Compulsory purchase order CPO

1 Introduction
2 Process
3 Compensation
4 Reform
5 Related articles on Designing Buildings
6 External references

[edit] Introduction

Compulsory purchase powers enable acquiring authorities to purchase land to carry out a function which is considered to be in the public interest, for example, constructing new road or rail infrastructure. People who have their land acquired by compulsory purchase are generally entitled to compensation.

There are a number of sources of compulsory purchase orders but the two most commonly used are:

A compulsory purchase order based on a specific Act of Parliament.
An order under the Transport and Works Act 1992.

Whilst the purchase powers come from a number of sources, the actual compulsory purchase procedure is covered by the Acquisition of Land Act 1981 (as amended). On 26 October 2004 the first compulsory purchase guidance was published.

The acquiring authorities are generally; Local Authorities, the Highways England, Government departments, Regional Development Agencies, Urban Development Corporations and utility companies.

Note that as part of their manifesto for governement Labour committed to going further than the Levelling-up and Regeneration Act 2023 (“LURA”) had gone in terms of reforming the compulsory purchasing processs. These changes would be proposed in order to help achieve its target of delivering 1.5 million new homes in its first Parliament including reforming compulsory purchase compensation rules to improve land assembly, speed up site delivery and deliver housing, infrastructure, amenity, and transport benefits in the public interest.

On 19 December 2024 the labour party, now in government opened a consultation on Compulsory Purchase Process and Compensation Reforms which includes the possiblilty of removing hope value when calculating compensation for compulsory purchases, the consultation is due to close in February of 2025.

[edit] Process

The acquiring authority may first make direct contact with owners of land to enter into negotiations to acquire the land by agreement. Similarly, if a property owner wishes to sell their land they should contact the acquiring authority. However, if the acquiring authority is unable to reach agreement to purchase, or if it is impractical to reach agreement, then they may proceed to compulsory purchase.

A formal resolution by the acquiring authority to use compulsory purchase powers will define the land to be acquired and set out the purpose for which it is required. The acquiring authority will then proceed to identify ownership of the land and any other rights over the land, such as occupancy rights. The acquiring authority can serve a legal requisition to obtain this information.

The compulsory purchase order itself will including details of the purchase, the Act under which the power is given, a schedule of the land to be acquired and the people with rights over it, and a map of the land. It will normally be accompanied by a statement of the reasons for the order.

The acquiring authority must publish a notice giving details of the order for two weeks before submitting the compulsory purchase order to the appropriate minister for confirmation. They must also serve notice on every person that may have rights over the land or people whose land may be reduced in value as a result of the order.

The minister will consider the order, along with any objections and may decide that a public enquiry is necessary, or alternatively objections may be considered through a written representations procedure. A report is prepared by an inspector appointed by the minister and the minister will then decide to confirm, modify or reject the order.

If the order is confirmed, the land may be acquired, either by:

Agreement.
Following a notice to treat / notice of entry.
By a general vesting declaration (GVD).
By procedures for acquiring short tenancies.
In response to a blight notice.

The compulsory purchase order must be used within three years of being confirmed.

[edit] Compensation

Compensation is based on the principle of ‘equivalence’. That is, compensated parties should be no better or worse off after the purchase. Compensated parties have a duty to mitigate their losses, and business occupiers have a duty to minimise any potential loss of profits.

The assessment of compensation is covered by the Land Compensation Act 1961 and Section 5 provides five rules for assessing compensation:

No allowance shall be made on account of the acquisition being compulsory.
The value of the land shall, subject as hereinafter provided, be taken to be the amount which the land if sold on the open market by a willing seller might be expected to realise.
The special suitability or adaptability of the land for any purpose shall not be taken into account if that purpose is a purpose to which it could be applied only in pursuance of statutory powers, or for which there is no market apart from…the requirements of any authority possessing compulsory powers.
Where the value of the land is increased by reason of the use thereof or of any premises thereon in a manner which could be restrained by any court, or is contrary to law, or is detrimental to the health of the occupants of the premises or to the public health, the amount of that increase shall not be taken into account.
Where land is, and but for the compulsory acquisition would continue to be, devoted to a purpose of such a nature that there is no general demand or market for land for that purpose, the compensation may, if the Lands Tribunal is satisfied that reinstatement in some other place is bona fide intended, be assessed on the basis of the reasonable cost of equivalent reinstatement.
The provisions of rule (2) shall not affect the assessment of compensation for disturbance or any other matter not directly based on the value of land.

