommendations for the replacement of the existing rules by a comprehensive statutory code…”

Lord Carnwath had himself of course chaired that review. Too late for the litigants in Bloor, now finally, by virtue of section 32 of the Neighbourhood Planning Act 2017  (which introduces new sections 6A to E into the Land Compensation Act 1961) we have a codified version of the “no scheme world” rule. (The compulsory purchase provisions within the 2017 Act are well summarised by David Elvin QC in a paper  to the 2017 PEBA conference). 

New section 6E has refined the rule so that it is now more difficult for claimants to rely on increases in value of their land created by the transport project for which the land has been acquired, where regeneration or redevelopment was part of the justification for the transport project. 
The big question is whether a more radical manipulation of the “no scheme world” rule might be possible, even if it parted from the principle of equivalence. After all, if land for development could be secured at little more than agricultural value…?
It would be mightily difficult, indeed controversial to the extent of potentially being counter-productive, if land is to be acquired without prolonged legal wrangling. If in the real world your land has hope value for another form of development, why should that be ignored? However, in fact it’s not legally impossible.
Article 1 of the protocol to the European Convention on Human Rights states as follows:
Every natural or legal person is entitled to the peaceful enjoyment of his possessions. No one shall be deprived of his possessions except in the public interest and subject to the conditions provided for by law and by the general principles of international law. 

The preceding provisions shall not, however, in any way impair the right of a State to enforce such laws as it deems necessary to control the use of property in accordance with the general interest or to secure the payment of taxes or other contributions or penalties.”

(Incidentally, the Conservative manifesto confirms: “We will not repeal or replace the Human Rights Act while the process of Brexit is underway but we will consider our human rights legal framework when the process of leaving the EU concludes. We will remain signatories to the European Convention on Human Rights for the duration of the next parliament.“)
The European Court of Human Rights interprets Article 1 of the protocol so as to require compensation to be paid in relation to the confiscation of property. In Lithgow v UK  (European Court of Human Rights, 8 July 1986), a case arising from Labour’s nationalisation of various industries under the Aircraft and Shipbuilding Industries Act 1977, the court said:
“The Court further accepts the Commission’s conclusion as to the standard of compensation: the taking of property without payment of an amount reasonably related to its value would normally constitute a disproportionate interference which could not be considered justifiable under Article 1 (P1-1). Article 1 (P1-1) does not, however, guarantee a right to full compensation in all circumstances, since legitimate objectives of “public interest”, such as pursued in measures of economic reform or measures designed to achieve greater social justice, may call for less than reimbursement of the full market value”.


Whilst a distinction was drawn in the case between state nationalisation of industries and the compulsory purchase of property, the same basic principles apply. It is clear from this and other cases that individual states are given a margin of appreciation to determine what is in the public interest. For example:
Sporrong and Lönnroth v. Sweden  (22 September 1982) (a case about longterm blight caused by ‘zonal expropriation permits’)
 “…the Court must determine whether a fair balance was struck between the demands of the general interests of the community and the requirements of the protection of the individual’s fundamental rights…
James v UK  (21 February 1986) (a challenge brought by the trustees of the estate of the Duke of Westminster to leasehold enfranchisement under Leasehold Reform Act 1967):
“Because of their direct knowledge of their society and its needs, the national authorities are in principle better placed than the international judge to appreciate what is “in the public interest”. Under the system of protection established by the Convention, it is thus for the national authorities to make the initial assessment both of the existence of a problem of public concern warranting measures of deprivation of property and of the remedial action to be taken… Here as in other fields to which the safeguards of the Convention extend, the national authorities accordingly enjoy a certain margin of appreciation.” The Court went on to find that the aim of the Leasehold Reform Act 1967, namely greater social justice in the sphere of housing, was a legitimate aim in the public interest



