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15 March 2019

Legal landscape: Land CPOs – a fair price to pay?

This article first appeared in The Planner, the magazine of the Royal Town Planning Institute.

The exercise of compulsory acquisition powers for any purpose, including facilitating construction of major transport infrastructure such as High Speed 2 (HS2), should be founded on ‘fairness’.

The law requires fair procedures – such as proper notice and the opportunity to object, and fair compensation for individuals and businesses whose land is taken in the public interest. Balancing the competing rights of those whose land is acquired with the public benefit brought about by the scheme is crucial. Without this any form of compulsory purchase order would risk breaching human rights legislation.

Public criticism of budget overruns in the HS2 scheme, coupled with reports of high-value compensation claims in the Upper Tribunal alongside assertions of HS2 seriously undervaluing property, reflect a wider concern regarding fairness when it comes to implementing that scheme.

Fair valuation and the related topic of land value capture in the context of compulsory purchase raise difficult questions. How should increases in land value arising from planning permission or new infrastructure be fairly shared between the dispossessed landowner whose property is required in the public interest and the state acquiring the land to invest in the scheme?

The recent House of Commons Housing, Communities and Local Government Committee’s report on land value capture considered that there was scope for central and local government to claim a greater proportion of land value increases through reforms. These could include changes to the Community Infrastructure Levy and further revisions to compulsory purchase law, in particular the Land Compensation Act 1961.

Changes introduced by the Housing and Planning Act 2016 and the Neighbourhood Planning Act 2017 were intended to make compulsory purchase ‘clearer, fairer and faster for all’. These included clarifying the right and timetable for advance payments of compensation, obliging the acquiring authority to pay on entry, as well as seeking to clarify the ‘no scheme’ principle – that valuation should have no regard to either increases or decreases in value brought about by the scheme.

A common criticism of HS2 appears to be that advance payments are being delayed, putting relocating businesses under acute pressure, and that initial valuations are pitched very low. This can put enormous pressure on businesses and individuals when they are forced to decide whether to risk uncertain litigation in the Upper Tribunal.

Here there is also exposure to payment of the acquiring authority’s legal costs should the claim fail.

Another potential area for injustice is the rules regarding the disposal of land not required for construction and later operation. A good example is where subsurface works have required acquisition and demolition on the surface, after which the land becomes surplus to requirements.

On the face of it this land can be offered back to the original owners under the Crichel Down Rules, subject to various conditions. There is no obligation to return the land where it has materially changed in character, or where new works have been erected. The value of land is assessed at current market value, often putting it beyond the reach of the former owner.

Big infrastructure scheme promoters, including the Government, invariably adopt their own variations on the rules into their land disposal policy. In short, the conditions of the offer-back include accepting the interest offered, completing the works in the public interest consistent with the local context, and guaranteeing the safety and accessibility of the new infrastructure. The acquiring authority also has a duty to secure best value. This can encourage interests to be packaged in ways that make it hard for any landowner other than a developer with deep pockets to be able to bid for the land. The inability of landowners dispossessed for subsurface works where a clear site is returned to market can cause unfairness and dispute.

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