The Planning and Infrastructure Act 2025 ('The Act'), which received Royal Assent on 18 December 2025, introduces major reforms to the compulsory purchase process in England and Wales. The Act sets out that public authorities may acquire land without compensating owners for future development potential, known as ‘hope value’.
Hope value reform and the shift in compensation
The Act builds on earlier changes introduced through the Levelling‑up and Regeneration Act 2023, which granted public authorities the ability to seek directions to disregard ‘hope value’, the uplift in land value attributable to the prospect of future planning permission, when assessing compensation. Under the new Act, hope value can now be removed in a broader range of circumstances, particularly where land is required for affordable or social housing or other public‑interest purposes such as education or health facilities.
Government consultations confirm that these powers have been expanded to include compulsory purchase orders (CPOs) made on behalf of parish, town, or community councils under section 125 of the Local Government Act 1972, allowing smaller‑scale schemes to benefit from reduced acquisition costs.
This marks a significant departure from the historic application of the "principle of equivalence", under which landowners were compensated if the acquisition had not occurred, including for development potential in the open market. The expanded removal of hope value means compensation may now reflect existing use value only, resulting in markedly lower payouts.
Expanded powers for local authorities
The Act also modernises procedural aspects of compulsory purchase. Key reforms include:
- Delegated decision making: Decisions on confirming CPOs that include a direction removing hope value can now be delegated to inspectors or, where unopposed, to the acquiring authority itself.
- Electronic service of notices: Authorities may now serve statutory notices electronically, helping to reduce administrative burdens and streamline communication.
- Earlier possession of land: Authorities are empowered to take possession earlier under the general vesting declarations procedure, accelerating delivery of public interest schemes.
These changes sit alongside transitional regulations introduced in December 2025, which clarify the applicability of new procedural rules and ensure that ongoing compulsory purchase processes can continue without legal disruption.
Implications for landowners
The reforms represent a substantial recalibration of compensation rights. With hope value increasingly disapplied, landowners face a greater likelihood of receiving compensation aligned solely to the site’s current permitted use. This shift may materially reduce the value realised where land holds medium or long-term development prospects.
Landowners confronted with a CPO will need to engage early and strategically to understand how the new statutory regime affects valuation, negotiation, and potential challenge.
Implications for investors and developers
For investors and developers, the Act presents both opportunities and risks. Reduced land acquisition costs and faster CPO procedures may strengthen the viability of regeneration and infrastructure projects. However, the expanding power of public authorities to override development potential for compensation purposes introduces uncertainty for long-term land based investments. Projects positioned within or adjacent to areas designated for public interest schemes may become more susceptible to compulsory acquisition on less favourable terms.
Conclusion
The Planning and Infrastructure Act 2025 marks a decisive evolution in compulsory purchase law. Landowners and investors should reassess their exposure under the Act, to manage the risks introduced by this new landscape.
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