Is Compulsory Purchase Fair?

A common question I’m asked or a frustration that clients feel is whether compulsory purchase orders (CPOs) are fair.  An important question and I understand why it’s asked.  It’s an emotive issue – the ‘little guy’ versus the ‘fat cats.’ 

My response?  They can be very unfair, plain and simple. 

I’ll explain why in some detail but also, I want to reassure you that all is not lost: a compulsory purchase surveyor, like me, is on your side and can help you fight your corner early to ensure it is as fair as possible.

What is a compulsory purchase order?

A compulsory purchase order (CPO) is when a property or properties are bought from the owner without consent.  That may sound archaic, but they are still enforced today by public bodies and housing developers thought the UK.  These bodies, known as the acquiring authorities, want your land and they’re allowed to buy it whether you like it or not.

Is that fair?  The government might be able to argue that they need the land for the ‘greater good’ or to have a positive impact on society or the country as a whole.  Some examples would be a new runway (Heathrow) or a new railway line (HS2).

Developers might need the land on which your property stands to build a new residential development with the support of the local council.  It might be local authority housing development or a development of luxury homes but either way, they want to buy your property without your consent.  They use a CPO.   

Reasons why CPOs are not fair

From my 17 odd years’ experience, this is why I think CPOs are not fair.

Budget and resources

The acquiring authorities want to obtain the land that they need for their development. They use their compulsory purchase powers and in doing so employ a huge team of people to advise them at every step of the way (lawyers, barristers, surveyors, planners) and a bottomless budget to make it happen. The fees spent by the developer and council on taking advice is never questioned.  You are much more limited in the advice you can take, especially in advance of the CPO. Straightaway, they’re at an advantage.  

This upper hand really comes into play if you (and your advisor) don’t agree to the price that the acquiring authority have offered you for your house, flat, farm or business.  You can go to tribunal to challenge the compensation offers but if you ‘lose’, you may have to pay the council and developers tribunal costs as well as your own.  More often than not, rather than risking tribunal and these potentially exorbitant extra costs, property owners reach a less than satisfactory settlement.

One way to avoid these costs is to make a reference to tribunal by using what’s known as the Simplified Procedure method thereby reducing your exposure to excessive fees.    

Better off or worse off?

There are different mechanisms of establishing the compensation you are owed depending on the type of property – residential, business, development land or agricultural land. 

The principle is, you shouldn’t be left worse off but the compensation code also says that you shouldn’t be better off after a CPO.  The key word is ‘equivalence’ – you should be compensated to match the value of your property / land/ business and any costs and losses incurred. 

That sounds fair, but is it always? 

Here’s an example of why it sometimes is not fair: fictional clients own an ex-local authority flat in London, zone 2.  They receive the value of their 1960s flat as part of a CPO.  But the proceeds aren’t sufficient to buy them an equivalent property in the same area. The majority of these types of flats have been demolished and newer stock on the market sells for much more than the compensation they are paid for their 60s flat. They have received the value of their property but it’s not enough to buy a new flat in the same area.  

As a result, they are not only forced out of their beloved home that perhaps they scraped and saved up to buy, but also out of the area they’ve known and lived in for years.  They have to move elsewhere, generally outside of London in order to be able to afford a comparable abode. This is a common scenario. Is it fair? Of course not.   

The same can be said for businesses.  A business is not just bricks and mortar and stock.  It does well because it’s a focal point of the community; it has regular clientele that it may have built up for over 20 years; it could be a destination for some; it means something to everyone in the area.  When a wider area is regenerated, the rents are often too high for these businesses to stay in the local area. Regularly smaller business cannot relocate, and they are forced to shut down, known as extinguishment – is this fair?

Pulling the strings

The acquiring authority is pulling all the strings when it comes to the timeline of the CPO.  In some cases, the process can go on for decades.  The really unfair part is that when a CPO has been issued, homeowners will find it very difficult, if not impossible to sell their property on the open market.   They are trapped. There are many CPO’s in London that have been proposed and ongoing but not fully actioned for over 10 years. These elongated timeframes can cause huge distress.  That, to me, is not fair. The whole process is supposed to take about eighteen months to two years and if it did it would be a lot fairer. I believe this is a reform that should take place.

It makes for grim reading, doesn’t it?  But there are steps that you can take so that you’re not on the back foot.

How to improve the CPO process for you and your family

First and foremost, involve an expert, a compulsory purchase surveyor, as soon as you can.  CPOs are complex: there’s legislation, case law and guidance to be navigated but I can come along with my metaphorical compass and help you on this journey. You should also ask for a legal undertaking on surveying fees as soon as a compulsory purchase is mentioned. The acquiring authority has a statutory obligation for compensating you for any legal and surveying advice relating to the CPO (except for objecting to the CPO), make sure you take advice early.  

Advice from me is tailored to each client and situation so there isn’t a set procedure to follow.  Here are some ways we can direct the process in your favour:

· Dealing with the council is important and when you do can influence your final compensation figure.  The timeline of a CPO provides several options of interacting with them and choosing the right one is critical to success.

· Objecting to the CPO.  There are two recent cases where objections have been successful and stopped the CPO. I advised ten business owners and residents how to object to a CPO at Vicarage Field CPO in Barking & Dagenham which was subsequently denied.  So, all is not lost and it’s worth a shot.

· Get your house in order and no, I don’t mean tidy up!  If you have an investment property with numerous tenants on different leases, good advice could help you organise these interests.  Different compensation applies to investment value, existing use value and development value. It is important that you understand the implications of each before the CPO happens.

· If your business is being acquired, then I can provide advice record keeping in advance of the CPO to ensure you to receive the maximum claim possible. 

· If possible, serve a Blight Notice on the acquiring authority. This puts you in control of the timeline. 

· Take the initiative and make a reference to tribunal using the more cost-effective written representations route.

As well as all that, keep records from the outset of the CPO being issued.  Receipts, emails, invoices must all be retained to prove costs incurred, both tangible and intangible.  Start keeping records from the moment you’re made aware of the CPO and then you’ll carry on as a habit throughout the lifetime of the process (which, as we’ve discussed, can take some time).

When a CPO is issued, often people feel as though they’re the little guy against the fat cats.  They might think that they don’t stand a chance of ‘winning’ the situation.

But a way to improve the odds and make the whole process seem fair, is to employ a compulsory purchase surveyor.  I am specifically and only on your side, and there to make sure that you get a fair deal for everything that you’ve gone through and your property’s worth.  My costs are covered by the acquiring authorities in your compensation payment.  

Get in touch with me if you are faced with a compulsory purchase order.

Remember, I’m on your side.