Similarly, in theory a mechanism might be arrived at which in some way disentitled land owners in some circumstances from achieving a full market value for their land. But the circumstances would need to be carefully circumscribed and the reaction of most land owners would be to fight rather than one of flight. 
It is not as if compulsory purchase compensation is presently particularly generous, even with the additional loss payments (capped, even for owner-occupiers, at the lesser of 10% of the compensation payable and £100,000) that were introduced by the Planning and Compulsory Purchase Act 2004 specifically to sweeten the pill for land owners and make compulsory purchase less contentious! Do we really want more uncertain situations such has arisen at the Aylesbury Estate, with the Secretary of State rejecting  a CPO made by the London Borough of Southwark, on the basis of the prejudice that would be caused to leaseholders by the inadequate level of compensation payable to them, and now reportedly  having consented to judgment following a challenge by the council, such that all concerned now face a re-opened inquiry?
Furthermore, if these amended compensation principles are only to apply to, for example, Council Housing Deals, how will dispossessed owners be able to recover their property, or further compensation, if the land ends up not being used for the restricted purposes for which the land was taken?
Lastly, that manifesto reference to making it “easier to determine the true market value of sites”. Does this suggest a simplification of compensation principles? Or an overhaul of the timescales for determining compensation liability? Transport for London have recently suggested (in the paper referred to in the next section of this blog post) that the Government might make “the process of acquiring land through compulsory acquisition more transparent by:

* Introducing an independent valuation panel to determine the market value of the land based on the ‘no scheme’ principle set out in the Neighbourhood Planning Bill 2016 

* Establishing (early in the land acquisition process) an objective and transparent evidence base on alternative development potential in the absence of the scheme, for such a panel to determine ‘no scheme’ market values, for instance through the use of a modified section 17 certificate”.
Land auctions, land value capture charges

The passage quoted earlier from the Housing White Paper refers to “auctions”. Academic Tim Leunig has been promoting  the idea of “community land auctions” for a long time and indeed the idea was toyed with in the early years of the coalition government, whilst to a number of us it seemed naive in its assumption as to how planning actually works:
“The council first asks all landowners to name the price at which they are willing to sell their land. By naming a price, the landowner gives the council the right to buy the land for 18 months at that price. The council then writes a development plan. As now, they will take into account the suitability of the land offered for development, but will also consider the price of the land, and the likely financial return to the council.”
Transport for London has more recently been promoting a more sophisticated “development rights auction model” as a method of capturing land value increases created by transport infrastructure improvements. Their 20 February 2017 land value capture report , summarises it as follows:
“For zones with high development potential (particularly for housing) with multiple landowners, the Government, TfL and the GLA should consider the development rights auction model (DRAM), a new land value capture mechanism. 

The key features of the development rights auction model are: 

* The integrated planning and consenting of land use and density in a defined zone around a major new transport facility, in parallel with the planning of the transport scheme 
* The introduction of a periodic development rights auction, in which development rights over land put forward (voluntarily) by landowners are auctioned in assembled packages to a competitive field of developers. Gains above a reserve price are shared between the participating landowners and the planning/auctioning authority. No development taxes (such as CILs or s106 payments) are payable under this scheme. All non-operational but developable public sector-owned land within the zone is entered into the auction as part of a standard public sector land pooling arrangement 

* The introduction of a high zonal CIL for those landowners who wish to self- develop rather than participate in the auction 

* The use of reformed compulsory purchase order (CPO) powers (following successful passage of the Neighbourhood Planning Bill 2016) to deal with holdout problems that threaten to stall development, together with further consideration of other options as discussed in the report”.
The Government’s 8 March 2017 budget announcements included a memorandum of understanding  entered into with the GLA, that says this:
“At Budget 2016, the government invited Transport for London (TfL) to bring forward proposals for financing infrastructure projects from land value uplift. 

The government has agreed to establish a joint taskforce bringing together the GLA, TfL, London Councils, HM Treasury, Department for Transport (DfT) and Department for Communities and Local Government (DCLG) to explore the options for piloting a Development Rights Auction Model (DRAM) on a major infrastructure project in London.

Should a pilot of DRAM be agreed, it will be jointly evaluated by London and the government to review its effectiveness and determine whether a similar model could be applied to other infrastructure projects.”


I can’t presently relate the DRAM initiative to the reference in the Housing White Paper (quoted above) to establishing land value via auctions in CPO situations, following possession. What on earth is that a reference to?
TfL’s February 2017 paper has various other more radical policy suggestions to capture infrastructure-related land value increases, including changes to SDLT, to retention of business rates and a new “land value capture charge” This would “capture a proportion of the premium paid to landowners by new purchasers or tenants of residential property for access to new transport facilities“. (Shall we call a tax a tax though, folks?). 
There is also a current RTPI research project The Use of Alternative Land Value Capture Mechanisms to Deliver Housing in England and Wales.
Benchmark land values in viability appraisal

