A three-step programme to coax affected landowners into hailing rather than shunning new towns or railways came idly to mind while chairing a debate on strategic land issues at lawyers Hogan Lovells.
Step one: introduce primary legislation forbidding those whose land is subject to Compulsory Purchase Orders from claiming anything more than existing land use value for projects identified as having “national significance” under the existing rules.
Step two: use said legislation to force promoters to pay 10 times the existing use value of the land. Stuff the landowners’ mouths with gold.
Step three: pre-define and pre-include new settlements or major rail projects. Then include future receipts in the headline budgets and/or government estimates.
The 1946 New Town Act allowed land to be compulsorily purchased at existing use values. But the provisions of the Act have been superseded by both subsequent legislation and case law. As a result CPO cases are bedevilled by complex arguments over land values and made surreal by the concept of hope value – the “we might have got permission for something else altogether” argument. As Lord Denning said of the whole process in 1974: “The valuer must cast aside his knowledge of what has in fact happened … He must ignore developments, which will, in all probability take place in the future and let his imagination take flight to the clouds. He must conjure up a land of make-believe, where there has not been, nor will be, a brave new town.”
New legislation would blow away the cloudy concept of hope value and apply a simple multiplier to compensate the owner under ‘existing use’ principles. Unfair? A bit. That’s why landowners should be overcompensated by a factor of 10. Paying a farmer £40,000 an acre for £4,000 an acre agricultural land that will have a residual value of £240,000 an acre after infrastructure costs is not going to break the bank. Adopting some sort of ‘10 times existing use value’ formula also feels equable.
Or at least it does to former lawyer Michael Freeman. The founder and chairman of Argent is promoting a new town called Mayfields. The settlement of 10,000 well-spread homes on 1,200 acres between Crawley and Brighton has naturally met with howls from objectors. The proposal was not identified in Freeman’s short-listed submission for the £250,000 Wolfson prize in September. The judges had simply asked for the best solution to delivering an economically viable garden city. Freeman’s unnamed town was based on Mayfields. Check out the calculations in the online submission on the Policy Exchange website. Paying the farmer £40,000 looks economically viable.
But this is an amateur’s dream and a political nightmare.
For a professional and more practical view, let us turn to Michael Gallimore, the Hogan Lovells partner who organised the strategic land debate together with the International Building Press.
“The entitlement to compensation in CPO situations raises both social and legal issues. The fundamental question is who should be entitled to capture the uplift in value or betterment, the state or the landowner?
“It would be open to a government to legislate to ‘cap’ the compensation which is payable where new towns are being promoted, particularly in view of the pressing national need to bring forward such schemes. However some caution is needed. Case law has set expectations among landowners as to their entitlement to compensation and we also now have to operate within the confines of the Human Rights Act and its respect for property rights.
“The risk of a legal challenge will never be far away and any new system would need to offer sufficient incentive to landowners to head off the delays which challenges would inevitably involve.”
Doh! Why is everything to do with planning so damn difficult?
