Compensation claims following compulsory purchase of land
Claims to compensation following the compulsory purchase of land can involve complex areas of law and procedure. Where parties cannot agree on compensation, either party can refer a claim to the Upper Tribunal (Lands Chamber) to determine the amount that should be paid. This often happens when the parties disagree on the valuation impact of some special feature or complexity to do with the property, such as development value or potential business use.
1. What is a Compulsory Purchase Order (CPO)?
A CPO grants a body known as the Acquiring Authority (AA) the right to compulsorily acquire land for a specific public purpose. The AA has to demonstrate that there is a compelling public interest case for the CPO to be made. If a CPO is made, the AA can take possession of property at any time within three years of the publication of the CPO confirmation (this may be extended if the CPO is challenged).
2. How is the compensation calculated?
Under the Land Compensation Acts of 1961 and 1973, compensation may include:
- the amount for which the land would sell (on the date the AA becomes entitled to enter the land and take possession, commonly known as the ‘vesting date’), assuming it is being sold on the open market by a willing seller (and ignoring the proposed scheme);
- disturbance costs (for any losses suffered as a result of being dispossessed);
- compensation for damage to any retained land; and
- the reasonable legal and other professional fees incurred.
3. What is the process to apply to the Tribunal for a decision on compensation?
The applicant must make a reference to the tribunal and put forward their statement of case. The respondent then has one month to file a statement of case in response. Depending on the complexity of the matter, the parties may need to appoint a number of independent experts and exchange expert reports and witness statements.
In parallel with the Tribunal proceedings, parties often engage in without prejudice settlement discussions. This is particularly important because going all the way to a full hearing has consequences for both parties. The general rule is that the losing party pays the costs of the winning party (with the figure to be paid often being subject to a cost assessment process), which creates an element of cost risk for both parties, although there may be exceptions. Settlement offers can be made to try to obtain some cost protection.
We act for both landowners and AAs in relation to CPOs, compensation negotiations, and Tribunal references for compensation. That allows us to see the full picture of CPO claims and advise you with the benefit of our rounded experience. If you have any queries or concerns about an existing or potential CPO or claim for compensation, we would be happy to discuss how we can help.
Time can be critical in dealing with potential CPOs, so if you have any concerns, please do contact us without delay.