One of the most contentious issues in relation to developers’ project viability appraisals (carried out for the purposes of seeking to agree reductions in the scale of section 106 affordable housing and other obligations) is the benchmark land value that should be applied as a cost input. Clearly it should not be the actual market value (which would lead to circularity) but equally it should not be just the existing use value (EUV), which would not reflect reality and would result in schemes being assumed to be viable when in reality they would not be because the land would not be made available at the assumed benchmark value. 
The 2012 RICS guidance, Financial Viability In Planning  , advises that it is appropriate to take into account alternative use value (AUV):
“Site Value should equate to the market value subject to the following assumption: that the value has regard to development plan polices and all other material planning considerations and disregards that which is contrary to the development plan.”
As summarised in my 1.12.16 blog post  , the London Mayor is seeking to move away from accepting AUV, preferring an “EUV+” approach, ie existing use value “plus premium”, with the methodology for calculating the premium left undefined, and therefore a recipe for continuing debate. 
In practice, surely any attempt to pitch EUV+ at less than AUV is equivalent to restricting the application of the “no scheme world” rule – a policy intervention to apply that shortfall for public purposes. Except that with viability negotiations, it could of course lead to development simply not proceeding. Is there then a stalled scheme and grounds for compulsory purchase? The extent to which this sort of economic intervention is acceptable needs to be carefully limited and defined. 
CIL reform

There have been rumours that the reason why the Government parked in February any response to the CIL review team’s report was that the new ministerial team had started to think about whether in fact any replacement for CIL should encapsulate land value concepts (memories of the planning gain supplement anyone?). There is certainly no mention of CIL in the Conservative manifesto. Certainly the policy priorities as between CIL and affordable housing need to be reconsidered. 

If we weren’t in such dire straits, we could of course go back to a position where the state invested in social housing and funded public services without weighing the costs so heavily on land owners and developers. In the meantime, over the next five years we’ll definitely see answers emerge to those questions I posed back at the beginning of this overlong post. 
Simon Ricketts 20.5.17

Personal views, et cetera

From The White Paper Mountain, What Do We See?

After so long we have reached the top of the mountain: the white paper and accompanying documents have all been published today, 7 February 2017. However, now we see a series of further peaks on the horizon. 
A good way into the white paper itself, Fixing Our Broken Housing Market, is to start at the back end. From page 72 you have the detailed proposals listed, including a series of proposed changes to the NPPF and other policies which are now the subject of a consultation process from today until 2 May 2017. The consultation focuses on a series of 38 questions but some of the questions are potentially very wide-ranging. Further consultation is proposed on various matters, including 
– housing requirements of older people and the disabled

– Increasing local authorities’ flexibility to dispose of land at less than best consideration and related powers

– Potentially increasing fees for planning appeals (up to a maximum of £2,000 for the largest schemes, recoverable if the appeal is allowed)

– Changes to section 106 processes (with further consideration being given to dispute resolution “in the context of longer term reform”)

– Requiring housebuilders to provide aggregate information on build-out rates and, for large-scale sites, as to the relevance of the applicant’s track record of delivering similar schemes

– Encouragement of use of CPO powers to support the build out of stalled sites. 

There is a supplementary consultation paper on planning and affordable housing for build to rent  containing a further 26 questions, with a consultation deadline of 1 May 2017.
There are responses to previous consultation papers and reports:
– Summary of responses to the technical consultation on implementation of planning changes, consultation on upward extensions and Rural Planning Review Call for Evidence  (including a u-turn on the previous idea of an upwards extensions permitted development right in London, now to be addressed by policy). 
– Government response to the Communities and Local Government Select Committee inquiry into the report of the Local Plans Expert Group 
There is plenty to get to grips with, for example:
– the housing delivery test and new methodology for assessing objectively assessed need

– an understandable focus on whether the applicant will proceed to build out any permission and at what rate, although with a worrying reduction of the default time limit for permissions from three to two years

– Homes and Communities Agency to become “Homes England”. 

It is also reassuring to see the Government applying real focus to build to rent, reducing its emphasis on starter homes – and also reducing its reliance on permitted development rights. 

However, it is surprising how much still remains unresolved. We will apparently have a revised NPPF “later this year” but for much else the start date looks to be April 2018, for example a widened affordable housing definition including watered-down starter homes proposals (no longer a statutory requirement and with reference to a policy target of a minimum of 10% “affordable housing ownership units” rather than the requirement of 20% starter homes previously proposed) and a new methodology for assessing five year housing land supply. 

Liz Peace’s CIL review team’s review of CIL: “A new approach to developer contributions”  (October 2016 but only now published) remains untackled. The Government’s response will be announced at the time of the Autumn Budget 2017. 

