Vince Cable is to propose a state-backed agency to compulsorily purchase land for building and call for measures to allow construction on some green belt sites.

In a speech at the Royal Institute of British Architects in London on Tuesday, the Liberal Democrat leader will also propose a big expansion in rent-to-own, where some people in new developments could pay a market rent in exchange for a gradual stake in the property, thereby subsidising social rents.

The speech in response to the housing crisis comes as the government announced £1.67bn in funding for 23,000 affordable homes across England, including 15,000 for social rent. The funding is part of a previous commitment of up to £9bn for affordable housing.

The most eye-catching element of Cable’s speech, among sections released in advance to the Guardian, is a so-called British Housing Company, an arm’s length government agency assigned to acquiring land at low cost.



Using compulsory acquisition powers given by law, the organisation would aim to save money by purchasing land at a price that would not include a hike in value factored in to include possible planning permission.

“The aim would be to acquire sites at a price as low as 40% of land acquired in the open market without paying the ‘hope value’ which attaches to those sites currently earmarked as having development potential,” Cable is to say.



The idea is similar to a plan announced by the shadow housing minister, John Healey, in February. Labour’s proposal would create a new English Sovereign Land Trust with powers to buy sites at non-planning rates.

Cable is to say the powers would be given under amendments to the 1961 Land Compensation Act, the same as in the Labour proposal.

Under a combination of this idea and the proposals to boost rent-to-buy, the new homes would initially be provided on five-year rentals, which could be converted into purchases with a mortgage.

Cable is due to say: “In due course, the owners would sell into a pool, retaining any housing market inflation but not the discount to market value which would be recycled to provide affordable housing for the next generation of occupants.”

On the green belt, Cable is to admit that this is “an emotional issue”, but some areas could be considered for building.

“To improve housing supply, we must be flexible and pragmatic not ideological and dogmatic,” he is to say. “There are some parts of the green belt, for example, which have disused petrol stations or abandoned warehouses on them or places which – being immediately next to busy motorways – could hardly be called areas of beauty and tranquility.”

The Lib Dem plan would enable councils to “swap” planning for low-value green belt sites in exchange for protecting other green spaces such as playing fields.