Last edited 07 Sep 2016

Compulsory purchase order CPO

Contents

[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:

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).

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

[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

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.'

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.

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.

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