The Planning Bill – Affordable Housing and Land Compensation

On the 27th February 2019, Labour MP Helen Hayes introduced a new Planning Bill for affordable housing and land compensation to the House of Commons.


To restore community need at the heart of the planning system and increase the speed and quantum of affordable housing delivery. Hayes explained that it was time to meet the needs of local communities and safeguard their interests for future generations.

The post-war planning system…

The post-war planning system was a framework for managing change and making sure that new development met the needs of local communities. However, the system which had been reviewed and modified in recent years would often fail to deliver against either the promises it made or the real and pressing needs of local communities.

It is now time for a major reform…

Hayes explained that planning plays a critical role in the delivery of affordable housing but there are some major problems at present which limit the effectiveness of their planning system and work in favour of landowners against the interests of the communities.

The MP said, “Our planning system is in need of major reform. The Government’s definition of affordable housing includes homes to buy at up to £450,000 and homes to rent at up to 80% of market rent. I and my party support the delivery of affordable entry-level homes to buy, and although I believe that there are ways to deliver these homes that are more effective and give better value for money than the Help to Buy scheme, my Bill does not cover homes for sale; it addresses the definition of affordable homes to rent.”

Hayes revealed that over the past 10 years, the number of social homes built each year had fallen from around 30,000 to 6,400. At the same time, the number of “affordable homes” at up to 80% of market rent rose to 47,000.

Hayes proposed two reforms:

  1. To define affordable housing in relation to household incomes. The Bill re-established the link between the definition of affordable and income, replacing the current definition of up to 80% of the market price with a definition of “no more than 35% of net household income for lowest quartile income groups in each local authority area.”
  2. Amend the law relating to land valuation and compensation. Even though the reforms introduced last year, which were welcomed, landowners had the right to the future value of development rights or planning permission, which was granted by and in the gift of the planning authority, dramatically inflating the cost of land, and inflated land prices made it much more difficult for councils to buy land in order to deliver social housing.

The proposed Bill would make 3 changes to the current planning law:

  1. Amend section 19 of the Planning and Compulsory Purchase Act 2004, as amended, and add to it a statutory definition of an affordable home for the purpose of all planning decisions.
  2. Make further changes to sections 14 to 16 of the Land Compensation Act 1961, as amended.
  3. Introduce a new statutory definition of the key factors used for viability testing in relation to planning decisions.

The Bill is supported by Shelter and the Town and Country Planning Association, to reform the planning system to deliver fair outcomes and accelerate the delivery of genuinely affordable social housing.

Planning law for local authorities…

There will be a new requirement in planning law for local authorities who will have to include a policy in their local plans to capture betterment values and establish a legal duty to capture land value. This would be done for the benefit of communities and creating a strong justification for councils to argue for the resources they need to engage in viability discussions on equal terms with applicants.

Viability testing for planning decisions will include:

  • Placing explicit limitations on the expectations of developer profit
  • Land values for compulsory purchase

This will provide greater certainty and transparency for both landowners and communities. The current viability rules were developed to encourage and stimulate building in a recession but it had evolved into a ‘quasi-scientific’ basis for negotiations between developers and councils.

The Second Reading of the Bill is scheduled for the 22nd March 2019, we will report back with an update.

Relevant information:

**Read the official Bill presented by Helen Hayes on the government website here.

**Listen to Helen Hayes in the Houses of Parliament introducing the new Bill here.

Helen Hayes

Helen Hayes is the Labour MP for Dulwich and West Norwood. She is a chartered town planner and member of the RTPI.

**Find out more here about Helen Hayes from the ‘TheyWorkForYou’ website.

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