[edit] Reform

On 19 December 2024 and consultation was opened on Compulsory Purchase Process and Compensation Reforms including the possiblilty of removing hope value, closes in February 2025. The government’s ‘Plan for Change’ outlined the commitment to deliver 1.5 million new homes during its Parliament to address the housing crisis along with the vital infrastructure needed to grow the economy and support public services. It describes the reasoning for its proposal as being to 'ensure the process for compulsorily acquiring land with a direction to remove the payment of hope value for schemes in the public interest is more efficient. Also, that the balance of the assessment of compensation awarded to landowners is fair and quicker decisions on CPOs can be made allowing schemes in the public interest to progress. In addition, the administrative costs of undertaking the CPO process can be reduced." Section 1 of the consultation sets out the proposed reforms to the LURA power allowing directions to be sought to remove hope value from the assessment of compensation. Section 2 outlines proposals to make technical changes to improve the general CPO process and the rules for the assessment of compensation.

On 3 October 2024 updated guidance on the compulsory purchase process and model compensation claim form. Current guidance on the Crichel Down Rules and Purchase notices published separately, new guidance on power to remove hope value.

On 13 June 2024 Labour published its manifesto for the 2024 General Election committed to further reforming compulsory purchase compensation rules to improve land assembly, speed up site delivery and deliver housing, infrastructure, amenity, and transport benefits in the public interest. It promised to take steps to ensure that for specific types of development schemes, landowners are awarded fair compensation rather than what it referred to as 'inflated prices based on the prospect of planning permission.'

On 21 March 2024 compulsory purchase orders and register of decisions added to the government guidance.

On 26 October 2023 the Levelling-up and Regeneration Act 2023 (“LURA”) introduced reforms to the compulsory purchase order (“CPO”) process to make it easier to use. It also made changes to the compensation regime to ensure the balance of compensation and costs associated with the prospects of planning permission for appropriate alternative development is correct and more akin to normal market conditions. LURA also introduced a power to allow for the removal of value associated with the prospect of planning permission (i.e. “hope value”) from the assessment of compensation in certain circumstances. The power allows acquiring authorities such as local authorities (including Mayoral combined authorities), Homes England, NHS Bodies, development corporations, to include in CPOs directions to remove the payment of hope value from compensation providing it is in the public interest.

On 17 December 2021 the compulsory purchase and compensation guides were updated.

On 22 September 2017, Housing and planning minister Alok Sharma announced a further package of measures to simplify and speed up the compulsory purchase process. (Ref. https://www.gov.uk/government/publications/compulsory-purchase-process-and-the-crichel-down-rules-guidance)

On 7 September 2017, the the Neighbourhood Planning Bill 2016-17 was introduced into Parliament, with provisions to simplify compulsory purchase, making it clearer, fairer and faster. The government suggested that the process was unnecessarily uncertain and complex, based on a patchwork of statute and case law. See Neighbourhood Planning Bill 2016-17 for more information.

In June 2015, The British Property Federation suggested the government should consider making it easier for property owners to serve blight notices when they are affected by Compulsory Purchase Order proceedings. (Ref BPF.)

In the 2014 Autumn Statement, the chancellor suggested; '...The government believes the Compulsory Purchase Regime would benefit from streamlining and updating. Proposals will be published for consultation at Budget to make processes clearer, faster and fairer, with the aim of bringing forward more brownfield land for development.'