Hope value, compulsory purchase and the 2023 Act changes

Hope value compensation reform is the part of the Levelling-up and Regeneration Act 2023 that matters most to anyone holding land on the edge of a settlement. The Act allows compulsory purchase compensation, in defined circumstances, to be assessed without the element of market value that reflects the prospect of future planning permission. For a farmer whose field is worth agricultural value with a development premium attached, that difference is the whole negotiation.

This article describes the position as at 24 September 2026. Compulsory purchase compensation is a technical field that has seen several rounds of amendment, and further extension of these powers has been under discussion, so verify the current text on legislation.gov.uk and take professional advice before acting on any of it.

What hope value is

Compensation for compulsory acquisition starts from the market value of the land: what a willing seller would obtain from a willing buyer in the open market. Market value includes what a purchaser would pay for the chance that the land might one day receive planning permission, even where no permission exists.

That premium is hope value. On a field adjoining a village boundary with a reasonable prospect of allocation in a future local plan, it can be many times agricultural value. On land with no realistic prospect at all, it is close to nothing.

The valuation is carried out in the no-scheme world. The scheme underlying the acquisition is disregarded, so the increase in value created by the road or the regeneration project that is taking the land does not count in the owner's favour, and neither does any decrease it caused. A certificate of appropriate alternative development from the local planning authority is the mechanism for establishing what permission the land could have expected absent the scheme, and it is worth applying for where the answer is arguable.

What the 2023 Act enables

The Act amended the compensation regime so that an acquiring authority may include in a compulsory purchase order a direction that the statutory assumptions about planning permission are not to apply. Where such a direction is made and confirmed, the land is valued without hope value, at something closer to its existing use value.

This is a targeted power rather than a general change. It does not apply to every compulsory purchase, it is not automatic, and it has to be sought expressly in the order and justified.

The policy argument behind it is land value capture: that where the public is paying for affordable housing, schools or health facilities, it should not also be paying a premium for development potential the scheme itself is creating. The counter-argument, made by landowners and their valuers, is that compensation ceases to be equivalent to the loss suffered.

Which schemes and which bodies

The power is limited by purpose. It is directed at acquisitions facilitating affordable or social housing, education and health facilities, and it is available to specified categories of acquiring authority rather than to anybody with compulsory purchase powers.

Both limbs matter to a landowner. If the scheme is a road, an energy project or a commercial regeneration, the direction route as enacted in 2023 is not available, and hope value falls to be assessed in the ordinary way. If it is a council assembling land for affordable housing, it may be.

The boundaries have been the subject of consultation and further legislative proposals since 2023, including extending the purposes and the bodies covered. Check what is in force at the date your order is made rather than relying on a summary written earlier, including this one.

How a direction is made and confirmed

The direction sits in the compulsory purchase order and travels with it through the confirmation process.

1. The acquiring authority makes the order and includes the direction, publishing its justification.
2. Notice is served on owners, lessees and occupiers, and the order is advertised.
3. Objections are made within the stated period, and an objection can be directed at the direction specifically as well as at the order.
4. The confirming authority considers the case, normally through written representations, a hearing or a public inquiry.
5. The confirming authority may confirm the order with the direction, confirm without it, modify it or refuse.

The public interest test is where the argument happens. An authority has to show that removing hope value is justified in the public interest for this scheme, and a landowner's case is usually that the scheme does not qualify, that the justification is inadequate, or that the land in question is not needed for the qualifying purpose.

Take the inquiry stage seriously. Once confirmed, the direction governs the valuation, and the Upper Tribunal is deciding value within the framework the order set rather than revisiting whether the direction should have been made.

What it does to negotiations

Most compulsory purchase is settled by agreement in the shadow of the order, and the direction changes the shadow.

An authority with the prospect of a confirmed direction has a stronger position, and offers made before the order is confirmed may sit between existing use value and full market value. An authority without that prospect is negotiating against a valuation that includes the development premium.

Landowners in promotion or option agreements need to read them again in this light. Those agreements are usually written around a planning promotion and a sale at market value, and they may not deal well with an acquisition at a compensation figure stripped of hope value. The interaction between the agreement, the compensation and the promoter's fee is a question for your own advisers.

Other routes to capturing land value have been introduced alongside this one, including the pilot scheme covered in community land auctions and how the pilot works.

Evidence a landowner should keep

• The planning history of the land and of comparable land nearby, including allocations, refusals and appeal decisions.
• Any representations made to the local plan, with the council's responses and the inspector's comments.
• Option and promotion agreements, and the marketing evidence behind them.
• Correspondence with the authority about the scheme, from the earliest approach.
• Records of use, income and investment, which support disturbance and loss payment claims separately from land value.
• Any certificate of appropriate alternative development applied for or granted.

Compensation has heads beyond land value: severance and injurious affection where part of a holding is taken, disturbance, and statutory loss payments. Those are unaffected by a hope value direction, and they are frequently under-claimed. The statutory caps on loss payments are revised, so check the current figures rather than a number from an older guide.

Whether the land has development prospects at all is itself a planning question, and terms such as grey belt and how it applies or the weight carried by a neighbourhood plan may decide whether there is any hope value to argue about.

Checking the position before you act

Read the order and the statement of reasons, not the covering letter. Identify the purpose relied on, whether a direction is included, and which statutory provision it is made under. Then check that provision on legislation.gov.uk in its current form, because amendments and commencement orders move faster than commentary.

Instruct a valuer and a solicitor who do compulsory purchase work regularly, and do it when the first approach arrives rather than after the order is made. Reasonable professional fees incurred in settling compensation are themselves recoverable as part of the claim.

Changes to these powers are tracked on the planning law updates timeline, and where a scheme's viability or land value is in issue for a planning application, PlanScope can draft the supporting documents, including a Viability Assessment, in minutes with the inputs flagged for your surveyor. That document needs review by a suitably qualified professional before it is used. PlanScope provides AI-assisted draft reports for planning applications. Reports should be reviewed before submission. We do not guarantee planning approval.

This is general guidance, not legal advice; check the position with your local planning authority or a qualified professional before relying on it.