Use it or lose it: can compulsory purchase help housing delivery?

Posted on 07 February 2018

UK highway development

On Wednesday 31 January, The Times reminded us that in last November's budget speech, chancellor Philip Hammond promised a review of un-implemented planning consents.  He said that if the review found permissions for housing are being held back for "commercial" reasons, then the Government "will act" – including through use of compulsory purchase powers.  

The use of compulsory purchase orders (CPO) against slow developers was also proposed by Jeremy Corbyn at the Labour Party conference last year.  It is tempting to point out that neither compulsory purchase nor Government reviews are exactly bywords for speeding anything up.  But if the leader of the opposition and the chancellor - himself a housing developer in his former business career - both support the idea, then it has to be taken seriously.

CPOs can be the key to unlocking development, be that housing, infrastructure or town centre regeneration. With London's mayor looking to deliver housing on previously used land, CPO will sometimes be the only solution for sites in fragmented ownership.  The process of CPO for HS2 is also under way.

The CPO system has been modernised in recent years, and the valuation principles have been codified.  Used wrongly it can be unfair, inefficient or even dangerous, but used correctly CPO can make everyone's life a lot simpler.

As for the Government's review, there are many reasons why planning permissions for housing can take years to implement, and not all reasons are bad.  Some of the largest sites in the country have build programmes spanning more than a decade.  Condition discharges, other consent regimes, contamination, archaeology, ground works can mean even the keenest developer can take years before a steady supply of dwellings emerges from a reasonably-sized permission.

Even "commercial" reasons are not necessarily cause for criticism. Funding difficulties and cash flow, timing of community infrastructure levy and section 106 obligations are entirely legitimate reasons for a start on site being delayed.

The review will be led by senior Conservative politician Oliver Letwin.  If he finds evidence of a real problem which CPO could solve, then the parameters of CPO will need careful definition.  No increase in delivery speed will be achieved by lengthy CPO inquiries into whether the reasons for delay are legitimate.  Given that planning permissions generally have just a three year lifespan, there is a risk that the threshold for delay will have to be unreasonably short, the CPO process be truncated (risking injustice), or that permissions might expire before an new developer can get started.

It is easy for politicians to fall back on the rhetoric that cynical developers intentionally restrict supply to push up prices, but the stark numbers bandied about do not tell the whole story.  It is in everyone's interest that Oliver Letwin has full and sensible evidence on which to base his report.  Those involved in the industry should engage with the review to minimise the risk of a politically expedient but potentially worthless or damaging result.