Why land sales in 2025 could look drastically different due to Labour's reforms

The land sales market in 2025 is poised for significant changes as Labour’s planning and tax reforms take centre stage.

Labour's shifts in agricultural land taxation, pro-development policies towards granting planning permission and the rise of Grey Belt strategies could be set to create new opportunities and challenges for landowners and developers alike.

We spoke with Ian Barnett, National Land Director for land surveyors, Leaders Romans Group (LRG), who explained what he predicts 2025 could bring for the land sales market.

Agricultural landowners face further challenges

Changes to Agricultural Property Relief (APR) on Inheritance Tax, announced in October’s Budget, are predicted to reshape the agricultural land market.

Ian Barnett notes that the new tax implications will likely drive more family farms to sell their land. “From protestors to commentators, the consensus is clear: agricultural landowners may feel forced to sell to mitigate future tax burdens,” Barnett observes.

This shift could result in a surge of agricultural land entering the development market, potentially creating opportunities for developers at more competitive prices, while still intensifying debates around rural land use.

Ian Barnett

Ian Barnett, a dual-qualified Chartered Town Planner (MRTPI) and Chartered Surveyor (MRICS), is renowned for identifying development opportunities and offering landowners professional, insightful advice. His expertise combines in-depth planning knowledge, commercial acumen, and a broad network within the development industry.

A pro-development planning agenda

Labour’s planning reforms include policies designed to accelerate development in the latest updates to the National Planning Policy Framework.

According to Barnett, reinstating mandatory housing targets and increasing opportunities for Green Belt and brownfield development are critical measures.

“We expect to see significant policy moves, such as Green Belt/Grey Belt releases under specific circumstances and the introduction of ‘Brownfield Passports’ to streamline development on previously used land,” he explains.

Despite these initiatives, under-resourced planning departments remain a bottleneck. “While funding has been committed to hiring more planning officers, delays in planning consent are likely to persist in the short term,” Barnett warns.

He emphasises that issues such as flood risk, highways, and ecological assessments will still require thorough consideration, potentially driving up costs and prolonging timelines.

Compulsory purchase and land value capture

Labour’s controversial land value capture policy is another factor reshaping the market. The proposed law would empower local authorities to acquire land at a reduced price by removing “hope value” – the premium added by potential planning permission.

“This policy has understandably caused concern among landowners,” Barnett says. “While it aims to boost affordable housing supply, it risks discouraging landowners from bringing land to market, creating unintended consequences.”

He urges a balanced approach, stressing that stability in the planning system and taxation policy is essential to meet housing delivery targets.

The rise (and challenges) of the 'Grey Belt'

The concept of the 'Grey Belt' – areas of underutilised land between urban and rural zones – has gained traction as a potential solution to the housing crisis. However, Barnett points out significant limitations to its implementation.

“The requirement for 50% affordable housing on Grey Belt sites has raised concerns about the viability of certain schemes, particularly in areas with lower land values,” he notes. The policy, though promising, needs refinement to ensure it can meaningfully contribute to housing supply goals.

Barnett also highlights the necessity of a broader review of Green Belt land classifications to balance development with sustainability. “Declassifying and reclassifying land is vital to achieving the government’s ambitious target of 1.5 million homes,” he asserts.

A cautiously optimistic outlook

While challenges remain, Barnett sees reasons for optimism in 2025. Labour’s commitment to bold planning reforms and ambitious housing targets signals a pro-development stance that could energise the market.

“Delivering 1.5 million homes this Parliament is a monumental task, but the government’s willingness to tackle long-standing obstacles is encouraging,” he concludes. “Land sales are just one piece of the housing puzzle, but they are critical to unlocking the potential for much-needed residential development.”

As the year unfolds, stakeholders will closely watch how these policies take shape and whether they can overcome the hurdles that have historically slowed progress in the housing sector.