Compulsory Purchase: A Complete Guide

Compulsory purchase is a legal power that public bodies (acquiring authorities) can use to acquire a piece of land or property that does not require the owner’s consent. The land or property acquired must be used for a development that is in the public interest. A formal process where a Compulsory Purchase Order (CPO) is made, it’s only leveraged as a last resort. 

The statutory process is only used when necessary because it can take between 12 and 18 months. With multiple stages, it involves navigating a range of objections and an entitlement to financial compensation for the landowner. This compensation should cover the value of the lost property or land, plus fees that cover the disruption caused. 

The framework and procedures for this process are set out in the Compulsory Purchase Act 1965 and the Acquisition of Land Act 1981. The compulsory purchase process is only started by acquiring authorities that have taken all reasonable steps beforehand. These will vary depending on the particular development project. 

However, confirming authorities (usually a government minister or appointed inspectors) will want acquiring authorities to demonstrate that they have directly engaged with all affected parties and understand the impact of the CPO procedure. They must also have attempted to acquire the land or property by agreement, including offering adequate compensation. 

There are other powers which can be used to acquire land, such as the Transport and Works Act or a development consent order. Landowners can also initiate the process by serving a purchase notice under section 137 of the Town and Country Planning Act 1990 or a blight notice under section 150 of the same bill. 

If all other options have been exhausted and the compulsory purchase power is initiated, then the following process begins: 

• Acquiring authorities select the most appropriate compulsory purchase power based on the purposes for which the land is being acquired. It’s key they choose the most specific enabling power available under law
• Once chosen, acquiring authorities must justify its use of CPO powers under the act they have specified. Presented as a statement of reasons, authorities may need to defend it through hearings or written representations
• Acquiring authorities will then prepare and make their compulsory purchase order. This may involve conducting surveys or valuations of the property or land, or engaging with and notifying third parties, to which rebuttals can be made
• Once the relevant documentation has been submitted, the compulsory purchase order will be considered by the confirming authority against the relevant legal criteria. This may involve reviewing objections, giving supplementary information, making modifications to the order and holding an inquiry
• A compulsory purchase order becomes operative from the date it’s confirmed. It must be sent to the Chief Land Registrar and a ‘notice to treat’ or ‘notice of entry’ must be issued. From this point, the acquiring authority can start to take ownership of the land, while the landowner can apply for compensation

There is no single set of guidance on the valuation procedures for compensation under compulsory purchase orders. Although the principles, legislations and practices used to establish this valuation are commonly referred to as the ‘compensation code’. 

Another key term is the ‘equivalence principle’. This dictates that the landowner shouldn’t be paid any less or more than the value of the property or land they’ve lost. 

To come to the final figure, the following elements need to be considered: 

• Value of the land taken: the amount realised if the land was sold on an open market to a willing seller on the valuation date, excluding any increase or decrease caused by the proposed works by the acquiring authority. This is known as the existing use value. Other values that may be taken into account are:
  • Hope value: reflecting any existing or prospected planning permission for an alternative use or development
  • Ransom value: if this site can unlock the development potential of an adjoining one
  • Marriage value: if the site is worth more when combined with other land or properties
• Disturbance payments: these account for any losses experienced as a result of the land or property being taken which aren’t based on its inherent value, such as removal expenses, legal fees or stamp duty
• Loss payments: can be applied if someone is occupying the property at the time of its acquisition 
• Severance and injurious affection: this applies if only part of the land or property has been acquired and has lost value as a result of being separated from the rest. Or if adjoining land has been for new development, such as a part of a garden being used for road construction

Challenges are faced by all parties involved in the compulsory purchase process. For bodies initiating it, the lengthy stages and extensive costs can have a significant impact on development projects. 

Changes outlined in the Planning and Infrastructure Bill are designed to reduce this burden by: 

• Implementing an electronic documentation service
• Introducing the ‘expedited procedure’, where a general vesting declaration can be made in less than three months for purchases of land that is unoccupied or has no identifiable interest holder 
• Speeding up the process of using directions to remove hope value, where justified in the public interest

Acquiring authorities can benefit from compulsory purchase advice from expert teams such as Dalcour Maclaren. Our relevant and extensive experience of relevant case law and managing multiple dispute resolutions can help the process run efficiently.