Decision-makers will need to grapple very quickly with the question as to the weight they should give to the white paper as a material consideration, given the Government’s clear policy direction now on a range of issues. 


Simon Ricketts, 7.2.17
Personal views, et cetera

Hillingdon JR: Lucky Strike Out?

In R (London Borough of Hillingdon & others) v Secretary of State  (Cranston J, 30 January 2017) the Government achieved an impressive strike out of the first challenge to the proposed third runway at Heathrow, following the Government’s 25 October 2016 announcements. My 15 October 2016 blog post Airports & Courts wins no prizes for predicting a series of such challenges.  
Following the strike out, the draft Airports NPS  was promptly published on 2 February for a 16 weeks’ consultation period. 
However, was this somewhat of a lucky win? The Government’s position, accepted by Cranston J, was that the effect of section 13(1) of the Planning Act 2008 was that there can be no legal challenge of a Government announcement of a decision to publish a draft NPS, but that any challenge instead has to be made within a six week window following final designation of the NPS.
Section 13(1) provides as follows: 
“A court may entertain proceedings for questioning a national policy statement or anything done, or omitted to be done, by the Secretary of State in the course of preparing such a statement only if –



(a) the proceedings are brought by a claim for judicial review, and

(b) the claim form is filed [before the end of] the period of 6 weeks beginning with [the day after] —

 
(i) the day on which the statement is designated as a national policy statement for the purposes of this Act, or



(ii) (if later) the day on which the statement is published.”

So was the 25 October 2016 announcement something done “in the course of preparing” an NPS? Hmm.
Was the operation of section 13(1) intended to be so different from sections 23 and 25 of the Acquisition of Land Act 1981, which provide for a six week deadline for challenging a compulsory purchase order from publication of notice of its confirmation and the exclusion that a CPO otherwise “shall not, either before or after it has been confirmed, made or given, be questioned in any legal proceedings whatsoever“? So, according to the 1981 Act, no challenges before the CPO has been made but the Supreme Court in R (Sainsbury’s Supermarkets Limited) v Wolverhampton City Council  (12 May 2010) has entertained a judicial review of a council’s resolution to make a compulsory purchase order. Is the drafting within the 2008 Act distinguishable from the 1981 Act? Even if it is, where is the logic? With CPOs the widely understood risk of JR of the resolution to make a CPO, before section 25 cuts in to prevent further challenges until the order has been finally confirmed or rejected, is the reason why acquiring authorities commonly seek to leave as little time as possible between that final resolution and making the order. There is no reference in Cranston J’s judgment to this (surely) analogous process

.

Whatever the rights and wrongs, the decision to go for a strike out – always high stakes, given the risk of adding to the time needed to dispose finally of the challenge or at least the risk of egg on face – has so far proved to be the right one, although I do not know whether the claimant local authorities plan to appeal. Even if cleared for take off, the proceedings would in any event face a bumpy ride give that judicial review is a remedy of last resort and it could be said that the claimant authorities should first be making representations to the draft NPS before resorting to litigation?
It was a good week all round for Heathrow. By a decision letter dated 2 February 2017  the Secretaries of State for Communities and Local Government and Transport allowed an appeal by the airport, permitting enabling works to allow it to implement “full runway alternation during easterly operations” (ie, basically, regular easterly departures from the northern runway), after a June 2015 (yes 2015) inquiry and initial refusal by Hillingdon Council in March 2014 (yes 2014) of the airport’s planning application.  
Finally, a post script on challenges to CPO decisions, and to my 22 September 2016 blog post Regeneration X: Failed CPOs. Local Government Lawyer reports that after an oral hearing Collins J has granted Southwark Council permission to challenge the Secretary of State’s decision not to confirm the Aylesbury Estate CPO, Dove J having previously refused permission on the papers. Collins J apparently also “proposed that a meeting should be held between the two parties before any litigation began, considered that it would be unlawful for Southwark to offer more than was allowed under the Compensation Code, and recognised that the decision had significant knock-on effects for other schemes“. It would be no surprise at all to me if the decision is eventually overturned. 
You may now unfasten your seat belts.

