The Levelling-Up and Regeneration Act 2023 & compulsory purchase

The legal framework for compulsory purchase has been subject to piecemeal change and evolution over many years, with most major pieces of planning legislation introducing an incremental change or two. The Levelling-Up and Regeneration Act 2023 (LURA) is no different and include the following key changes.

Hope value

The market value of land can reflect the “hope” of getting a valuable planning permission in the future, which can mean that land is worth more than is reflected in its existing use.  For example, agricultural land on the edge of a settlement may be worth more that agricultural value, due to the prospect of getting a residential permission at some future stage. The removal of hope value from compensation can therefore mean less money is payable to landowners by way of land value and may (in theory) mean that a higher contribution towards “planning gain” (such as new community infrastructure) can be secured. However, the removal of hope value can be controversial, as where land has already traded at values reflecting hope value, existing landowners might not be fairly compensated.

As a compromise, LURA allows the local authority to apply to the Secretary of State (as the confirming authority for a compulsory purchase order) to ignore the prospect of additional planning permissions being granted in assessing compensation and applies where land is being compulsorily acquired for health, education or planning purposes (which can be broadly applied).  Accordingly, it will be for the Secretary of State to assess where hope value can be disapplied. Additional compensation might become payable in the future however, if the acquiring authority’s stated intentions as to the land acquired are not materially fulfilled, providing uncertainty for those funding development schemes underpinned by compulsory acquisition.

Certificates of Appropriate Alternative Development (CAAD)

Landowners can apply for a CAAD to establish what planning permissions could reasonably be expected to be granted in the absence of a scheme underpinning compulsory purchase. Under LURA, the application must identify a specific description of development proposed to be AAD on the valuation date (or the date of determination of the AAD application if earlier) – the authority may issue a certificate for a less extensive description however. Where development benefits from being AAD, planning permission for that development is taken to be a certainty. Otherwise, the prospect of another planning permission being granted (including the future prospect) is to be assessed.

Conditional confirmation

New provisions will allow the confirmation of compulsory purchase orders to be delayed until specified conditions have been discharged. For example, this could allow an order to be confirmed conditional upon the grant of planning permission.

Process

There are also powers to allow compulsory purchase orders to last longer than the current three years; to allow changes to the date of vesting after service of notice of vesting (for example to give an owner more time to relocate); to ensure publicity around orders can be found online; and facilitating the use of written representations for contested orders.

A more substantial review by the Law Commission of the compulsory purchase procedure and compensation is ongoing. The Law Commission last reviewed the system in the early 2000s, but the changes were not implemented in full. In the meantime, the changes introduced by LURA will come into force on a day the Secretary of State appoints by regulations.