Councils should be given the power to compulsorily purchase land at a fairer price, according to a report by MPs.
The House of Commons’ Housing, Communities and Local Government Select Committee called for reforms to the Land Compensation Act 1961 to reduce the right of landowners to receive “hope value” for their land.
It said that the compensation paid to landowners should reflect the costs of providing the affordable housing, infrastructure and services that would make a development viable, as well as capturing a proportion of the profit the landowner will have made.
The exact amount should be determined by an independent expert panel and be binding on all parties, the report argued.
On land acquired by the public sector, this would allow local authorities to capture the remaining value to provide the infrastructure and services made necessary by development, as well as additional revenue for other local priorities,” the report said.
“It would also serve to lower land prices traded within the private sector, ensuring that developers are able to meet their local plan obligations in full.”
Local Government Association housing spokesman Martin Tett, said: “Rising land prices is one of the most influential contributors to our housing crisis – it means less homes are built, they are less affordable, they are built more slowly, there can be compromises on quality, and there is not enough funding left over for vital local infrastructure and services that communities need to back development.
“There are therefore huge gains for communities, economies and public services in allowing councils being able to capture potentially billions of pounds worth of land value increases to invest in the very infrastructure and services that generate those increasing values.”
But Ian Fletcher, director of real estate policy at the British Property Federation, said: “At a time when the UK must be building more homes, finding land is critical to success.
However, if landowners don’t get the uplift in value from change of use, fewer landowners will come forward with land. This will exacerbate the housing crisis.”
