What landowners should know

Major shifts in housebuilding and planning policy are coming into play with the new Government’s agenda. If you own land, this could be a pivotal moment for you. Understanding the implications of these changes is crucial for making informed decisions about the future of your property.

Government planning and housing policy: What’s new?

The Government is expected to introduce updates to the National Planning Policy Framework (NPPF) later this year. These changes aim to simplify and expedite the planning process, which could make it easier and quicker to get approvals for land development. Local Planning Authorities (LPAs) will also face new mandatory housing targets – both annually and over five-year periods.

For example, in Buckinghamshire, 47,000 new homes are currently in the pipeline, with projections likely to increase to 61,152 by 2035 or even 86,562 by 2045. LPAs are now required to develop new local plans detailing how these housing targets will be met, which will include identifying sites for new homes and associated infrastructure like schools and healthcare facilities.

A key aspect of this will be the Government-mandated ‘call for sites,’ a process that identifies land most suitable for development.

What does this mean for landowners?

These changes present both opportunities and challenges for landowners. Many councils are already reviewing their local plans, making this the best time in a decade to consider promoting your land for development.

However, while some speculators might make grand promises, it’s important to understand that land development is a complex process, and not all deals are created equal. Land values are influenced by various factors, and returns for landowners have started to diminish due to rising obligations such as s106 payments, social housing quotas, and new regulations such as Biodiversity Net Gain (BNG) and carbon credits.

In fact, land values for owners are now around 5%-7% lower than they were just a few years ago. The inclusion of affordable housing – now accounting for 35%-40% of new housing developments – along with the rising fees that developers pay to councils, impacts the bottom line for landowners.

However, the demand for ‘environmental’ land for BNG and carbon offsetting is just emerging and, for many landowners, locking up their land for 32 years (a requirement of the BNG management plan) is preferable to a sale. It could also pay very well in terms of a lump sum payment, annual income and also land improvement.

The risk of compulsory purchase and increased taxation

There’s also a risk of compulsory purchase if the Government deems it necessary to meet its housing goals, particularly if it decides to plan new towns – similar to the creation of Milton Keynes in 1967.

Landowners could find themselves in a situation where their land is purchased by the Government whether they like it or not. Could Winslow or Steeple Claydon be designated as New Towns?

In addition, higher taxes are likely on the horizon, particularly Capital Gains Tax and Inheritance Tax. Tax planning is vital, especially with potential changes to Retirement Relief that may also come into play. Being proactive about your tax situation now could save significant costs later.

Timing is key

While there are clear risks, the current environment also presents opportunities, especially if your land has development potential. By understanding the changes in policy and knowing what to expect from the process, you can make better-informed decisions.

If your land is in a council area that is slow to develop a local plan, it’s worth noting that the Government may intervene and assign planning experts to take control of the process. This could bypass the local council altogether, giving the Government authority over planning permissions. It’s crucial that landowners remain vigilant and seek professional advice to navigate these new policies effectively.

Protecting yourself from poor contracts

Another concern is the rising number of landowners signing contracts that don’t deliver on promises or, worse, leave them liable for significant fees. It’s essential to avoid these pitfalls by working with reputable professionals who have a proven track record in the industry. An experienced land agent can guide you through the intricacies of development, including BNG, s106 agreements, tariffs and equalisation measures.

Conclusion

The changes coming will create both challenges and opportunities for landowners. While the planning process may become quicker and more streamlined, the financial landscape could become more complex with potential reductions in land values and increased tax burdens. Navigating these changes will require careful planning and professional advice.

Now is the time to assess your options and make sure you’re informed about how these changes could affect your land. Whether it’s preparing for a call for sites, understanding the potential for compulsory purchase, or managing tax obligations, having the right strategy in place is crucial.

If you would like further information on how these changes could impact your land, consult a qualified land agent who can offer expert advice.