Compulsory purchase and hope value: your questions answered

Hope value is the part of a property’s market value resulting from a possible beneficial change that might happen in the future. Essentially, if something might happen in the future that would make a property worth more than its current use, a buyer would pay more for it now than they otherwise would. Such circumstances could include someone potentially wanting a parcel of agricultural land as the garden to a house, the land being likely to be suitable for high-value environmental work, or the land being relatively likely to receive planning permission for development at some point.

Hope value is not something artificial that exists just for compulsory purchase. It features in many types of valuation and can increase an asset’s value for inheritance tax.

Consider it this way: if you were looking to buy a field just outside a village where you might be able to build houses at some point then, all things being equal, you would probably be prepared to pay more than you would for the same fi eld in open countryside where development was unlikely. “Hope value” is what we call this difference.

Compulsory purchase law is built around the “principle of equivalence” – where an asset is acquired compulsorily, the asset’s owner must be no better or worse off than if the acquisition had not happened. Compulsory purchase frequently does not end this way, but the “principle of equivalence” is the goal.

Hope value is part of an asset’s overall market value, so should normally be compensated in compulsory purchase. Our field just outside a village is worth more on the open market because it might receive planning permission at some point. That means it would also receive more compensation for compulsory purchase than a field in a remote area.

Only if certain criteria are met. The process for this was introduced in England and Wales by the Levelling-up and Regeneration Act 2023, and is limited to specific authorities using one of a set of specific compulsory purchase powers for the specific purposes of providing education or healthcare facilities or building “a certain number” of affordable homes.

Even where an acquiring authority passes these tests, hope value is not automatically removed. When the authority first applies to use compulsory purchase powers, it must explicitly request that hope value should not apply and justify the rationale for this in detail. The “confirming authority” (which grants the compulsory purchase powers) then assesses whether hope value should be disapplied. Currently, this decision must be made by a minister, although planning inspectors may soon be able to make this decision on the minister’s behalf. They will consider whether this would be in the public interest and whether it would be “unfair” to anyone affected.

Private sector housebuilders do not have compulsory purchase powers, although public bodies sometimes pass land they have acquired on to housebuilders for delivery.

If hope value is removed and land is subject to compulsory purchase, but then not used as described, hope value can be retrospectively paid to former owner. Unfortunately, this is not automatic; the landowner must apply in writing to the confirming authority to receive this additional payment.

The Planning and Infrastructure Bill looks to expand these powers in two ways. Both are unwelcome and the CLA will lobby against them, but neither is revolutionary.

The bill seeks to expand when the powers to remove hope value can apply. Currently, local authorities can compulsorily purchase land and then pass it to parish councils for some purposes, including building affordable homes. The bill would allow the procedure to stop hope value applying to this power if it is used to deliver affordable homes.

Where a direction to remove hope value is applied, the bill would apply it to the “loss payments” as well as the property’s value. These are additional payments based on the property’s value, designed to cover the cost and emotional burden of having to move out of and replace the property.

No; if a site has a planning permission in place, the increase in value resulting from this must be compensated in full.

First, take a breath - compulsory purchase is very slow. There is a lengthy process before an authority can compulsorily acquire land. The council cannot turn up at your door and demand you immediately sell up at a knock-down price. If no formal process has started in relation to your land, there will usually be a period of years before it can be compulsorily purchased, with or without hope value.

Seek advice about promoting the land for development. All uses of compulsory purchase must pass a public interest test before being used, and it is supposed to be a last resort. If the land is already visibly moving forward for development, it is less likely that powers will be granted for it to be compulsorily purchased, as there is no public interest in doing so.

The best place to start is to contact your regional CLA office team, who can advise on your situation and how the land promotion process works. They may point you towards trusted agents who can act for you if needed.