Strengthening CPO powers for affordable housing: what the government’s proposal means

CPO powers are often used as a last resort for the development and provision of necessary infrastructure on large sites. For most sites, and for strategic greenfield housing land specifically, CPO is rarely required. It feels like a knee-jerk reaction. It might give the impression that governments (of both political colours) have responded to the affordable housing need, but it’s the wrong way of going about it.

Benchmark land values (BLV), which prevent developers from inflating land purchase prices in viability calculations, could be a more effective approach. While CPOs are rarely used in land assembly, planning permission is required for every housing development. This addresses the issue at its source and does not require a major shift towards using onerous CPO powers. If developers cannot pass on inflated land costs in their planning viability arguments, it should limit what they are willing to pay for land and correct any perceived or actual notion that inflated pricing is an issue.

Geographic discrepancies are just the first of the problems with putting this rule in place – how do you apply the benchmark value approach across different parts of the country? BLVs must still have a geographical nuance, and where that nuance is fixed would be the subject of considerable debate. 

In parts of the UK, such as Oxfordshire or Cambridgeshire, land with planning consent for development can experience a significant increase in value compared to undeveloped agricultural land. As a result, the potential loss to the landowner, known as the hope value, could be substantial. Comparatively, in other parts of the country, hope value might be much lower. This is just one inherent unfairness in a one-size-fits-all approach to BLV that will need to be addressed.

An alternative approach could be making housing allocations more available to remove the scarcity factor from market pricing. The lack of land for affordable housing is multi-faceted and extremely complex. It follows decades of tinkering with planning reform that failed to comprehensively reform the need for council, social or affordable housing: it’s far too prosaic to say the issue lies with greedy landowners. 

This policy proposal is using the wrong tool for the wrong problem. If the problem is affordability and deliverability, the causes lie in the broader economic context (including the mortgage markets) and factors such as the speed with which planning consents are granted – which is impacted by substantial under-resourcing.

CPO can be expensive and time-consuming. In planning, we talk in terms of five-year land supply, which feels like a long time, but CPO takes many years – we’d see little change during this parliamentary term by the time legislation was in force. Creating a more efficient planning system, with more certainty and investment and less risk, would have a much more immediate impact. 

“This policy proposal is using the wrong tool for the wrong problem. If the problem is affordability and deliverability, the causes lie in the broader economic context”

Many successful large-scale developments have resulted from landowners forming joint ventures with, for example, house builders and master developers. There are many different and more collaborative approaches to creating and realising value through the development of comprehensive and holistic delivery methods – ones that integrate public and private, commercial and residential, as well as owned and rented homes. 

The days of the 1970s council housing estate are gone and genuinely mixed communities offer an infinitely better alternative. While the benefits and realities of the ‘15-minute neighbourhood’ are debatable, well-functioning communities undoubtedly need a school, a shop and community infrastructure. Providing these different functions comes from partnerships: between councils and the private sector, and often bodies such as Homes England. 

The proposed change in legislation has caught people’s attention for all the wrong reasons. Increasing the delivery of affordable housing requires going back to the first principles: determining exactly what needs to be achieved and finding the appropriate tool. This already exists in a collaborative approach to planning and delivery, and I believe the government should focus on this.

Robert Smith is head of national strategic land and Paul Astbury is head of CPOs, both at Carter Jonas