Simon Ricketts 4.2.17

Personal views, et cetera

Level Playing Fields: Football Stadia & Planning

Professional football throws up such planning dilemmas. Stadia developments, usually now accompanied by a panoply of other uses, are space-hungry beasts, with extreme peaks in terms of traffic movements and noise. Football clubs are powerful institutions, often not driven by rational economic considerations, able to generate letters of support for their proposals from around the globe and with inevitably strong local political connections. And each club is effectively a monopoly: if a club says it needs to move or expand, what is a council to do? Who is going to blow the whistle?
It’s a particularly interesting week ahead for sports planning fans:

Chelsea


Chelsea FC’s proposed redevelopment of Stamford Bridge to create a new 60,000 seat stadium, with a direct link to Fulham Broadway tube station, is to be considered by the London Borough of Hammersmith and Fulham’s Planning and Development Control Committee on 11 January 2017 with a recommendation for approval. Whilst there are a variety of objections from local residents and groups as well as objections from the Royal Borough of Kensington and Chelsea and the Royal Parks, 12,000 people signed and sent in standard form postcards supporting the development, including 6,449 from outside London as well as 2,481 from outside the UK – how much weight should be given to this sort of managed process?

Luton Town
Now here’s a curious situation. Luton Council’s submission version of its local plan, currently under examination, allocated a site just off junction 10 of the M1 for the relocation of league division 2 Luton Town FC from its Kenilworth Road Stadium. The site known as south of Stockwood Park, has been the club’s favoured relocation choice for many years. The club acquired it in 2015. There is a separate site in Luton town centre, known as the Power Court site, which is allocated for retail led development (although at submission stage the council made a modification to introduce the possibility of an element of use class D2 assembly and leisure). 
The club has now decided that it does not wish to build a 15,000 seat stadium on the south of Stockwood Park site and instead wishes to build a 17,500 (rising ultimately to to 22,500) seat stadium on the Power Court site. In August 2016 it made planning applications  for a stadium and associated development at the Power Court site and for retail and mixed use development at its out of town south of Stockwood Park site. The applications have not yet been determined.  
Luton Council wrote to the local plan inspector on 22 November 2016 to indicate that, as it has “clear and unequivocal statements from the landowner to the effect that a stadium will not be developed” at the junction 10 site it had decided at a council meeting on 15 November 2016 to remove from the south of Stockwood Park allocation references to a 15,000 seater stadium and related facilities. 
The local plan inspector is holding hearing sessions on 10 and 11 January 2017 to pick his way through the position and has issued supplementary questions for the sessions in the light of the turn of events. 

Millwall
The land surrounding Millwall’s New Den is the subject of a planning permission for the New Bermondsey mixed use development project, being promoted by Renewal Limited, which owns most but not all of the site. Renewal has been working with Lewisham Council to bring the scheme, which includes 2,400 new homes, community sports facilities, health centre, premises for a local church, business space and studios and enhanced public realm, to fruition. Renewal and Lewisham assert that the scheme will complement and support the club’s activities at the stadium. 

However, the club and its supporters oppose elements of the Renewal scheme, asserting that the proposals would jeopardise the status of its youth academy which would in turn jeopardise the future of the club at the New Den. The Council’s Mayor and Cabinet decided on 7 September 2016 that a CPO should be made but, following pressure (including the 27,000 signature Defend Our Den campaign), the decision was called in under the Council’s internal procedures and the Council’s cabinet is due to reconsider the decision at a meeting on 11 January 2017, albeit with, again, a recommendation that the Council should use its CPO powers. 
The issue has reached the national press, with a Guardian story  on 5 January breathlessly headlined “Millwall admit council scheme could force club to leave Lewisham”. The Council has published its own Questions and Answers  document.
Three different stories, from three different leagues. But familiar themes. How can clubs’ reasonable needs and the aspirations of their fans be mediated as against other planning objectives? And who determines need?
Simon Ricketts 7.1.17
Personal comments, et cetera

Devo West Mids

Connecting the dots as to the Government’s policy announcements is never easy for all of us on the outside, trying to work out what they may turn out to mean in practice. 
An evidence session today with the West Midlands Land Commission was a good excuse for me to get to grips, belatedly, with what changes devolution may bring to planning and compulsory purchase in the West Midlands. 


Background

The West Midlands Combined Authority  was formally established on 16 June 2016 by virtue of the West Midlands Combined Authority Order 2016 . It comprises 17 local authorities and three LEPs and follows a devolution agreement dated 17 November 2015  .

The WMCA is to be chaired by a directly elected Mayor. The election is due to take place on 4 May 2017. Andy Street is to step down from his job as John Lewis chief executive to stand, as the Conservative candidate. Sion Simon is the Labour candidate. 
The devolution agreement includes the following statements in relation to planning:
“Planning powers will be conferred on the Mayor, to drive housing delivery and improvements in housing stock, and give the same competencies as the HCA.

