Compulsory Purchase process
The Compulsory Purchase process
First thing to point out here is that there is no one size fits all. For a start, the mechanism will depend on what type of Compulsory acquisition is pursued. For example, a railway scheme is highly likely to be promoted under a different consenting regime than a Council Estate regeneration scheme.
The below timeline is indicative for an Estate Regeneration scheme, that being the most common type that we are involved with, albeit we can advise on others.
So when is the best time to do a deal?
This is a question we often get asked. The answer unfortunately is how long is a piece of string. The aim of course has to be to secure a fair deal. Some authorities will make fair offers quite early on in the process whilst others will wait till quite late on. Whilst Compulsory Purchase should always be a last resort, some authorities are far more willing to pursue powers than others.
The appropriate time to do a deal will vary according to the scheme, the relative negotiating strength, the acquiring authority, the market and a whole array of different interplaying factors. Where we represent large numbers of homeowners, we can often speed up the process of securing fair offers.
It is a myth though that waiting till the last moment to do a deal gets a better compensation settlement. Whilst that can be the case, normally the opposite applies.
TIMELINE
The below timeline is indicative for Compulsory Purchase for an Estate Regeneration scheme promoted by a Council, where powers are granted. Negotiations for sales on Compulsory Purchase terms can often start very early on in the process. The vast majority of transactions on Compulsory Purchase terms are completed prior to an acquiring authority gaining Compulsory Purchase powers.
The final few stages can be rather unpleasant for homeowners. The Council would normally want to avoid them as well.
Stage 01
Stage 01: Consultation begins
Council begins consulting with affected parties on broad principle of regeneration. Consultation will continue through most of the process. At this stage, little may be known about the regeneration scheme. What will be built, when it will be built and when properties will be demolished may not yet be known.
Stage 02
Stage 02: Development partner and Housing Association procured
The majority of Council’s choose to work with a Developer and a Housing Association. Some decide to go it alone. Where there is a development partner, Council’s will normally undertake a procurement process where tenders are submitted. The more restrictive the tender process is, the less attractive the proposition will be to developers. Developers will of course have their own preferences for what the scheme would look like. A Housing Association is often appointed as well to manage the letting or sales of any affordable housing element.
Stage 03
Stage 03: Masterplan is created along with a Planning & Development agreement
The Council along with their development partners will create a blueprint for what they expect the regenerated estate to look like and a routemap for how they will get there. Often, a homeowner guide is produced around this time as well to explain how individuals are affected. Consultation will often step up as well.
Stage 04
Stage 04: Council resolution
Decisions to regenerate an Estate should not be taken lightly. As such, a number of Councillors within a Council will be consulted on proposals. They will make a resolution to decide whether to pursue Compulsory Purchase or not. Some Council’s will have this decision made by its Cabinet of Councillors and some will have it made by a Cabinet member who is a key Councillor, often supported by others.
Stage 05
Stage 05: Land Referencing
For a Council to make a Compulsory Purchase Order, it must find out who is legally entitled to be informed. They do this by a process called Land Referencing which is a questionnaire sent to every property. This will be supplemented by checks of ownership at the Land Registry. Questions include who owns a property, who lives there and who mortgages are with. The only question most of our clients don’t know the answer to is the exact term of their leasehold interest (where applicable). However, we record this so can advise.
Stage 06
Stage 06: Compulsory Purchase Order (CPO) is made
When the Council make a Compulsory Purchase Order, what they are affectively doing is requesting permission from Government for Compulsory Purchase powers. These are needed for if agreement cannot be reached with affected parties on a voluntary basis. The CPO will comprise of a cover letter, a schedule of interests (information found out during the land referencing) and a Statement of Reasons (SoR). The SoR is the Council’s justification for Compulsory Purchase, identifying how statutory and regulatory tests have been met.
See our guide on a Compulsory Purchase Order being made here.
Stage 07
Stage 07: Objection period
Once the CPO has been made, people with qualifying interests will be able to make an Objection to the Order, submitted to the Secretary of State for the Ministry of Housing, Communities & Local Government. There will be a period of time, typically about 28 days where objections can be made. If there are no qualifying objections to the Order or if any that are submitted are withdrawn, the Council will be able to confirm the Compulsory Purchase Order themselves. This means they would have Compulsory Purchase powers.
Objections can only be on limited grounds which do not include the level of purchase price being offered for the property. Typically, objections often delay a regeneration process but extremely rarely stop them.
We can submit objections on a clients behalf but cannot recover our fees for doing so. As such, where we submit objections, we would charge homeowners directly. This would only be done by express agreement.
