Are you affected by a Compulsory Purchase Order or do you need assistance in delivering a scheme in London and the South East?
Our surveyors have experience acting for both acquiring authorities and residential claimants, providing comprehensive advice regarding site assembly and compensation entitlements.
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Valuation & Negotiation
The principles of compensation are set out by the Compensation Code, which is made up of statute, case law and established practice. The underlying principle is that of “equivalence”, i.e. a claimant should be placed in no better or worse position (financially) after the acquisition than they were prior to the acquisition. The statutory provisions relating to compulsory purchase compensation are set out in the Land Compensation Act 1961, with the six rules of compensation found within Section 5 of the Act.
Rule 2 entitles a claimant to the Market Value of the land/property being acquired, with no allowance made for the fact that the property is being compulsorily acquired. This means we must envisage a hypothetical sale of the property in the open market by a willing seller, disregarding the positive or negative effects of the CPO.
Rule 6, also known as “Disturbance” compensation represents the costs and losses that the property occupier incurs as a result of being disturbed from their occupation of the property. A claimant has a duty to mitigate his/her losses as much as possible. Disturbance can include removal costs, acquisition fees (including SDLT) and survey fees.
This compensation is determined by law and reflects the imposition of losing your property due to the CPO. For residential owner occupiers, this is set at 10% of the Market Value. For example, if your home is valued at £250,000, the Home Loss Payment is £25,000. This is subject to a cap of £63,000, which is reviewed annually. For non-residential owners, the loss payment is 7.5% of Market Value.
The acquiring authority is usually responsible for paying the legal and surveyors which the claimant incurs in negotiating and reaching agreement on terms for the compulsory acquisition. A reasonable basis for calculating and charging fees will be agreed in advance of the claim proceeding.
The Compulsory Purchase Process
The majority of transactions on compulsory purchase terms are completed by agreement, with the acquiring authority seeking to avoid the use of its CPO powers. However, there are a number of stages leading up to confirmation of the CPO, which can take between 12 – 18 months.
Stage 1: Formulation
The acquiring authority decides what land is required for the scheme, with boundaries defined and information gathered on the various owners/occupiers.
Stage 2: Resolution
A decision to use CPO powers is made by the Council Executive or Executive Committee.
Stage 3: Referencing
The ownership and occupational interest are identified and recorded.
Stage 4: Making the CPO
The acquiring authority will prepare the Order. An accompanying statement will outline why the proposed scheme is in the public interest, delivering social, environmental and economic benefits. Notices will be served on the affected parties allowing objections to be made within a specified timeframe.
Stage 5: Public Enquiry
Any objections will be considered at a Public Local Enquiry, and the acquiring authority will give reasons for making the CPO. The Inquiry will consider the evidence from all parties before making a decision.
Stage 6: Post Inquiry
A report will be submitted to the Secretary of State (or Confirming Minister), with a recommendation regarding the proposed CPO. The Secretary of State will then confirm or reject the CPO, in some cases making modifications to the Order. Once confirmed, the acquiring authority has a period of 3 years in which to use its powers.
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