Compulsory Purchase Orders – what you need to know
If your home is subject to a Compulsory Purchase Order you could be forced to sell up – but if you know what you're doing you might be able to negotiate better terms or even stop the acquiring authority from securing powers to force you to sell.
What is a Compulsory Purchase Order and who can get one on my home?
Compulsory Purchase Orders (CPOs) allow public bodies to force homeowners to sell up if their property obstructs a regeneration project or it’s for the “greater public good”.
Similar mechanisms exist for transport schemes and Nationally Significant Infrastructure projects. For example, Heathrow are using a Development Consent Order (DCO) to secure their Compulsory Purchase powers, whilst High Speed Two (HS2) use a Hybrid Order which goes through Parliament.
When a Compulsory Purchase Order is made, the authority CANNOT force you to sell. They are merely applying to a government department for powers to be able to force you to sell. Depending on what you and others do next, it may take months or years before they secure these powers, if they do at all.
What does “compelling case in the public interest” mean?
It can be anything from new roads to shopping centres. But it could also mean your home is considered a danger to the public or it is a listed building that needs to be looked after.
For regeneration schemes, the acquiring authority will need to meet a three point test:
- Does it meet the economic wellbeing of the area of administrative responsibility (e.g. the boundary of a London borough)?
- Does it meet the environmental wellbeing of the area?
- Does it meet the social wellbeing of the area?
Do public bodies have to negotiate to buy my home?
Yes, they are required to enter into meaningful negotiations. However, the bar has been set rather low in determining what is reasonable in the past. Compulsory Purchase should be a last resort, used only if agreement cannot be reached voluntarily.
How much do they have to pay me for my home?
They are required to pay what the Market Value would be in the absence of the regeneration scheme. This can be very different to recent blighted sales. In addition, you may be entitled to an addition 10% or 7.5% depending on circumstances.
There is unfortunately no allowance made for whether or not the Market Value is higher or lower than when you bought it.
You’ll also be entitled to reasonable costs for appointing a Chartered Surveyor specialising in Compulsory Purchase to value, negotiate and guide you through the process and for a solicitor to transfer ownership to the buyer if agreement is reached.
You’ll also be entitled to disturbance compensation which can cover certain costs for buying somewhere else and allow you to recover costs or losses relating to your existing home such as with carpets, curtains, disconnections and reconnections. Entitlement does vary according to circumstances, so it’s best to get professional advice from the Chartered Surveyor representing you.
Isn’t that unfair?
We think so, and in France public bodies have to pay 1.5 times the price of the property to make up for the inconvenience of a compulsory purchase. But the argument against doing that in the UK is that it would encourage speculators to buy up properties in order to profit from CPOs.
Do I have to enter into negotiations?
Not necessarily, but it is advisable to. You should however reply to their correspondence, outlining things such as details of your ownership of the land and names of any other interested parties. If you fail to do this you may be breaking the law.
What should I do if I think my home is affected by a CPO?
1. If you want to ﬁnd out if someone is trying to get a CPO for your home you should contact your local council.
2. Once you know who is trying to purchase your home, contact them and find out who is in charge of corresponding with people whose homes might be purchased.
3. Make sure you keep a record of all your correspondence with that body – it could be vital if the case goes to court.
4. Also, keep a record of expenses that you’ve taken on as a result of the CPO – you may be able to claim these back. Keep in mind that you have a duty to mitigate your loss, which means that you won’t get paid for things that are made more expensive by your own actions.
5. Take professional advice early. A Compulsory Purchase Chartered Surveyor may be able to answer your questions very quickly and look to protect your position early on.
Can I negotiate directly with the public body that is trying to purchase my property?
Yes, they could agree to meeting some of your demands if you agree not to object through the official channels.
But if you are going to officially withdraw your objection, make sure you have a signed agreement with the body that is trying to purchase your property and show it to your solicitor or chartered surveyor.
However, homeowners affected by Compulsory Purchase tend to do far better if they have professional advice from a Chartered Surveyor who specialises in CPO. The acquiring authority will normally have expensive professional advice guiding them and the law requires them to pay for you to receive the same. Costs of course must be reasonable.
Should I try and use the negotiation stage to push the price up?
You could, but don’t push your luck, if the negotiations fall through, you face losing your home by force and you could end up getting paid a lot less. Your negotiation strength fluctuates through the process, up and down. It is a myth that the longer you wait, the more you get.
How do I object to a CPO?
All objections have to be made in writing to the appropriate Government minister or member of the Welsh Assembly. The body trying to acquire your property has to provide you with the contact details for this person and the time period for objecting.
Who can help me object to a CPO?
Get professional help when it comes to objecting to or negotiating a CPO. A solicitor or chartered surveyor should be able to help.
What can I object to? Is it ‘all or nothing’?
No, you may be happy with the overall proposal but want to make small changes, such as:
- Measures that would reduce the visual impact of the scheme.
- Changes to the location of the scheme.
But you can also object to the scheme entirely. However, if you attempt to object to the general concept of CPOs your case will be rejected.
There are limited grounds on which objections can be submitted. If not submitted by a qualifying party in a qualifying time and on qualifying grounds and to the correct place, objections can be rejected. You may therefore feel more comfortable appointing someone to represent you. A Chartered Surveyor for example, could submit your objection. Some may charge but some will submit an objection without charge if you also agree for them to represent you in negotiations for which the authority will be responsible for their reasonable costs.
What happens if my objection is not upheld at the Public Inquiry?
You can challenge a CPO in the High Court under the Acquisition of Land Act 1981. But you must do this within six weeks of the first time it is published in the first newspaper. However, this is extremely rarely successful and can be very expensive.
What sort of complaints will be considered by the High Court?
It will consider claims that:
- The powers granted in the CPO go beyond the powers permitted by the Act of Parliament under which they are being sought.
- The procedural rules have not been followed correctly.
- That the minister or inspector has not acted properly in reaching a decision – this could mean the evidence was either lacking or irrelevant.
Which Chartered Surveyor should I use?
If your home is at threat of Compulsory Purchase, you are entitled to professional advice paid for by the acquiring authority. Fees have to be reasonable.
Compulsory Purchase is a very niche specialism so not many Chartered Surveyors have the relevant experience. We have partnered with Dan Knowles, Director and Chartered Surveyor at Sawyer Fielding covering London and surrounding areas. You can contact Sawyer Fielding by calling 020 3011 5300 or by e-mail at firstname.lastname@example.org.
Other Chartered Surveyors who specialise in Compulsory Purchase can be found through internet searches. Whoever you find, it is worthwhile asking them to confirm that they have the relevant valuation experience and knowledge of the laws behind Compulsory Purchase.