Ian Barnett, national land director, Leaders Romans Group (LRG)
The context for land sales has changed quite considerably under the Labour government and further changes are yet to come.
The release of agricultural land for development
October’s Budget, specifically changes to Agricultural Property Relief (APR) on Inheritance Tax has caused considerable concern among agricultural landowners. From protestors to commentators, the view is that more land currently owned by family farms will now change hands as a result of the future tax implications.
A pro-development planning agenda
However, the ‘silver lining’ for those contemplating developing and selling their land is a more ‘pro-development’ policy framework. We expect to see reinstated mandatory housing targets (with increased numbers for many local authorities), further Green Belt / Grey Belt release in specific circumstances and also increases the opportunities for development on brownfield land through ‘Brownfield Passports’.
Resources have been allocated for more planning officers to speed up planning consents, funding has been committed to resolve the ongoing nutrient neutrality issue which has stalled so much development, and an imminent announcement about future new towns will require substantial amounts of land to come forward.
However, while the emerging changes in the planning system would suggest that land, specifically greenfield land, is more likely to gain consent for residential development, the process of achieving planning consent remains slow as a result of significantly under-resourced local authority planning departments (despite funding having been committed, it will take many months to fully address the backlogs). Technical matters such as flood risk, highways, ecology and landscape will still require as much (if not more) consideration despite the Government’s ‘pro-development’ stance. An increased pipeline of planning applications and appeals will, in the short term at least, result in increased delays and higher costs.
Compulsory purchase and land value capture
Not all Labour planning policies will benefit land sales. Another policy, trailed by Keir Starmer as a bold method of boosting the supply of affordable housing, is that of land value capture. It should be noted that this is a policy that the previous Conservative administration had tabled which suggests that politicians of all colours are seeking ways to increase revenue into the public purse. The new government has stated that its Planning and Infrastructure Bill would allow local planning authorities in England the power to buy up land, under compulsory purchase, at a fraction of its potential cost. The law would facilitate the acquisition of land at a reduced price by effectively stripping out ‘hope value’ – the price premium that landowners gain when selling land with the potential of planning permission.
Understandably this has raised some concern among landowners, and may be a reason, where feasible, to expedite a land sale. This is a policy which requires serious thought as it could have unintended consequences. Many in the industry consider that the planning system and indeed the wider issues that impact housing delivery (i.e. taxation policy) need a period of stability in order to deliver the housing that this country desperately needs.
The Grey Belt
The ‘Grey Belt’ works well as a slogan: it’s simple and concise, visual and intriguing. As intended, it immediately evokes images of unattractive scraps of land which would benefit from redevelopment. As such, it both questions the validity of the Green Belt and suggests a solution to the housing crisis – again, just as the government intended but the policy basis for the Grey Belt is far from clear.
The concept of the Grey Belt has been weakened by the industry’s reaction to the ‘golden rules’ governing its release – which (in a November sitting of the Housing Communities and Local Government Committee) the Secretary of State admitted required further consideration. Specifically the requirement for 50% affordable housing has apparently threatened the viability of some proposed schemes (specifically making development in areas of lower land values or smaller less viable sites).
There is no question that something needs to change to enable adequate levels of future development. The new government has set itself the tough challenge of delivering 1.5 million homes this Parliament and its capacity to do so is not helped by the fact that the amount of land in England designated as Green Belt has actually increased by around 1.7% for the past two years.
My view is that a fundamental review of the Green Belt, declassifying and reclassifying land as necessary, is a key part of the solution to deliver the government’s housing targets in a sustainable manner.
Overall, a positive outlook
While there will invariably be administrative and political obstacles facing the bold planning decisions that the government has taken, the government remains vocal in its commitment to 1.5m new homes being built this Parliament. The planning system is at the very start of that process and so positive change is needed, and quickly, to deliver on the government’s bold ambition. That said, there are many strands to the housing crisis and land sales are only one element in achieving substantially increased housing numbers.
