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As part of housing reforms enacted yesterday (30th April), local authorities can now purchase land for social and affordable housing without paying “hope value” costs.
What will this change?
This means councils can acquire cheaper land in certain situations, bypassing the additional costs associated with potential future development value. The Department for Levelling Up, Housing and Communities (DLUHC) highlighted that the previous system forced councils into costly disputes over land prices. The reform aims to streamline the process and make it more affordable for councils to build new homes, aligning with the government’s Long-Term Plan for Housing.
When will ‘hope value’ costs be removed?
Under the Levelling Up & Regeneration Act, bodies like Homes England and councils using Compulsory Purchase Orders (CPOs) can request the removal of “hope value” when it serves the public interest, particularly in supporting affordable or social housing, health, or education. Successful examples cited by DLUHC include the regeneration of Leicester’s Waterside area, where Leicester City Council utilised a CPO to acquire the Friars Mills site for redevelopment, bringing derelict industrial land back into use and potentially creating up to 500 new homes.
Expected Impact:
The new reform is anticipated to have a transformative effect on the housing market. By reducing land acquisition costs and simplifying development processes, more developers are likely to invest in affordable housing projects. The incentives for sustainable development will contribute to environmentally responsible growth, while public-private partnerships and land banking initiatives will ensure a steady supply of land for housing. Overall, this reform aims to address the urgent need for affordable housing and create a more inclusive and sustainable housing market for all.
Minister Jacob Young emphasised that these changes aim to stimulate investment and regeneration in communities nationwide, supporting housing needs, job creation and economic growth alongside the government’s broader housing strategy.
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