A Labour Government would cap price of land for homes

Councils and developers would be allowed to buy land in England more cheaply with the aim of building more low cost homes if Labour wins the next general election.

Shadow Housing Secretary John Healey said that a Labour Government would change the law and set up a new agency called the Sovereign Land Trust to buy agricultural land at ‘near current-use value’ rather than what he called vastly inflated prices it sells for when earmarked for development.

Currently councils cannot buy land at its agricultural value. A sale price is calculated as if there was already planning permission for homes to be built and Labour believes that this can make the land worth more than 100 times its value if it were sold as a piece of farm land.

Healey told the Financial Times that the policy would apply across the board. ‘So we take land profiteering out of the market and reduce the cost of land as an inflated component of the cost of homes that are eventually built,’ he said.

There have been recommendations that land values on large sited should be capped but Labour would take a more robust approach. In his recent report to the current Government Oliver Letwin set out this kind of approach.

A report for the Labour Party, written by Nicholas Falk, director of the URBED Trust consultancy, said other countries have similar ideas. For example in Leipzig in Germany and Eindhoven in the Netherlands, where public planning is used to lead regeneration.

The report sets out various options for how much compensation land owners could get from state buyers, with the ‘general principle that the value of a serviced housing plot should be 25% of the total value’ which would be in line with both Dutch and German examples.

The trust would also support regeneration projects in so-called left behind towns in Northern England and elsewhere, starting out as part of Homes England and then becoming a separate agency.

Author: Propertywire.com