“The Combined Authority and its constituent authorities will support an ambitious target for the increase in new homes, and will report annually on progress against this target. To ensure delivery of this commitment, the Shadow Board of the Combined Authority and the government agree that: 


    * Existing Local Authority functions, which include compulsory purchase powers, will be conferred concurrently on the Combined Authority to be exercised by the Mayor. These powers, which provide the same competencies as the Home and Community Agency, will enable the Combined Authority to deliver its housing and economic growth strategies. The government will bring forward further proposals for consultation in the New Year and will, as part of that consultation, discuss how they can be applied to support housing, regeneration and growth. 


    * The Homes and Communities Agency and the Combined Authority will work together to develop a joint approach to strategic plans for housing and growth proposals for the area. 


    * The government will work with the Combined Authority to support the West Midlands Land Commission. The West Midlands Land Commission will ensure there is a sufficient, balanced supply of readily available sites for commercial and residential development to meet the demands of a growing West Midlands economy. It will create a comprehensive database of available public and private sector land, identify barriers to its disposal/development, and develop solutions to address those barriers to help the West Midlands meet its goal to deliver a significant number of additional new homes over the next 10 years, and to unlock more land for employment use. The Combined Authority will also be able to use their proposed Land Remediation Fund to support bringing brownfield sites back into use for employment and housing provision”. 

WMCA’s ambitious objectives are set out in its Strategic Economic Plan  and include a “higher level of housebuilding than is currently provided for in development plans”. 
A Scheme for the Mayoral West Midlands Combined Authority was published on 4 July 2016 for a consultation period which closed on 21 August 2016. It seeks equivalent powers to establish mayoral development corporations, with the agreement of the relevant LPAs, as the London Mayor currently has. It also seeks, for its area, the same planning and compulsory purchase powers as the Homes and Communities Agency. 
The West Midlands Land Commission has also been set up, with terms of reference  to consider “what measures could be initiated and undertaken to ensure an improved supply of developable land from both a strategic and regional perspective”. 
WMCA has begun to work on specific strategic sites. It published on 19 October 2016 its Greater Ickneild and Smethwick housing growth prospectus. An application for housing zone status is to be made. (Although – is it just me? – the Government’s housing zones announcement 5 January 2016  is very vague as to the implications of HZ status other than the potential for an element of Government funding). 
Implications
What sort of planning powers WMCA will have to encourage, cajole and coordinate the work of its member authorities? Increased housing numbers will not come without real interventions and a new approach by all involved – in which I very much include the Government. After all:
– the Birmingham City Plan is still on hold following the previous Secretary of State’s 26 May 2016 holding direction as a result of concerns expressed by Sutton Coldfield MP Andrew Mitchell as to the proposed release from the green belt of land for the development of 6,000 homes

– we are still waiting for numerous measures to be fleshed out pursuant to the Housing and Planning Act 2016, including permission in principle and also the enticing mystery that is the concept in section 154 of “planning freedoms schemes”

– there is still no sign of the amended NPPF with its stronger policy support for development on brownfield sites. 

Will the WMCA be given CPO powers equivalent to the very wide powers that the HCA has by virtue of section 9 of the Housing and Regeneration Act 2008, or will it at least have a working arrangement with the HCA whereby the HCA will use its powers at the authority’s request? The section 9 power is much wider than LPAs’ normal “planning purposes” CPO power in section 226 of the Town and Country Planning Act 1990 as it can be used to achieve the HCA’s broader objectives as set out in section 2 of the 2008 Act:
“(a) to improve the supply and quality of housing in England, 

(b) to secure the regeneration or development of land or infrastructure in England, 


(c)  to support in other ways the creation, regeneration or development of communities in England or their continued well-being, and 


(d)  to contribute to the achievement of sustainable development and good design in England”

The use, or threat of use, of section 9 as against suitable sites which are not brought forward for development by their owners, might well be effective – particularly when taken with acquiring authorities’ possibly improved position against owners’ “no scheme world” compensation arguments by virtue of clause 22 of the Neighbourhood Planning Bill. 
Interesting also to see the London-style “Mayoral development corporations” proposal in the July Scheme document. But what about possibly developing other London-style structures, including the referral to and potential call-in by the Mayor of applications for strategic schemes?
So many unfinished legislative changes and policy announcements. As E. M. Forster (who died in Coventry – sole tenuous thematic link to blog) might have said: 
only connect
Simon Ricketts 24.10.16
Personal views, et cetera