What is Compulsory Purchase?
What Is Compulsory Purchase
Compulsory Purchase is a land assembly tool used by public bodies including local authorities, infrastructure providers and other statutory undertakers throughout the United Kingdom. When we say a land assembly tool this could mean land, houses, shops, industrial property, or woodland. Any property (apart from one or two exceptions e.g. The Kings property) can be acquired via compulsory purchase. It is common for funding to be provided by private sector developers, in this instance the public body will use its statutory powers of compulsory purchase to assemble a site for development, but the money behind the development itself and the cost of going through the compulsory purchase process is paid for by the developer.
Examples of the types of schemes where compulsory purchase is used include new railway line e.g. HS2, new runways e.g. the Third Runway at Heathrow and many road schemes. Smaller schemes such as town centre renewal projects and council estate regeneration projects which are common throughout London. Water companies and electricity companies can also use compulsory purchase should they need to upgrade their infrastructure.
Compulsory Purchase is used where it is deemed it would otherwise not be possible to assemble land by agreement. To acquire land by this method, the party undertaking the development, known as the acquiring authority, will need to apply to the relevant Secretary of State for a Compulsory Purchase Order.
What makes compulsory purchase different to other land assembly approaches taken in the normal property development market (the real world), is that property can be taken from the property owner without their consent. In some instances, the property can be acquired without any money being exchanged and regularly where the value of the property has not been agreed. The fact that the affected party is being forced to sell their property, the whole process must accord with a myriad of Acts of Parliament and case law commonly referred to as the compulsory purchase code.
For the homeowner or business owner affected by compulsory purchase it can be a very stressful time. It can also be an incredibly drawn-out process depending on how the timeline is managed by the acquiring authority and also depending on the nature of negotiations in advance of the compulsory purchase and after the formal process has begun. Although we say typical – there is no way of stating exactly what the timeline will be. We act for clients in Southwark who were told over twenty years ago that their home would be acquired in the future by compulsory purchase. They are still waiting. The stages include discussions/negotiations in advance of the CPO. The CPO gets made and there is an objection period. There will be a public inquiry then a period before the decision is made. There will then be the implementation period. We have written a separate blog on the compulsory purchase process which sets out the various stages involved including a typical timeline.
If your property is acquired, you are entitled to compensation. The most important element of compensation is the market value of the property but establishing this value is not always as straight forward as one would think. The value could be based on the existing use of the property e.g. an industrial Property. However, the market value could also be based on the development value of the property if it meets various tests. In many circumstances the development value would be higher than the existing use or current value of the Property. In addition to the value of land property owners are also entitled to statutory loss payments and disturbance. This again is a whole blog and some more insights as to the make of a compulsory purchase compensation claim can be found here.
Olden Property has been advising property owners affected by Compulsory Purchase for over fifteen years. We can advise residential and commercial property owners on negotiations in advance of a compulsory purchase or after the order has been made. With our expertise in compulsory purchase legislation and valuation we will ensure you achieve the full market value of your property in addition to all the statutory compensation you are entitled to. We can also advise on how you can object to a compulsory purchase order should you wish to stop the order or have your property removed. We can also act as an expert witness should the case be referred to Tribunal. Please get in touch if you are affected by compulsory purchase and require our expertise in what is a very complex area of surveying. Fees associated with dealing with a CPO are paid by the acquiring authority.
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