Carter Jonas
Carter Jonas

Housing & Planning Act Brings Changes to Compulsory Purchase

On 12th May 2016 the much anticipated Housing and Planning Act was given royal assent, this will bring several key changes to the compulsory purchase and compensation regime affecting both acquiring authorities and claimants.

How these changes will be implemented is still yet to be detailed, however below is a selection of the key changes this Act will bring:

Change Number 1: Rights to Survey Land  

Benefits: Acquiring Authorities

Acquiring Authorities are to be given a new power to survey any land which they intend to acquire an interest or a right over.

This will enable public bodies, with the ability to apply for CPO powers, to issue a 14-day notice on landowners and occupiers giving them the right to undertake survey work so as to facilitate the acquisition of the land.

Should force be required to enter onto the land a magistrate will be required to issue a warrant.

Rather significantly compensation for landowners and occupiers is limited to damages. As such this will now enable promoters of schemes to access land even where permission has been withheld by the owner, removing the potential for landowners to frustrate schemes by refusing access prior to obtaining powers or by demanding an unreasonable premium for entry.

Change Number 2: Changes to the Notice to Treat and General Vesting Declarations (GVD)

Benefits: Land Owners and Occupants

One highly controversial element of the current regime is the ability for Acquiring Authorities to permanently remove an occupier from land with only 14 days’ notice under a Notice to Treat and Notice of Entry, or 28 days’ notice when executing a GVD.

This minimum notice period is to be changed to 3 months for a Notice of Entry or GVD.  In the case of a GVD, the previous notice of intention to vest is removed and replaced with additions to the notice of confirmation of the Order so the overall period for securing land under GVD is not increased. In the existing GVD system the occupier has no certainty during the initial 2 month notice of intention to vest period that land would be acquired. In the new system the full three month period is given on execution of the GVD so that the occupier has certainty of acquisition throughout the notice period.  

This change will mean occupiers will  have at least 3 months to prepare to vacate the land. Acquiring authorities will need to ensure that land possession logistics are carefully planned and integrated with the project programme.  

Change Number 3: Counter-notice to a Notice-to-Treat: Requiring Possession to be taken by a Certain Date

Benefits: Land Owners and Occupants

The current regime allows acquiring authorities to take possession up to three years after serving a notice entry, when served at the same time as a notice to treat. This can cause uncertainty for occupiers and often increase the cost of their relocation.

The Act will allow occupiers with an interest in the property who have received a notice of entry to serve a counter-notice, specifying a date by which they require the authority to take possession. This date must not be before the end of the notice period specified in the notice of entry (which is now at least 3 months following Change Number 2) and must be at least 28 days after the day on which the counter-notice is served by the occupier.

From the occupiers’ perspective this gives them a new power to obtain certainty as to when they will be dispossessed following the service of a notice of entry. This will allow occupiers to plan their relocation with greater confidence.

Acquiring authorities will have to consider carefully when they serve a notice of entry, given they could be required to take possession as soon as the notice period expires. As with change 2 above, it will require careful planning of land possession logistics and integration with the project programme. Care must also be taken to ensure that land is properly secured and managed if possession is deemed by the expiration of a counter notice rather than entry being taken by the authority in the normal way.

Change 4: Changes to Advance Payments (s52 Payments)

Benefits: Land Owners and Occupants

Where possession of land is taken through compulsory purchase powers the current legislation requires acquiring authorities to pay an advance payment, being 90% of their initial estimate of the claim, within 3 months of receiving a formal request or by the date of possession (whichever the latest).

Unfortunately for claimants there has been no way of enforcing the payment is made within the required timescales. Although acquiring authorities are required to pay statutory interest on any unpaid compensation from the point of entry, this is set at 0.5% below the Bank of England Base Rate. As such this interest is currently set at 0% and is rarely high enough to ensure advance payments are made in a timely manner.

Where claimants aren’t paid advance payments within the required timescales this can often defeat the point of the payment in the first place. Landowners and occupiers can be left in a position whereby their property interest has been acquired, but they have to carry the full burden of relocation costs at risk until compensation is agreed.

The Act brings fundamental change to advance payments, both to the timescales by which payments are to be made and also to the consequences of failing to meet these.  The earliest date by which a payment will be due is to change from the point of entry, under the current regime, to the date a notice of entry is served or a GVD is executed.

If payment is not made within the new limits, the acquiring authority will be required to pay interest on the unpaid amount. The level of this interest rate is to be set by the Treasury, the intention being to penalise acquiring authorities that fail to meet the new regulations.  

In the past where acquiring authorities have served notices to treat well in advance of taking possession, the claimant has been forced to wait until the point of entry to receive an advance payment. Where acquiring authorities take this same approach under the new regime, they may be required to pay an advance payment upon serving a notice of entry; rather critically this would be before they have taken possession. In the event an acquiring authority then to decide to withdraw from taking possession of the land, the claimant will be required to repay any advance payment made to them. The onus will then be on the acquiring authority to pursue the debt which could be time consuming and expensive. Such a prospect adds further reason to ensure notices of entry are only served and GVDs are only executed once it is certain land is required for the scheme.

Change Number 5: Extension of Compulsory Purchase Time Limit Following a Legal Challenge

Benefits: Acquiring Authorities

Typically an acquiring authority has 3 years in which to serve notices to treat or execute a general vesting declaration. This time limit commences as soon as the acquiring authority publish the confirmation of the Order.

However parties who are aggrieved by the decision can legally challenge the CPO within 6 weeks of the date the confirmation of the Order has been published. During this period acquiring authorities can have their powers suspended, and even where this is not the case, may choose not to use powers given the uncertainty as to whether the CPO will be rescinded.

The provisions within the Act, once implemented, will mean that where a CPO is subject to a failed legal challenge the three year time limit to serve notices will be extended by the same length of time as the period it takes to deal with the challenge up to a maximum of one year.

As a result, the Act reduces the scope for aggrieved parties to legally challenge a CPO for tactical reasons. That said, despite powers being extended following a failed challenge, this would not cover a planning permission relating to the CPO, leaving the acquiring authority with a reduced period in which to build the authorised scheme. 

A further change relating to legal challenges is a new ability for the High Court to quash the decision to confirm the CPO rather than the CPO itself. This is significant as it means the decision as to whether or not to confirm a CPO could be retaken, without the Acquiring Authority having to make a new CPO and undergo the full inquiry process once again. This could save Acquiring Authorities up to a year in re-securing powers.

Ben ThomasMRICS

Senior Surveyor

Ben’s role is providing land assembly services for infrastructure and regeneration projects, either through private treaty negotiations or if necessary through Compulsory Purchase Powers. He assists...

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