Compulsory Purchase Orders Consultation

The Levelling-Up and Regeneration Bill contains a number of headline grabbing planning reforms including street votes for neighbourhood planning applications, a national infrastructure levy and the introduction of National Development Management Policies.

One measure given less prominence in initial responses to the Bill is the proposed amendments to compulsory purchase powers.  Sitting alongside other measures to promote the regeneration of town centres and high streets, a supporting note published alongside the Bill, proposes that changes to compulsory purchase orders (CPO) will support land assembly and make better use of brownfield land.

Compulsory purchase is a legal mechanism by which land can be acquired by ‘acquiring authorities’ which includes local and highway authorities, without the consent of the owner.  Fundamental to the power to compulsory acquire land is the obligation to pay full and fair compensation for the loss to the owner.

This right to compensation is the subject of consultation issued on 6 June 2022 by the Department of Levelling Up, Housing and Communities.

The consultation seeks views on an approach to assessing the open market value calculation (under section 5 of the Land Compensation Act 1961) and the assumptions to be made, for the purposes of prospective planning permission (known as hope value) in the calculation of compensation.

Hope value has long been criticised for distorting land prices in the context of compulsory purchase.  It impacts on acquiring authorities’ ability to assemble land for regeneration because, critics say, it encourages landowners to hold out for the best possible value based on future value.

The consultation seeks views on:

  • removing or capping the payment of hope value and whether there may be measurable public benefits in capping or removing hope values – Questions 3-6;
  • allowing directions to be made by the Secretary of State for specific schemes which to cap hope value at existing use value or at any amount above where it can be shown that there is a public interest in do so. The consultation asks whether proposals to issue directions hould only apply to acquiring authorities who are subject to the public section equality duty -questions 7 – 13; and
  • whether proposals should go further by automatically limiting the payment of hope value in compulsory purchase either generally or specifically in relation to specific schemes – question 14.

Housing Associations and Developers who are involved in regeneration projects will know that the ability to acquire land compulsorily is fundamental to getting those projects off the ground.

Compulsory purchase powers are complex with the uncertainty about the cost and delay involved in assessing compensation making it an unattractive option.  This is particularly true for those promoting CPOs who may be required to indemnify acquiring authorities’ costs at the outset of a project as a prerequisite to them exercising their CPO powers

The proposals for providing upfront certainty for acquiring authorities on the level of compensation and on the overall viability for schemes are welcome.

Further consultation to changes to CPO including the ability to impose conditions (e.g. on the availability of funding) and providing for a two stage confirmation process are likely to follow in the next few months.

In the meantime, it will be interesting to see what the reaction from the sector will be – the consultation closes on 19 July 2022.

For more information, please contact Hannah Langford.

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