Compulsory purchase: compensation reforms – Law Society response
The government’s proposals in the Levelling Up and Regeneration Bill seek to reform the compulsory purchase order (CPO) regime.
In particular, these would reform the level of compensation afforded to landowners subject to an order, so CPO schemes are “viable and deliver the benefits that are necessary in the public interest”.
The proposals seek to cap, or remove, ‘hope value’ from the assessment of market value when issuing a compulsory purchase order.
This means that compensation would be limited to ‘existing use value’, which is lower than market value.
While we recognise that removing ‘hope value’ would almost certainly increase the viability of schemes which are not required to pay it, we do not consider the public benefits of the scheme being delivered will necessarily increase.
This will only be the case if additional benefits are delivered with money saved instead of, for example, being absorbed by private developers.
There are no details in the proposals indicating that this will be the case and therefore should not be used as the basis for a public interest test.
Further, we have concerns as to whether the compulsory purchase order proposals are justifiable, equitable and compatible with human rights (article 1 of the first protocol of the European Convention of Human Rights and, if it’s a dwelling, article 8) when balancing the public interest against individual rights.
Failing to recognise the ‘hope value’ attached to a property will result in properties acquired for existing use, which will be less than market value.
Lastly, the proposals will potentially violate access to justice for landowners in many cases and delay the CPO process through an inevitable increase in court challenges.
The consultation closed on Tuesday 19 July.
We’ll continue to engage with the Department of Levelling Up and Housing Communities as the CPO proposals progress.
We hope to engage further on the bill and its associated consultations as it progresses.
Email Alasdair Cameron to discuss any of the points raised in this response.