A group of 15 organisations has written an open letter to housing secretary James Brokenshire to urge him to overturn a 50-year-old law to make it cheaper to provide new affordable homes.
The letter, published by the Onward think-tank yesterday, said local authorities should be able to purchase agricultural land at ‘fair market value’ as opposed to a one that assumes planning permission will be granted.
According to the 1961 Land Compensation Act, local authorities can buy agricultural land only at speculative ‘hope’ values.
This raises the price of the land above what it would be if it was sold merely as agricultural land, as it is expected planning permission will be granted. With agricultural land, this can increase the value 100-fold.
The letter, signed by charities Shelter, Crisis, the Joseph Rowntree Foundation and others, said: “The root of England’s housing crisis lies in how we buy and sell land.
“When agricultural land is granted planning permission for housing to be built, the land typically becomes at least 100 times more valuable.
“We believe that more of this huge uplift in value should be captured to provide benefits to the community.”
A report by Onward from June 2018 found that three quarters of the total uplift in land value from planning permission – equivalent to £9bn in 2015 alone – was captured by developers and landowners rather than communities.
Changes to the 1961 law would encourage greater investment in affordable housing and public services, such as new doctors’ surgeries and schools, according to the think-tank.
The letter said: “If there was more confidence that more of the gains from development would certainly be invested in better places and better landscaping, in attractive green spaces, and in affordable housing and public services like new doctors surgeries and schools, then there would be less opposition to new development and much better infrastructure.”
Last week, the government’s social housing green paper came under fire for failing to commit any new funding for the sector.
In July, Brokenshire said that housing developers must be held to account if they failed to deliver promised community benefits.
