Contribution
My Lords, I shall speak to Amendments 210 and 211 in my name and Amendment 227G in the name of my noble friend Lord Sandhurst. I refer the Committee to my register of interests, as I have previously disclosed on this Bill.
When we say that the Conservative Party is under new management, we mean it. We are rightly proud of much of the work that went into the Levelling-up and Regeneration Act 2023, but we are also clear about areas where improvement is needed. I have tabled Amendment 210 to address one such issue, an issue that sits uncomfortably with our core principles of property rights and fair compensation. We believe deeply in the right of individuals to own property, and that such ownership should not be disturbed lightly. When it is, compensation must be fair and transparent and reflect the true value of what is being lost. That includes hope value.
Hope value is not a vague or abstract notion; it is a well-established component in the valuation of land and property, used not only in sales but in inheritance tax assessments and a wide range of commercial transactions. It reflects the possibility that land might in future obtain planning permission for a more valuable use. It is the very element that allows developers and others to bring forward land for development, persuading reluctant landowners to sell by recognising the future potential of their land.
To disregard hope value is to ignore how the market works. It risks undermining confidence in the land market and creating new barriers to development rather than removing them. The valuation methodologies underpinning hope value are well understood, professionally governed and economically rational. They are consistent with option valuations in financial markets, although I am not sure they go so far as to use the Black-Scholes option pricing model.
If a site has no realistic prospect of future development, its hope value will naturally be nil or negligible. However, where a site has a reasonable expectation of future change in use, reflected in prices agreed between buyers and sellers, we must ask why the Government or local authorities should be entitled to disregard that. In doing so, they risk ignoring market signals and distorting resource allocation. If the market values a piece of land as having the future potential for residential development but the authority wants to use it for a different, potentially less efficient use, that should prompt reflection, not concealment.
In a helpful Written Answer following Second Reading, the Minister set out the intended application of these provisions. That response included reference to land for educational and health purposes but also to housing, and not necessarily affordable housing. That gives little comfort. The noble Baroness, Lady Pinnock, has moved her Amendment 209B, which seeks to expand this to recreational facilities. Needless to say, we do not support that.
We are told that the powers will be used to support affordable housing schemes, but in practice the drafting is broad, the safeguards are weak, and I see no mechanism that protects landowners should the purpose of the CPO change after acquisition. Could the Minister clarify? Would these provisions still apply if the land were no longer used for the original purpose stated in the CPO? Clear guidance—or, better still, an amendment to the Bill—could help to avoid costly litigation in the years to come.
The Minister’s letter also cited examples where removing hope value might help to bring forward certain sites, such as brownfield land where viability is an issue, infill plots, and allocated sites that have not yet come forward, but that analysis does not hold. If viability truly is an issue, the hope value will already be low or nil, and on infill or allocated sites it is not the price that delays development but the length and complexity of the planning process and the delays caused by responses from statutory consultees and agencies.
I hope I have persuaded the Committee that removing hope value does not unlock land or accelerate housing delivery. On the contrary, it undermines property rights, weakens trust in the planning system and may ultimately deter landowners from bringing land forward.