Farmers Forked by Skier?
Friday 2nd June 2023
Our PM-in-waiting ‘Skier’ Starmer has made a further property related announcement. He obviously feels focusing on the housing crisis is a good way to win votes. Probably correctly.
This week it is Compulsory Purchase Orders (CPO’s) allowing local authorities to requisition potential development land without paying the cost of ‘hope’ value. Despite the implications in the headlines, they are specifically not suggesting that land which already has planning permission can be bought by a CPO, at least not at a discounted price. Even Labour realise that would be untenable theft.
Regardless, as currently proposed, it is an ill-thought-out policy likely doomed to years in the courts and possible ultimate failure.
However, there is one point that occurs to me, though clearly not to the shadow housing minister Lisa Nandy, which could by accident make the proposal work.
Farmers are a canny lot and not as innocent as they like to make out. Any farmer with land by a town knows full well that their land has a potential uplift in value, if it were to have planning permission. If they protest otherwise they have their gnarly fingers crossed behind their broad backs!
In my experience this uplift can realistically be in the order of 100 times its agricultural value.
Most farmers are happy enough to pootle about on their tractors in the knowledge that if they did sell (at retirement say) they could get a developer to pay well over the agricultural value. The developer then applies their skills to work through the arduous process of getting planning permission and taking on the inherent risk that it may not be granted. The risk and work involved means the price paid to the farmer is not the full planning value. It is the developer who will reap the final value, sown by the farmer. Fair enough.
However, with Labours' proposed Ski Pole of Damocles hanging over them, farmers would be wise to crystalise planning on their land and the 100 times value increase, before there is any chance that some quick-witted Council (there are some) slaps a CPO on them.
Farmers (perhaps in joint venture with developers) might well put forward their land for planning permission for fear of being forced to sell at agricultural value.
The net effect of this might be a surge in voluntary planning applications and therefore land on which to build new homes.
Cynics might suggest that local authorities could refuse planning permission to farmers then buy the land by CPO, followed by granting themselves planning permission. They might try it but again would end up in court for years, thereby not serving the underlying purpose- which is to get on with building new homes.
The uplift in value from agricultural land to land with full planning permission will lessen, because as we all know (save the Labour Party and those muppets in The Treasury) with a surge of supply – comes a softening in prices.
With the underlying cost of land for new housing lessened will come a reduction of the final prices of new homes- surely good for all those trying to get onto the ‘ski lift of hope’ commonly known as the ‘housing ladder’.
Until next time.
PB
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