What is a Compulsory Purchase Order?
A Compulsory Purchase Order (CPO) refers to the legal power that allows certain organisations or public authorities to acquire privately owned land or property for a public purpose. This is in place even if the owner is unwilling to sell. A CPO is typically used in real estate when the acquisition is deemed necessary for projects such as infrastructure development, urban regeneration, or public utility improvements.
How does a compulsory purchase order work?
Once a CPO has been issued, it grants the acquiring authority the legal right to purchase the property at a fair market value, as determined by an independent valuation process. The process involves notifying the property owner of the intention to acquire their land or property, along with details of the proposed project. The owner is then given the opportunity to object or negotiate the terms of the purchase.
If an agreement cannot be reached between the acquiring authority and the property owner, or if the owner refuses to sell, the acquiring authority can seek a confirmation from a higher authority, such as a government department. If confirmed, the CPO enables the acquiring authority to take possession of the property and transfer ownership.
Compulsory purchase orders are subject to specific laws and regulations that vary from country to country, and sometimes within different regions or states. These laws aim to ensure fair treatment of property owners and provide mechanisms for dispute resolution and compensation.
The power to issue a CPO is typically reserved for public bodies or authorities with specific statutory powers, such as local governments, transportation agencies, or urban development corporations. The purpose of a CPO is to facilitate projects that are deemed to be in the public interest, even if it involves overriding the rights of private property owners.
When a Compulsory Purchase Order is issued, it is important to note that the authority does not have the immediate power to force you to sell. Instead, they are making an application to a government department, seeking the necessary powers to potentially compel you to sell. The process that follows, including your actions and those of others involved, can extend over several months or even years before the authority can obtain these powers, and there is also a possibility that they may not secure them at all.
What can a Compulsory Purchase Order be used for?
There are a variety of reasons a CPO can be issued. Below, we take a closer look at some of these.
Infrastructure Development: CPOs are mostly used for large-scale infrastructure projects. This includes the construction or expansion of roads, highways, bridges, tunnels, railways, airports, seaports, or utility networks such as gas pipelines or power transmission lines. These projects are considered vital as they enhance transportation networks, improve connectivity, or ensure a reliable supply of essential utilities.
Urban Regeneration: CPOs are also used as a critical tool for urban renewal and regeneration initiatives. Mostly, this involves transforming and revitalising specific areas or neighbourhoods to enhance their economic, social, and environmental aspects. In this case, CPOs are often used to acquire dilapidated or underutilised properties for demolition and subsequent redevelopment projects, such as constructing new housing, commercial buildings, public spaces, parks, or cultural centres.
Public Facilities: CPOs can also be issued to acquire land or property for the development of public facilities and public amenities. This includes acquiring land for the construction of educational facilities, hospitals, healthcare centres, libraries or community centres. The goal is to provide essential public services and infrastructure to meet the needs of a local community.
Environmental Projects: CPOs are also used to acquire land for environmental conservation or restoration purposes. For example, protecting ecologically sensitive areas, establishing nature reserves or preserving wildlife habitats. CPOs can also be used to facilitate projects aimed at mitigating the impacts of global warming or climate change such as renewable energy installations.
Government Initiatives: CPOs can also be used to support various government initiatives. For example, they can be employed to facilitate the development of affordable housing projects in order to address housing shortages. They can also be used for public safety improvements, such as acquiring land for emergency services infrastructure etc.
It is important to note that in each of the above mentioned cases, the decision to issue a CPO rests with the relevant public authority or organisation. The process usually involves notifying affected property owners, engaging in consultations, conducting independent valuations to determine fair compensation, and providing opportunities for objections and negotiations. The aim is to balance the public interest in carrying out necessary projects with ensuring fair treatment and appropriate compensation for property owners affected by the CPO.
What are the steps to making a Compulsory Purchase Order?
Below we take a brief look at the steps steps to making a Compulsory Purchase Order (CPO):
Identification of the Need: The acquiring authority identifies a need for acquiring land or property for a specific purpose, such as infrastructure development or urban regeneration (as stated above).
