Hope value and its place in land value assessment

Hope value is the part of a land price that reflects the prospect of future planning permission rather than what the land can lawfully be used for today. A field with grazing value of a few thousand pounds a hectare that sits next to a settlement boundary and might be allocated in the next local plan review is worth more than a field in open countryside ten miles away, and the difference is hope value. For a landowner it is the number that makes a sale worth doing. For a viability assessment it is the number that gets stripped out.

That split is the thing to understand. The same parcel can carry hope value in a market transaction, have it disregarded in a planning viability appraisal, and have it partly or wholly removed in a compulsory purchase valuation depending on the statutory assumptions that apply. None of those positions is inconsistent, because each is answering a different question.

What hope value represents

Hope value is a market phenomenon, not a planning concept. It is the premium a purchaser will pay now for the chance of a consent later, discounted for the probability of getting it and the time it will take.

In practice valuers build it from three things: the value the land would have with permission, the probability of permission being granted, and the delay before it arrives. A site with an allocation and a resolution to grant carries most of its development value already. A site with a sympathetic local plan direction of travel and nothing more carries a fraction of it.

How the prospect of permission is priced

The arithmetic is simple and the inputs are arguable.

The honest difficulty is that the probability input is a judgement, and two competent valuers can reach materially different figures for the same field. Where a transaction depends on it, the usual answer is an option or promotion agreement that defers the valuation until the planning position is known rather than guessing at it now.

Relationship to benchmark land value in viability

This is where hope value is deliberately excluded. National viability guidance requires the benchmark land value in an appraisal to be based on existing use value plus a premium to the landowner, and it says that hope value should be disregarded.

The logic is circular otherwise. If land price could include the expectation of permission, and the viability appraisal then used that price as a fixed input, policy requirements such as affordable housing would be squeezed by the very expectation that policy compliance would be reduced. Guidance closes the loop by fixing the benchmark to existing use plus a premium instead.

So an applicant who paid a hope value price and then argues that the scheme cannot carry policy-compliant affordable housing is making an argument the guidance anticipates and rejects. Overpayment for land is not a reason to reduce planning obligations. A Viability Assessment has to start from existing use value plus a premium and justify that premium with comparable evidence, which is a different exercise from justifying what was actually paid.

What the premium can rest on

Comparable transactions, adjusted for policy compliance. Returns available on alternative uses of the same land. The reasonable expectations of the landowner given the existing use. What it cannot rest on is a price paid in a competitive bid process against other bidders who also assumed reduced obligations.

Hope value in compulsory purchase

Compensation for compulsory acquisition is based on market value under the Land Compensation Act 1961, and market value includes hope value. The statutory planning assumptions in the 1961 Act, including the certificate of appropriate alternative development procedure, determine what planning position the valuation may assume, and the no-scheme principle strips out any value created by the acquiring authority's own scheme.

The Levelling-up and Regeneration Act 2023 introduced a power allowing the Secretary of State to direct, for certain categories of scheme, that the usual planning assumptions be disregarded so that compensation excludes hope value where that is justified in the public interest. The categories relate to purposes such as affordable housing, education and health facilities. As at October 2026 the position should be checked against the current commencement regulations and any directions sought, because this is an area where practice is still developing.

For a landowner facing a compulsory purchase order, the two questions are therefore whether a direction applies and what planning assumption the valuation proceeds on. Both are worth early professional advice, because they can move the compensation figure by a multiple rather than a percentage.

Option and promotion agreements

Most hope value is realised through an agreement rather than an outright sale, which transfers the planning risk to a promoter or developer while leaving the landowner with a share of the uplift.

• An option gives the developer the right to buy at a price usually set as a percentage of market value with permission, less promotion costs.
• A promotion agreement puts the promoter in charge of securing permission and selling the land on the open market, with the proceeds split after costs.
• Overage or clawback attaches to a sale and pays the seller a further sum if a better consent is obtained within a stated period.

Each one prices hope value differently, and the differences are not trivial. Read the cost deduction clauses hardest: a promotion agreement with uncapped promotion costs can turn a generous headline percentage into a modest net receipt.

Why hope value is excluded from some assessments

Three regimes, three answers, and the reasons are worth separating.

1. Market transactions include hope value, because a buyer will pay for a prospect.
2. Planning viability disregards it, because allowing it would let land price dictate policy compliance.
3. Compulsory purchase compensation includes it subject to the statutory assumptions and the no-scheme principle, with a power now available to disregard it for certain public interest schemes.

A landowner who moves between these worlds without noticing the change in rules can make an expensive mistake. Where land has no reasonable beneficial use because of planning decisions, a different remedy applies altogether, and the note on purchase notices where land cannot be reasonably used covers that route.

Evidence of prospects

Where hope value has to be demonstrated, the evidence is planning evidence rather than valuation evidence.

Useful material includes the site's position in the adopted plan and in any emerging plan, the authority's housing land supply position, the outcome of any call for sites, pre-application correspondence, appeal decisions on comparable sites in the area, and any constraints that would need to be overcome. A Planning Statement assembling that material gives a valuer something to work from, and gives a landowner a realistic view rather than an optimistic one.

One caution. A promoter's assessment of planning prospects is not independent, and a landowner relying on it to set a price is relying on the other side's homework. Commission your own view of the planning position before signing an agreement that runs for ten years.

This is general guidance, not legal advice; check the position with your local planning authority or a qualified professional before relying on it. PlanScope provides AI-assisted draft reports for planning applications. Reports should be reviewed before submission. We do not guarantee planning approval.