Social Housing

Lord Best Excerpts

Thursday 31st January 2019 Lords Chamber

[Lord Best (CB)]

My Lords, I thank the noble Lord, Lord Whitty, for this debate. I congratulate the noble Baroness, Lady Osamor, on her powerful maiden speech. I draw attention to my housing interests on the register.

I spoke last week about social housing in the valuable debate introduced by the noble Lord, Lord Scriven, so I will concentrate today on a single issue: land value capture. Sir Oliver Letwin, in his radical report of last December, recommends that for future large sites local planning authorities should have the power to acquire sites at a maximum of 10 times their existing use value—for example, not £1 million or £2 million an acre but, say, £80,000 or £100,000 an acre. This would make it possible to provide thousands more genuinely affordable homes without frightening the Treasury.

The authority would create master plans and design codes. To deliver those, it would deploy a special development company to put in the infrastructure of the land being parcelled out, with individual parcels sold to builders and social housing providers to create housing of different types and tenures. Sir Oliver recognises that when landowners are unwilling to sell on these terms, compulsory purchase will be necessary.

The current CPO system needs overhaul, not least because it requires, under the Land Compensation Act 1961, that the valuation of sites subject to compulsory purchase must include “hope value”—the prospective uplift which could follow from a change of use. To achieve the Letwin model, a new Act of Parliament to amend the 1961 Act will be necessary. In the meantime, can land value be captured in any other ways?

The Mayor of Cambridgeshire and Peterborough, James Palmer, is doing deals with landowners to secure sites at just eight times agricultural value, rather than 100 to 200 times, and the mayor will switch locations for development if landowners are recalcitrant. However, planning decisions will often be pre-empted by infra- structure constraints, emboldening some landlords to hold out for wildly inflated prices.

An alternative opportunity is to use legislation that already exists. In 2016 and 2017, the noble Lord, Lord Taylor of Goss Moor, and I secured two amendments to planning Bills, with government support. These retain the still operative power in the New Towns Act 1946 which enables the Secretary of State to acquire land for a new settlement at existing land value, and now gives that power to development corporations set up by local authorities.

The Government are now canvassing bids from councils to use this route to capture land value and create sustainable mixed-tenure new communities. These can demonstrate that, if only land value can be captured, all our housing developments could be far better and far more affordable social housing could be created without overwhelming the public finances. An update on this issue from the Minister would be much appreciated.