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30 November 2017

The Neighbourhood Planning Act 2017: What does it mean for Compulsory Purchase Orders?

Compulsory Purchase Orders (CPOs) enable public bodies to acquire land for projects considered to be in the public interest. This is an important resource for driving regeneration, particularly in urban areas where space is often a limiting factor for development. Support in the Housing White Paper for use of the procedure to meet targets for housing delivery confirms that CPOs are set to have a more prominent role in development going forward.

As part of the drive to increase the use of CPOs, the government has sought to reform the legislation governing these powers, which has developed piecemeal over time and has been criticised for its complexity. The Neighbourhood Planning Act 2017 (NPA) has introduced a suite of changes designed to simplify and provide more certainty in respect of the CPO procedure. We set out below a summary of the key changes both already implemented and yet to be brought into force.

Changes from September 2017

On 21 September 2017, the UK government introduced a statutory instrument which brought into force the following provisions of the NPA:

  • The “no-scheme” principle – Assessment of compensation for those affected by the CPO scheme has been codified. Compensation is based on the market value of the land, assuming the scheme has been cancelled on the valuation date. Any increase or decrease in the value of land caused by the CPO scheme (or the prospect of the scheme) is therefore to be disregarded. Transport infrastructure projects relevant to the scheme are also to be excluded for the purposes of valuation.
  • Removal of second-bite compensation – Those affected by a CPO are no longer entitled, as they were under the old regime, to claim compensation where planning consent is granted for additional development on the land within ten years following completion of the compulsory purchase.
  • Compensation for disturbance – Where the land being acquired is subject to an unprotected tenancy or minor tenancy, regard must be had to the likelihood of the tenancy continuing in determining appropriate compensation for the landlord and tenant. This abolishes the previously applied “Bishopsgate principle”, where tenants who hold their lease outside the Landlord and Tenant Act 1954 receive compensation based on the assumption that the tenancy will come to an end on the earliest date it could under the terms of the lease.
  • Joint CPOs – The Greater London Authority, Transport for London and the Mayoral Development Corporation are now each allowed to acquire land authorised by a CPO on behalf of the others to facilitate joint regeneration schemes.
  • Deadline for confirmation notices – The acquiring authority must issue a confirmation notice within six weeks of the CPO being confirmed, which will then trigger the six week challenge period and the three year period within which the compulsory powers must be exercised. Previously, there was no statutory requirement for the notice to be published within a designated timescale. The above changes will only apply to CPOs made on or after 22 September 2017. The previous regime will apply to any CPOs made before this date. 

Changes yet to come

The following provision has not yet been implemented:

  • Temporary possession – The NPA introduces a right exercisable by public bodies to take temporary possession of land (on at least three months’ notice) so that the land can be used for preparation for the scheme, for example the storage of construction equipment. Those who have a leasehold or freehold interest in the land can limit the period of possession to one year where the land is a residential dwelling and six years for other land by serving a counter-notice. They will be entitled to compensation for any loss sustained as a result of the temporary possession and the NPA introduces provision for advance payment, similar to the requirement under the Housing and Planning Act 2016 for CPOs.

Conclusion

The NPA introduces significant changes to the CPO process, most notably codification of the “no-scheme” principle and temporary possession of land. Whether this will facilitate a faster and simpler procedure as intended by the government remains to be seen. It is likely that the interpretation of provisions, particularly those related to compensation, will be a source of contention going forward. The certainty provided by the NPA however is positive for acquiring authorities, landowners and developers and a step in the right direction in terms of codification and consolidation of the CPO legislation.


This article was written by Vanessa Short, for more information please contact Vanessa on +44 (0)20 7203 5202 or vanessa.short@crsblaw.com

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