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CPO CPO

Levelling Up and the Regeneration Bill

Nyear Yaseen • 21/06/2022

Reforms to compulsory purchase legislation – what you need to know

 

What is compulsory purchase?

In recent years ‘compulsory purchase’ has become a term which elicits dread in anyone affected by the potential acquisition of their property. Often perceived to be an area of surveying practice shrouded in mystery and confusion with affected landowners not knowing their rights under legislation. The framework guiding the use of compulsory purchase is known as the Compensation Code.

 

Why is the Compensation Code changing?

Over the years attempts have been made by the Government to reform and simplify legislation for both acquiring authorities and landowners. The Government proposes to once again attempt to reform the Compensation Code in the Levelling Up and Regeneration Bill. Does it succeed in simplifying the Code for both acquiring authorities and landowners? Sort of… 

 

CPO is moving to online

Seeking to bring practice in line with technological development, the proposal for digitisation of CPO notices and documents informing landowners that a CPO is to be made will make accessibility to documentation more convenient. An online location will be provided where landowners can view documents and access notices informing them a CPO has been made. This reform is welcomed as it will enable landowners to review notices at their convenience and have continual access to relevant documentation as and when needed. However, they should not exclude those that do not have online access.  

 

How are Compulsory Purchase Orders made?

Acquiring Authorities rely on enabling powers under which they can exercise their right to make a CPO. Principal among these enabling powers is Section 226 Town and Country Planning Act 1990 which sets out the basis upon which an authority can seek to make a CPO – in essence this allows the authority to make a CPO where it promotes the economic or social well-being or the improvement of the environment in an area. For a CPO to succeed the confirming Government minister needs to be convinced a case has been made in the public interest on this basis, as CPO should only be used as a measure of last resort. 

 

 

What reforms are the Government proposing?

The Government proposes to insert the word ‘regeneration’ in Section 226 of the 1990 Act. Our view is this broadens the test an authority must meet in order to justify the use of CPO powers primarily to address structural changes in the property market; for example, changes to the function and role of the high street in communities. Proposals the authority wishes to make to deal with these structural changes may not be captured as ‘improvements’ but rather regeneration of an area to meet community needs. In principle this is welcomed provided the basis of assessing what is ‘regeneration’ is subject to robust and transparent evidence of the benefits which will be delivered and should significantly outweigh the loss of private rights. 

 

The representations procedure would be improved

The Government is also introducing a representations procedure whereby if an objection is made by a landowners to a CPO then this can be dealt with through written testimony or through a hearing. This reform is welcomed as it should reduce the cost burden on the public purse and remove the uncertainty and cost of objection on landowners. Details on the representations procedure is to be finalised and we await the outcome of the regulations which are to be drafted. We are keen to understand how the representations procedure will meet the rights under the Human Rights Act 1998 – a point lawyers will no doubt carefully scrutinise!

 

But blight provisions have not been accounted for

Much like planning consents are subject to a series of planning conditions which must be satisfied into order to implement the planning consent, the Government is proposing conditions are also imposed on CPO before they can be implemented. In principle a mechanism which places conditions on the confirmation of a CPO is good, as in some circumstances CPO’s are implemented without funding being secured or scheme viability being proven. However, creating a parallel procedure whereby conditions are placed and there is a lengthy process of discharge, which then increases blight on affected properties without certainty that the CPO will be confirmed should be dealt with by considering blight provisions in law at the same time. We note no proposal is made under current reforms addressing blight at all and we encourage Government to do so.

 

Authorities may get a longer timeframe to implement CPO but where does that leave landowners and occupiers?

Currently, acquiring authorities have up to 3 years to implement a CPO. It is proposed this is increased to a longer and yet undefined period of time. Whilst the principle in the context of large multi-phase schemes can be understood, however, it also increases the burden of blight on affected landowners with acquiring authorities having a far longer timeframe within which to implement the CPO and creating a climate of uncertainty for business owners and residential occupiers. To address this imbalance, we believe the Government should consider parallel reforms to blight provisions. An acceptable trade-off for extending the implementation period could be that blight provisions are reformed to include business and other commercial organisations enabling them to move at their earliest opportunity and continue investing in their businesses and benefitting UK PLC.

 

What is the General Vesting Declaration and how does it work?

Acquiring authorities can compulsorily acquire properties using two routes to vest the land. The General Vesting Declaration (‘GVD’) where an acquiring authority can vest the land no earlier than 3 months after the GVD has been served on the landowners. Under this procedure the land must vest on the date shown on the GVD. The alternative is the Notice to Treat (‘NTT’) and Notice of Entry (‘NOE’) route where anytime of up to 3 years from the date a NTT is served the acquiring authority can serve a NOE and take entry on the date specified in the NOE unless the acquiring authority and landowner agree an alternative date when the acquiring authority with take entry and title will pass to them.

 

Expect increased flexibility in the GVD

The NTT and NOE route provides more flexibility to landowners who may need more time to finalise matters and vacate the land and can therefore agree an extension with the authority. The Government has redressed this imbalance between the GVD and NTT/NOE as no such flexibility is available to landowners in the GVD route. Legislation for a GVD will now allow landowners and acquiring authorities to extend the date of vesting by agreement. We welcome this reform which is long overdue.

Other proposed changes are considered primarily procedural and points of clarification to existing legislation and do not benefit or undermine landowners but apply common standards to data held on CPOs. These reforms are welcomed.

 

Reform due for Sections 14 – 17 Land Compensation Act 1961

However, we note the Government had not set out any details concerning reform to Sections 14 – 17 Land Compensation Act 1961. But as of Monday 6 June the Government has set out in a consultation paper proposals to reform procedure for Certificate of Appropriate Alternative Development (‘CAAD’) and approach to hope value for land where no consent is in place at the Valuation Date. A CAAD is akin to a planning permission over the land affected by the CPO ignoring the CPO scheme. 

 

Is this reform unfair to landowners?

Radical and controversial would be the words that come to mind to describe proposals to limit land value to existing use value or percentage above to allow for ‘hope value’. There are proposals to also require claimants to pay for the CAAD! These proposals are in the form of a consultation and yet to make it proposed reforms in the Bill itself. With consultation closing on 19 July 2022 we expect many, like ourselves, will challenge the real motivation for this particular reform which would only ultimately reduce the cost burden to the state but at real cost of landowners who are denied from considering alternative uses which they could otherwise had realised if no CPO ever existed and is considered unfair. We welcome views from both acquiring authorities and claimants on these reforms.

 

There’s a long way to go between drafting and assenting in legislation

In essence much of the reform proposed in the Bill itself are procedural and provide clarification to existing legislation. Whilst in principle this is to be welcomed, the devil will be in the detail and practice that emerges once this is enshrined in legislation. The Levelling Up and Regeneration Bill is currently undergoing its second reading in the House of Commons and there is a long way to go between what is drafted in the deposited Bill, and what is then assented in legislation, including future amendments the Government have signalled they will make to reflect the above consultation paper. Watch this space! 

If you would like to understand more about these reforms could impact your property contact us.

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