Compulsory Purchase Process & Compensation Reforms
Boris White
Jan, 22 2025Government Launches Consultation on Compulsory Purchase and Compensation Reforms
Just as we logged off for Christmas, the Government released a consultation outlining proposed Compulsory Purchase Process and Compensation Reforms.
Removing Hope Value from Compensation
The Government is considering introducing a general power for the Secretary of State to remove hope value from compensation assessments for:
- Brownfield land in built-up areas suitable for housing but without extant planning permission
- Land allocated for residential development in local plans that has not yet come forward for development
Although this is a consultation, the Government signalled its intentions well in advance, making it likely these proposals will progress despite criticism.
Other Technical Reforms
The consultation also includes several technical changes, the most notable being Loss Payment reforms favouring occupiers over investors. Discretionary home loss payments will no longer apply to non-compliant property owners facing compulsory purchase.
Why Is the Government Doing This?
The aim is to streamline infrastructure delivery and reduce costs. The proposed reform on hope value appears to target land banking—where landowners delay development in anticipation of better market conditions.
While many contest claims that land banking delays housing delivery, evidence shows major infrastructure schemes, such as HS2, have failed to meet timelines and budgets. Clearly, the current system isn’t working.
Impact on Strategic Land
These reforms raise concerns for strategic land, which often takes years to promote through the local planning process.
Ceres Property’s Development Team handles numerous freehold sales of speculative sites, purchased with the expectation of future development. Boris White, Partner in our Development Team, warns:
“If these reforms on hope value come into force, premiums currently paid for substantial hope value on long-term strategic land will reduce significantly. This impact will be worse if there’s no reimbursement for money spent promoting sites—it can cost hundreds of thousands of pounds to get a site allocated in a Local Plan. We fear this will have a greater negative effect than any accusation of ‘land banking’, as it disincentivises speculative planning promotion.”
A Contentious Area of Compensation
Compensation for Compulsory Purchase Orders (CPOs) is already contentious. Peter Cole, Partner in our Land Consultancy Team and infrastructure specialist, comments:
“Removing hope value in certain cases feels like the Government is poking a hornets’ nest that’s already on fire. Having your land, home, or business affected by a CPO scheme is an emotional and stressful experience. While we need more infrastructure delivered on time and on budget, are we leaning too far to one side? Claimants must still receive what is fair.”
Greater Good or Greater Risk?
Compulsory purchase is often justified as essential for the greater good, but will these reforms truly deliver that in the long run?
What’s Next?
Expect additional CPO reforms as part of the Planning and Infrastructure Bill, with details anticipated in early 2025. Watch this space.