Vicky Fowler reviews the consultation on revisions to the compulsory purchase process and what it means for the property industry
Key points
- The proposed reforms seek to make CPO legislation clearer, fairer and faster
- If the proposals go ahead as proposed, acquiring authorities would be required to offer good compensation and take possession when they say they are going to
- There is less encouragement for bodies to use CPO powers than under the current guidance, but this is likely to change in the final draft
- Claims for advance payments will be able to be claimed at any time from confirmation of the CPO to help claimants order their finances and smooth the process of relocation
- The inspector could make the final decision on orders involving issues of only local importance
In the Autumn Statement, the government indicated that the compulsory purchase (“CP”) regime would be streamlined. Proposals have now been published for consultation, which aim to make the compulsory purchase order (“CPO”) process clearer, faster and fairer. The ultimate goal is to make it easier to assemble development sites in multiple ownership, a scenario that often applies to brownfield sites.
The proposals seek to make the regime clearer by improving guidance on the CPO process and fairer by encouraging acquiring authorities to offer good levels of compensation, enabling claimants to require possession to be taken once the date for possession has passed, speeding up the process for obtaining advanced payments and improving interest rates on outstanding compensation.
To make the process faster, the government suggests imposing time limits for confirmation of a CPO and alterations to the court’s remedies should a decision to confirm a compulsory purchase order be successfully challenged. In addition, it proposes to extend the powers to enter for surveys before the making of a CPO so that they also apply to Transport for London and a small number of ministers who currently have the power to make an order but no power to enter for survey purposes.
Significant changes
The proposed revisions to guidance in the main replicate the current circular but intend to offer more certainty and consistency. However, this is not uniformly the case. In removing the statement that bodies possessing CPO powers are encouraged to use them “proactively” and replacing it with “when expedient” and later stating that CPO should only be used “as a last resort”, there is less encouragement to use the powers than in the past. This is a case of unintended consequences and many expect that it will be corrected in the final guidance.
The regime now requires greater certainty on funding. It is not enough, for example, for a local authority to have aspirations to bring forward redevelopment of a brownfield site. They need to have funding for that development, which may require having a developer on board. These changes to the guidance potentially lead to the promotion of CPOs much later than may be the case currently.
Another potential unintended consequence is that for non-developer-led CPOs (such as those promoted by the Homes and Communities Agency), claimants will hold out for every last penny. The reality with developer-led CP acquisitions is that it is always open for the development partner to negotiate acquisition by private treaty on terms that are more favourable than open market valuation.
Significantly, the government is proposing that a claim for an advanced payment can be made at any time from the date of confirmation of the CPO. This change would enable claimants to be put in a financial position so that they can re-order their affairs and relocate without the need to finance this from their own resources or from a bridging loan. Making it easier for claimants to manage their affairs can assist with reducing the overall compensation bill.
Other proposals
Another proposal aimed at fairness is increasing the notice period to be given for entry onto a property when implementing a CPO by way of notice to treat. Currently, occupiers may only have 14 days to relocate. The reality is that a longer period than 14 days is often given and negotiations to acquire the land by private treaty continue, with notice of entry being served as a last resort. These longer timeframes potentially make that less likely.
In relation to proposals for timescales for confirmation of a CPO, these will be welcomed by the development industry and potential claimants. At present, the process of confirming a CPO once submitted can be lengthy and is often unclear.
In the case of orders considered by way of public inquiry, it is proposed that within 10 working days of the close of the inquiry, the inspector, in consultation with the acquiring authority, should inform the acquiring authority and other parties as to the timescales for the decision. This has the effect of aligning the timescales for determination with the bold timescales of the development consent order process, which provides a one-stop shop for promotion of national infrastructure projects including the ability to compulsorily acquire land. These are often complex schemes. Thames Tideway Tunnel, for example, had 14,000 properties listed in the book of reference.
The government is also proposing that in contested CPO inquiry cases that do not raise issues of more than local importance, the final decision can be delegated to an inspector. This change will save three months on the overall process, reducing time and resources for those promoting a CPO-led development.
Currently when a CPO is challenged by an aggrieved party in the High Court and the challenge is successful, the court has the power to quash the whole or any provision of the order, meaning that if the land is required, the whole process has to start again. Yet if a decision is flawed but the order is sound, the reforms would enable that decision to be re-taken. Given the increase in High Court challenges, it is a welcome proposal as it de-risks a costly, time-consuming and complex process.
Will it work?
Overall, the proposals could make the CPO process clearer, fairer and faster. However, there is the potential for longer lead-in times for actual commencement of the CPO process if the proposed guidance on use and funding of schemes remains unchanged. This has the ultimate consequence of making land assembly for development sites in multiple ownership no quicker than currently is the case.
Vicky Fowler is a partner at Berwin Leighton Paisner