Preliminary Assessment: The acquiring authority conducts a preliminary assessment to determine the feasibility and necessity of the proposed CPO. This includes evaluating alternative options, conducting surveys, and assessing potential impacts.
Preparation of CPO Documentation: Once the decision is made to proceed with the CPO, the acquiring authority prepares the necessary documentation, including the CPO itself, a statement of reasons, and supporting evidence. This is done in accordance with the relevant legislation.
Requisition for Information: As part of the CPO preparation process, the acquiring authority may send a “Requisition for Information” form to the owners or occupiers of the affected properties. This form seeks relevant information regarding the land and its ownership.
Publication and Notification: The acquiring authority is required to publicise the proposed CPO to ensure affected parties are aware of it. This involves publishing a notice in local newspapers for two successive weeks, posting notices on or near the affected land, and sending individual notices to qualifying persons (owners, leaseholders, tenants, and occupants).
Objections and Public Inquiry: Interested parties have a designated period, usually at least 21 days, to submit objections to the CPO. If objections are received, a public inquiry may be held to assess and consider the objections, allowing affected parties to present their case.
Ministerial Confirmation: The CPO documentation, along with any objections and inquiry findings, is submitted to a government minister (the “confirming authority”) or an appointed inspector for review. The minister considers the objections and decides whether to confirm, modify, or reject the CPO.
Timetable and Confirmation: If no objections are raised or the minister is satisfied with the objections process, the CPO is confirmed.
It’s worth noting that the specific procedures and timelines can vary, and it’s essential to consult the relevant legislation and seek professional advice when dealing with a specific CPO process.
How much do you get for a compulsory purchase order
The compensation amount for a compulsory purchase order in the UK can vary significantly based on various factors, such as the location, size, condition, and market value of the property, as well as the purpose for which it is being acquired.
When a property is subject to a compulsory purchase order, the government or a local authority can acquire it for public use or development projects. In such cases, the property owner is entitled to compensation, which is typically based on the market value of the property and associated costs, such as disturbance and relocation expenses.
You also have the right to receive compensation for reasonable costs associated with hiring a specialised Chartered Surveyor who can assess the value, negotiate on your behalf, and provide guidance throughout the compulsory purchase process and if an agreement is reached, you are entitled to the services of a solicitor who will facilitate the transfer of ownership to the buyer.
It’s important to note that you have the right to claim disturbance compensation. This compensation is designed to cover specific costs incurred when purchasing an alternative property and to help recover expenses or losses related to your current home, such as carpets, curtains, disconnections, and reconnections. The entitlement to disturbance compensation varies depending on individual circumstances, so it is advisable to seek professional advice from the Chartered Surveyor who represents you.
What claimants need to know about compulsory purchase
If you are a claimant, here are some tips from the Gerald Eve professionals to help you reduce risks and maximise compensation during the compulsory purchase process:
Stay engaged: Take advantage of the minimum 21-day objection period after the Compulsory Purchase Order (CPO) is made. Use this opportunity to express your concerns and raise any issues, except for the financial settlement. Stay actively involved in the process.
Maintain an audit trail: Keep clear records of decision-making related to your claim. Retain invoices and documents for all costs incurred. This will enable you to compile and submit your claim promptly.
Obtain quotes: When relocating, obtain competitive quotes for any expenditures. This demonstrates value for money to the acquiring authority. Failing to seek competitive quotes may lead to arguments that you have not adequately mitigated your costs.
Be mindful of expenses: Consider the principle of equivalence when making expenditure decisions. Avoid unnecessary extravagant upgrades or improvements that go beyond what was present in your previous property. Costs of repairs needed in the new property may be accounted for, but disrepair may be considered reflected in the purchase price or rent.
Specialist adaptations: If specific adaptations are required in the new property to make it usable for you, these costs may be claimed as disturbance items. These adaptations should be necessary for your particular circumstances and not simply add value to the property.
Losses in the “shadow” of the scheme: Losses incurred as a result of the threat or prospect of compulsory purchase, once statutory notices are served, may be eligible for compensation.
