Consideration & Use Of Compulsory Purchase Powers

An overview

Introduction

The ability to secure and control the land required for the delivery of a regeneration project is a fundamental building block for the success of a physical development project. Compulsory Purchase Orders (“CPOs”) can be an important tool to support project delivery.

Where third party land (or rights) is required in order to facilitate development, attempts can and should be made to assemble necessary sites by agreement, with CPO to be considered as a last resort. However, CPO, or the prospect of the use of CPO powers, can help to remove uncertainties about the potential to assemble sites within a reasonable timetable or at an acceptable price.

The use of CPO (or potential CPO) as part of a wider Land Assembly Strategy (“LAS”) can reduce risk to a project, helping to provide more confidence in timetable and a reasonably estimated cost. It also can assist in avoiding “ransom” situations arising, where landowners seek to exploit their position by threatening delays to a project unless excessive prices are paid.

Building a case for CPO

The key resource for public bodies when looking to promote a CPO is the Guidance on Compulsory Purchase Process and Crichel Down Rules (“the Guidance”) published by DLUHC. The Guidance sets out the steps and best practice to be followed when promoting a CPO, considering issues such as the choice of the right power, justifying a CPO, and the process in preparing, making and implementing a CPO.

The overarching principle within the Guidance when making a CPO is whether there is a compelling case in the public interest, and whether the public benefits of the scheme being delivered outweigh the interference with private rights. If this test cannot be met, then a CPO should not be considered.

The most common legal basis for local authorities to make CPOs is under section 226(1) (a) of the Town and Country Planning Act 1990 (“TCPA 1990”). When promoting a TCPA CPO, an Acquiring Authority will also have to demonstrate that their scheme is likely to contribute to the promotion or improvement of the economic, social, and environmental well-being of the area, that the scheme is deliverable, and that there is a compelling case for the delivery of the scheme.

Other CPO routes

In addition to the TCPA, there are other routes to using CPO powers available. These include:

The Housing Act 1985 enables the assembly of land for housing and ancillary development, provision of access roads and bringing empty properties into housing use.
The Housing and Regeneration Act 2008 enables Homes England to use CPO powers to improve the supply and quality of housing or regeneration of land.
The Local Government Planning and Land Act 1980 allows Urban Development Corporations to use CPO powers to bring land and buildings into effective use, encouraging development of industry and commerce, and ensuring housing and social facilitates are available.
The Localism Act 2011 allows Mayoral Development Corporations to use CPO to securing regeneration of their area.
When seeking to use CPO powers, it is important to give consideration to the most appropriate power to use, and consideration of this should form part of the Land Assembly Strategy.

CPO Procedure

The Compulsory Purchase Procedure Manual[1] sets out the process of making a CPO and using powers of compulsory purchase in eight stages. We briefly explain the key aspects to each stage with indicative timings.

The eight stages of the CPO procedure, replicated from The Compulsory Purchase Procedure Manual (subject to Crown Copyright)

The Formulation stage involves information gathering and drafting of the CPO and associated documents, which will include a schedule of interests and Statement of Reasons justifying the use of CPO powers. At the same time the entity promoting the CPO – known as the Acquiring Authority (“AA”) – will be preparing a report to the relevant authorising committee. During the Formulation stage, the AA will also prepare a Property Cost Estimate (“PCE”) setting out the anticipated cost of acquiring all land and rights needed for delivering the scheme. The PCE will not only consider the market value of an interest, but also any disturbance and statutory loss payment which might arise because of the CPO. Whilst an approximation, the PCE will continue to be refined and reviewed as more information is obtained through the process. At this stage the AA may also start early negotiations with landowners. In practice, negotiations to acquire property interests by agreement will often continue throughout the CPO process.
Following completion of the Formulation stage, the AA will report to the relevant committee and make a Resolution to use CPO powers. Further information gathering into land ownership through “requisition for information” notices will then be made.
Following the Resolution, and once all the landownership information has been gathered, the AA can make the Order (CPO), which is submitted to the relevant Secretary of State (“SoS”) and all interested landowners, together with the CPO plan, a schedule of interests and Statement of Reasons.
Once a CPO is made, there is a minimum period of 21 days for Objections. Objections must be in writing and if relevant will trigger a Public Inquiry, where evidence from the AA and objectors will be heard. Objections to the level of compensation are not considered valid at Inquiry.
A reduction in the number of outstanding objections at the Inquiry will reduce time and cost of the Inquiry and increase the chances of success. Where no objections are received or objections are resolved, the CPO can be confirmed without the need for an Inquiry.
The Inspector will make a Decision if they have the appropriate delegation or make a recommendation to the SoS. The Decision will be to either confirm, modify, or reject the CPO. A letter will be sent to the AA and all remaining objectors setting out the decision.
Following publication of the decision, there is a 6-week judicial review period where the validity of a CPO can be challenged. On the basis that there is no challenge during this period, the CPO can be implemented and Possession to be taken of all of interests in the CPO land following the service of appropriate notices. These notices give rise to an entitlement to appropriate compensation.
Compensation for compulsory acquisition is assessed in accordance with principles derived from statute and case law, collectively referred to as the ‘compensation code’. Claims that cannot be agreed are referred to the Upper Tribunal (Lands Chamber), which is responsible for the determination of compensation in the event of dispute.

In summary, consideration of the use of a CPO is an important part of a Land Assembly Strategy, with the potential to make a significant contribution to the delivery of regeneration and infrastructure projects where there is a compelling case in the public interest.

Stephen Lashmar is a Chartered Surveyor and RICS Registered Valuer with extensive experience in dealing with compulsory purchase and land assembly matters. Stephen has acted for both claimants and acquiring authorities on a range of high-profile schemes, including HS2.

If you have any questions on this topic, or would like support, please contact your Delivery Associate, or email DeliveryAssociatesNetwork@Arup.com

References:

[1] Department for Communities and Local Government, Compulsory Purchase Procedure Manual, most recently updated 2009