Real Estate Litigation

Compulsory Purchase

Affected by a compulsory purchase order? Having trouble agreeing the level of compensation with the Local Authority? In need of guidance through the minefield that is compulsory purchase? Then read on.

If you find yourself subject to a CPO by an acquiring authority then you are generally entitled to compensation. We will guide you through the process and assist in maximising your compensation.

Firstly, if you are aware that your property may be subject to a CPO, you can enter into negotiations with the authority for them to acquire the property by agreement. If no agreement is reached, the compulsory purchase procedure will be used by the authority.

As soon as the process starts it is advisable to keep a record of all costs associated with the process as you may be able to recover them as compensation.

Once the acquiring authority has formulated the need for the CPO they will embark on an information gathering exercise to establish who had proprietary interests. Once this exercise is complete, the authority will be ready to make the CPO. The authority will have to publish press notices and serve notices on the individuals affected by the order.

At this stage, owners have the option to make objections to the making of the CPO. If objections are made and not withdrawn the minister will arrange either a public hearing or for written representations to be considered.

Once the CPO is confirmed the authority will go about purchasing the land in question by the following main methods

1. Agreement
2. Notice to Treat
3. General vesting declaration

No matter which method is used, the calculation of the compensation remains the same.

The authority will seek to reach an agreement. If no agreement is reached it can either serve a notice to treat or obtain a GVD

Notice to treat

This is a document served by the authority stating its intention to negotiate for possession of the property and to pay compensation. The notice asks for claim in respect of the land to be submitted within a specified period, usually 21 days and on the claim form provided.

If you do not submit a claim the authority may refer the question of compensation to the Lands Tribunal or withdraw the notice and abandon the purchase. This is very unlikely.

Following receipt of such a notice do not take any steps in relation to the property with a view to increasing its value as these are disregarded in calculating the compensation

After a notice to treat is served the authority can serve a notice of entry to obtain possession specifying a date for entry. At this point the authority will not have acquired title but can undertake activities in relation to its acquisition purpose. Once compensation is agreed or determined by the Lands Tribunal, title will pass.

General Vesting Declaration

This gives the authority the right to enter and take possession of the property and vests the title in the authority. Notice will first be given and not less than 2 months later the GVD can be executed giving a date no less than 28 days later when the land will vest in the authority. This date becomes the date for the assessment of the compensation.

Compensation

Generally the position is that you should be in the same position after the CPO as before.

Depending on your circumstances there are a number of heads of claim for compensation.

Value of the Land taken

The value of the land is based on the open market value of the land at the valuation date as between a willing buyer and willing seller disregarding the effects of the scheme for which the CPO was used.

Importantly, the value of the land can include a development value or ransom value that existed at the valuation date. This is an important consideration when seeking to agree compensation with the authority or through the land tribunal.

Severance and injurious injury

In some circumstances the authority may only seek to acquire part of the land. There are two possible effects on compensation:

  • You may seek to have the authority acquire all of the land or claim compensation for the reduction in the value of the retained land as a result to the acquisition of part.
  • Alternatively the proposed scheme may affect the value of the land by some loss of amenity or because the land is less desirable.

Disturbance

Generally restricted to occupiers, this is the total cost of moving out of the property and moving into another property such as removal costs, conveyancing fees, surveyors costs, stamp duty and land registry fees.

Home loss payment 

To compensate for the stress and inconvenience of moving up to 10% of the market value of the property.

If the level of compensation cannot be agreed then an application can be made for a determination to the Upper Tribunal Lands Chamber (formerly the Lands Tribunal).

These claims are dealt with by the chamber in a procedure that is similar to that of the County and High Court system. The parties will have to file Statements of Case and comply with directions that the tribunal orders. Such directions are likely to include the exchange of documents, witness statements and expert evidence. The latter is of particular importance and needs to include expert valuation evidence. It is particularly important to obtain the valuation impact of special features of your land that will have a positive influence on its value. This is where we can provide invaluable advice to help maximise your position.

For any enquiries or more information, please send an email to david.edwards@orj.co.uk or call 01785 223440.

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