Government to press ahead with power to remove ‘hope value’ from compensation payable on compulsory purchase

It “allows for an assessment in each case by the acquiring and confirming authorities of whether interference with private rights is proportionate and justified in the public interest in that case”.

The Ministry of Housing, Communities and Local Government issued the consultation on compulsory purchase process and compensation reforms last December and has now assessed some 160 responses.

Ministers will press ahead with deleting hope value - the compensation paid for prospective planning permissions - from compulsory purchase sums in certain cases despite claims that this would be unfair and breach human rights legislation.

The Government said it wanted to reform compulsory purchase to improve land assembly and hasten delivery for housing, infrastructure, amenity and transport projects, while also enabling more land value to be retained by public sector authorities and reinvested in other schemes.

Its first question asked whether directions to remove compensation payable for prospective planning permissions should be included in compulsory purchase orders (CPO) made on behalf of parish/town or community councils by local authorities under section 125 of the Local Government Act 1972 where the schemes concerned are providing affordable or social housing.

This drew 63 positive responses, 41 that were negative and 56 neutral and the Government said this showed “considerable support for the proposal”.

Comments in favour included that removing hope value would help schemes deliver affordable housing and that councils needed the ability to unlock stalled developments on vacant land which can create eyesores.

Negative comments were those suggesting landowners would be deterred from putting sites forward for development and that removing hope value denied fair compensation, and so would breach human rights.

In response, the Government said: “The power to remove the…’hope value’ by directions (as introduced by the Levelling-up and Regeneration Act 2023) is compatible with the European Convention on Humans Rights and allows for an assessment in each case by the acquiring and confirming authorities of whether interference with private rights is proportionate and justified in the public interest in that case.”

Ministers also said they would proceed with proposals that confirmation of a CPO that includes removing hope value could be undertaken by inspectors, and by acquiring authorities where there are no objections to the order.

Answering concerns that CPO issues were beyond inspectors’ competence and might give rise to conflicts of interest, the Government response said: “Inspectors are independent, highly skilled professionals who are required to declare any conflicts of interest when determining cases to ensure decisions are impartial. They are also required to undertake training to perform their roles.”

Asked if section 14A of the Land Compensation Act 1961 should be amended to make it clear that directions to remove hope value should apply to other heads of claim where open market value is a relevant factor in the assessment of compensation, 56 respondents answered ‘yes’ and 27 ‘no’ although 77 said they did not know.

The Government said it “intends to proceed with making it clear in legislation that CPOs confirmed with directions removing hope value apply to all other heads of claim where open market value is a relevant factor in the assessment of compensation” and that this was part of the Planning and Infrastructure Bill.

Mark Smulian