We want what you’ve got – compulsory purchase in the era of austerity
15th December 2017
Compulsory purchase is an option of last resort of public bodies in the interests of the greater good and the owner should be properly compensated for their loss. New rules seek to iron out some anomalies in the system, but are also likely to reduce the amount of compensation payable.
The Compulsory Purchase Act 1965, the Acquisition of Land Act 1981 and the Land Compensation Act 1961 largely govern the appropriation of land by public bodies for the delivery of social, environmental and economic change through a Compulsory Purchase Order (‘CPO’). Disputes on compensation are referred to the Upper Tribunal (Lands Chamber).
In terms of the assessment of compensation, the fundamental proposition remains, being that the owner should be paid neither less nor more than their loss. It is the 1961 Act that provides the key provisions, being: the value is the open market value (save for some exceptions) allowing for planning permission considerations with no allowance being made for the fact that the acquisition is compulsory. There are a few other potential heads of loss: severance and/or injurious affection; home loss or other loss payments; and disturbance.
In October 2015, the DCLG published the nattily entitled,
‘Guidance on Compulsory purchase process and The Crichel Down Rules of the disposal of surplus land acquired by, or under the threat of, compulsion’.
On 22nd September 2017, changes to the underlying legislation was made by the Neighbourhood Planning Act 2017 and an update to the guidance was published with an updated model form for claiming compensation.
This article aims to highlight some of the key points of the changes; these apply only to CPOs made or authorised after 22nd September 2017.
Firstly, the changes seek to limit any increase to the compensation payable by reason of the underlying project. It provides for a disregard on the impact on value which the proposed project may give rise to; the ‘no-scheme’ principle; i.e. where a project involves considerable subsidies in relation to transport, compensation can be inflated where the value of the land increases by reason of the scheme in the first place. This has been brought about by the new ss.6A-E of the Land Compensation Act 1961; putting on a statutory footing Pointe Gourde Quarrying & Transport Co v Sub-Intendent of Crown Land  AC 565.
Secondly, by a new s.47 of the Land Compensation Act 1973, an adjustment is made to the treatment of different types of interests in land. Oddly, those with only a licence could, prior to the changes, have recovered the same or more than those with a leasehold interest on the basis that the land owner was expected to have tried to bring any tenancy to an end as soon as possible. (see Bishopsgate Space Management v London Underground  2 EGLR 175, LT). The new section provides matters that regard must be had to, including: the likelihood of the continuation or the renewal of the tenancy; and for business tenancies under the 1954 Act, the right of the tenant to apply for the grant of a new tenancy and the total period of occupation after any renewal.
Thirdly, the acquiring authority must serve a confirmation notice within 6 weeks of the CPO being confirmed; previously there had been no time limit.
Fourthly, the ability to claim additional compensation where subsequent planning permission (within 10 years of the acquisition) causes the land to increase has been removed. Instead the land owner will have to establish all the potential future value on the first claim.
Fifthly, a combined CPO is possible between different authorities.
Finally, there is a new model claim form. A failure to use the form and to do so properly and timeously may result in an adverse cost order by the Tribunal.
A few further changes are anticipated, namely a right to take temporary possession based on the same principles as a permanent acquisition.
 Amendments were also made under the Localism Act 2011
 See also the recent supreme court case JS Bloor (Wilmslow) Ltd v Homes & Communities Agency  2 P & CR 5.
Team: Daniel Dovar
Expertise: Real Property
, Contracts for the Sale of Land
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