The dangers of hibernation by landowners. The ability of shrewd councils to play the market, and win.
I write with the advantage of long market experience. At my age, 80+ I have seen many times how actors in the property market react to uncertainty. How they react to perceptions of unfair treatment. These reactions are a sensitive barometer. This barometer matters. It carries weight at moments of decision. It defines market sentiment. They behave as we all do what we do faced with challenges. We stop. We retreat. And we make no decisions .Whether as individuals owning land, or landed estates like the Crown Estate whose ownership persists over generations we retreat into our shells. After reflection, and if we think our legitimate rights are being abused, we then take specialist advice. Past evidence shows these steps can be summed up in a word. Landowners faced with prospect of, in their opinion, sequestration of their land on unfair terms, go into hibernation. And they will stay in hibernation until there is a policy U-turn. Post WW2 development experience makes clear unfair policies are usually reversed, sooner or later. Pressure to co-operate under threat of a CPO will be challenged at every step along the pathway. This confrontational dialogue is bad. It is not the way to proceed. When the ruling administration understands these consequences despite new legislative powers being in place, progress towards the government’s objectives will be far slower than expected. Nil co-operation from land owners is an effective policy. Usually something changes.. Either the policy or the administration changes. Sadly the outcome for potential home owners is another decade of policy stasis.
On the other hand it is a ridiculous, inefficient waste of tax payers money to pay hope value., often in popular areas, at lottery levels. Hope value is created by the community, not by the landowner and should be retained by the local community. . But if the present open market value of the land includes sky high hope value, to avoid accusations of compulsory sequestration it must be laid in full. The real issue is therefore how does the local council buy the land before the existing use value in the open market starts to grow, ie. before hope value takes root? Timing of purchase is crucial.
To demonstrate their land buying policy is rooted in equity, not brute force, as the buyer the local council must faithfully follow the market . Hope value can be avoided or extinguished by exploiting time and uncertainty. Both are highly effective ingredients. Both drive land prices up or down as market sentiment measures the chances of land use change and when, if ever, the change of use might come about. The good news for far sighted, shrewdly led local councils is that they have a lot of power to influence these outcomes. Therefore they can manipulate hope value. In my opinion this is the way forward, as landowners will be guaranteed that if compelled to sell their land they will always receive open market value, including hope value if it exists. This outcome removes any incentive for landowners to prevaricate or claim they are penalised. Market sentiment will shift as the expectation of a change in policy will end.
How can this favourable climate come about? Local councils or regional authorities must introduce spatial policies which look one or two generations ahead, enjoy cross party support locally and are built on genuine, long term cross border shared spatial policies. Put in different wording ‘local councils must take back control’.
Ian Campbell
21 July 2024
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