Explore other financial payments: Depending on your situation, there may be additional financial payments available. Statutory loss payments, if you qualify, acknowledge hidden losses caused by upheaval and the impact of the compulsory purchase process.
Request advance payment: Consider requesting an advance payment of compensation as a key tool to secure funds upfront. The acquiring authority is obligated to pay 90% of its assessment of the compensation entitlement either on the possession date or within two months of the request, assuming no additional supporting information is required.
Time limits: Remember that you have up to six years after possession or vesting of the land to refer your claim to the Upper Tribunal (Lands Chamber) for determination. It’s important to be aware of this timeframe if you have yet to submit a claim.
Seek professional assistance: Engaging a compulsory purchase surveyor, preferably before or after possession, can greatly assist you. Gerald Eve’s Compulsory Purchase and Compensation team, provides expert advice and representation.
Learn more in our article, “Cutting your losses: A Guide to Compulsory Purchase for Claimants,
here.
By following these tips and working with experienced professionals, you can navigate the compulsory purchase process effectively and pursue your entitlement to compensation for losses suffered due to the acquisition.
Working with Compulsory Purchase and Compensation Experts
Working with professionals, such as lawyers, property surveyors, and other experts, is crucial when dealing with Compulsory Purchase and Compensation (CPC) processes for several reasons:
Expertise and Knowledge: Professionals specialising in CPO and CPC processes have a deep understanding of the complex legal and regulatory frameworks governing compulsory purchase. They are familiar with the intricacies of the process, including relevant legislation, case law, and best practices. Their expertise ensures that your rights are protected, and you receive fair treatment throughout the process.
Maximising Compensation: CPC professionals have experience in assessing the true value of properties and can help ensure that you receive the maximum compensation to which you are entitled. They can analyse comparable market data, conduct valuations, and negotiate on your behalf to achieve a fair and just compensation package.
Navigating the Process: CPO and CPC processes can be lengthy and intricate, involving various stages, legal requirements, and documentation. Professionals can guide you through the process, helping you understand your rights, obligations, and options at each stage. They can assist in preparing necessary documentation, meeting deadlines, and advocating for your interests during negotiations or public inquiries.
Objecting to Compulsory Purchase Orders: If you wish to object to a Compulsory Purchase Order (CPO), professionals can provide valuable advice and support. They can help you formulate objections based on relevant grounds, gather evidence, and present your case effectively during public inquiries or discussions with the acquiring authority.
Mitigating Disruption and Losses: CPC professionals can assist in assessing and claiming disturbance compensation for any losses or disruptions caused by the compulsory purchase. They can help identify eligible costs, such as relocation expenses, professional fees, or damages to property, and assist in submitting comprehensive claims to ensure you are appropriately compensated.
Legal Representation: In complex CPC processes, legal representation can be crucial to protect your rights and interests. Lawyers specialising in CPC can provide legal advice, ensure compliance with legal requirements, and advocate for your rights during negotiations, inquiries, or any potential disputes that may arise.
With the above in mind, working with professionals experienced in CPO and CPC processes helps ensure that your rights are safeguarded, you receive fair compensation, and the complexities of the process are effectively navigated.
How We Can Help
The Gerald Eve team comprises experts who provide specialised advice to acquiring parties, such as public authorities and developers, as well as landowners and occupiers affected by compulsory purchase. We offer comprehensive support and guidance at every stage of the process, addressing all aspects related to compulsory purchase.
We also possess extensive knowledge in broader compensation issues, including the impacts of public works and utilities. With a wealth of technical knowledge and expertise, we have gained valuable experience working with both acquiring parties and affected landowners and occupiers. This dual perspective has granted us a deep understanding of the challenges and pressures faced by all parties involved in the compulsory purchase process. We leverage this understanding to adopt a dynamic and pragmatic approach to problem-solving.
We are adept at seamlessly integrating the land assembly and compulsory purchase process within development or infrastructure projects. Our team possesses the know-how to navigate through obstacles and find effective solutions. For landowners and occupiers, our comprehensive understanding allows us to identify and safeguard their interests, ensuring that claims are meticulously prepared and vigorously negotiated.
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