HOW WILL THE PLANNING AND INFRASTRUCTURE ACT 2025 CHANGE THE COMPULSORY PURCHASE LANDSCAPE IN THE UK?

The Government wants to improve the process of land assembly by compulsory purchase and use this as a driver of economic growth by making the process simpler, quicker and easier to use. The Planning and Infrastructure Act 2025 (the ‘Act’) aims to deliver development land through the compulsory purchase order (CPO) process.

The Act proposes to remove hope value where land is acquired by compulsion, allowing land to be acquired at existing use value to make affordable housing viable and support the requirement to deliver 1.5M new homes in this parliamentary term. This change is controversial, as compensation for land acquired under compulsory purchase is based on its open market value, which could include ‘hope value’.

Under the Act local authorities have delegated decision making, and can take earlier possession of land allowing the vesting procedure to be faster. The Act also seeks to reduce administrative costs of CPOs for local authorities by introducing electronic service of notices.

HOW CAN COMPULSORY PURCHASE DRIVE THE GOVERNMENT’S 1.5 MILLION HOUSING TARGET OVER FUTURE YEARS?

Following the Labour Party’s election win in 2024, the new Government announced that it was going to address the housing crisis and deliver 1.5 million new homes during the parliamentary term. Government figures suggest housing supply was 208,600 completed dwellings in 2024 to 2025 falling short of target. This represents a 6% decrease on 2023 to 2024. If Labour are in power to 2029, an average of 300,000 house completions per year would be required to meet their target of 1.5 million homes. If the current build rate continues, after five years 1.043 million homes would be completed, creating a shortfall of 457,000.

The Government hopes the Act will allow land to be acquired more efficiently. Planning delays could be avoided by allowing local inspectors, councils or mayors to take decisions instead of the Secretary of State. This will not transform viability, but implies the Government is willing to use CPO powers as an active land assembly instrument, rather than a procedural threat.

WILL THE PLANNING AND INFRASTRUCTURE ACT 2025 DELIVER THIS USING COMPULSORY PURCHASE?

CPOs act as a strategic support and a targeted intervention mechanism. The majority of the 1.50 million new homes will be achieved through private housebuilders, and housing associations utilizing the amended and fast-tracked planning system, and grey belt land releases. 

The Act intends to use CPO powers to unlock sites at lower values, through cheaper land acquisition costs, and by way of the removal of hope value. We believe proposals to remove hope value are inequitable for private landowners whose land does not necessarily have planning consent, but who may forego development value in the future following a CPO.

This is expected to increase valuation disputes and legal challenges over compensation, which may slow the CPO process. Removing hope value may paradoxically cause landowners to withhold land, reducing the land available for development.

Even though the intention of the Act is to speed up residential development, from making a decision to use CPO powers, to complying with Government guidance, to using powers as a last resort, it is necessary to allow for 12 to 24 months to negotiate and buy property through private treaty. The build time for the scheme may also take years to complete.

CPOs remain complex legal mechanisms. Residential developers and local authorities will continue to use these powers as a last resort when land assembly is not successful through negotiation.