Stage 08
Stage 08: Public Inquiry called and preparation
If there are outstanding objections, Government will call a Public Inquiry to assess the merits of the Compulsory Purchase Order. In preparation for this, the Council and its’ partners will produce various professional Statements of Case and summary documents of the same. This is their evidence put forward to the Inquiry to make their case for why they should receive Compulsory Purchase powers. Similarly, Objectors are able to put their own Statement of Case forward.
Both ‘sides’ will have the opportunity to read out summaries of their evidence in a witness box under court rules. They can also be cross examined by the other side. Typically, Council’s will be represented by Queens Counsel.
It is important to be aware that evidence put forward can only be on limited grounds and that court rules apply. Also that statistically, nearly all Public Inquiries result in Council’s being granted Compulsory Purchase powers.
See our guide on Public Inquiries here.
Stage 09
Stage 09: Inspector makes recommendation to Government
The Government appointed Inspector will write up his or her report to the Secretary of State, advising whether to Confirm the Compulsory Purchase Order or to not confirm it. Amendments can also be made. On occasion, the Secretary of State will delegate approval or otherwise to the Inspector.
The report can often take a few weeks to be submitted and then take weeks or months to be considered by Government. Often delays are due to workload within Government, with limited resources to being able to assess reports.
Stage 10
Stage 10: Compulsory Purchase Order to be confirmed
If the Secretary of State (or by delegation the Inspector) permits the Compulsory Purchase Order to be confirmed, this means the Council are granted Compulsory Purchase powers. Any remaining objections are overruled so are affectively then null and void. The Council will still try to buy properties by agreement but will now know they can acquire them by force if required.
Stage 11
Stage 11: Statutory notices for Order being confirmed
The Council will now place public notices and write to affected parties, confirming that they now have Compulsory Purchase powers.
See our guide on Confirmation of a Compulsory Purchase Order here.
Stage 12
Stage 12: General Vesting Declaration (GVD) served
The GVD is a Statutory notice which provides a date at which properties it is served on are acquired under the Compulsory Purchase Order. This can be in as little as three months. Sales by agreement can complete until the date specified in the notice. After that date, it is not possible to sell as the Council will already own the property.
We often get asked whether the Council can really do this even if they haven’t yet paid anything. The answer is yes! A Compulsory Purchase Order allows a Council to acquire a property by Compulsion. Compensation assessment is then dealt with separately. Negotiations for compensation can still continue even after a property is acquired.
This is a worrying stage which it is best to try and avoid if possible. On occasion, it can result in former owners being forcibly removed from a property by bailiffs if required.
See our guide on General Vesting Declarations here.
Stage 13
Stage 13: Advance payment request
This request can be made after stage 11 if required but is more common after stage 12. A request is made under Section 52 of the Land Compensation Act 1973 for an advance payment. This is 90% of the Council’s opinion of the value of the claim. The Council’s opinion may of course be different from our own opinion or our clients. The payment is normally made within three months or made on or just after the date that ownership of the property is taken by the Compulsory Purchase.
It is important to make this request and do so correctly. We have known one client who prior to instructing us was paying a mortgage about a year and a half after the house he lost had been demolished.
Negotiations can still continue for not only the additional 10% but also any uplift if one is due.
Stage 14
Stage 14: Possession and legal title taken by Compulsory Purchase Order
At the end of the period specified in the General Vesting Declaration (stage 12), the property is owned by the Council. Whoever occupies it would therefore be trespassing unless they have signed a tenancy or licence agreement to remain. If they are trespassing, they can be removed by an accelerated court sheriff process similar to court appointed bailiffs.
Stage 15
Stage 15: Referral to the Upper Tribunal of the Lands Chamber
If agreement cannot be reached be reached on the compensation due, the Council or the homeowner may apply to the Lands Chamber. Prior to doing so, both sides are encouraged to consider alternative forms of dispute resolution. The Lands Chamber is only an available option once the property has been lost to a Compulsory Purchase Order at the last stage.
Justice is served with a binding judgment but the costs would almost always outweigh the potential benefit. Costs can typically be in the £tens of thousands for residential property cases and this may not be recoverable. In some cases, costs can be over £100,000. It may also take approximately a year to receive an assessment date and judgment.
Whilst we can advise on the Lands Chamber if needed, it is very much a last resort which in almost all cases should be avoided. The Council themselves would of course also want to avoid costs.
Stage 16
Stage 16: Time barred from claiming
Six years after a property is acquired under a Compulsory Purchase Order, the right to third party determination is lost unless a reference to the Lands Chamber has been made in time. Negotiations can of course continue but with no right to third party determination, negotiating strength is very poor. We have known one claimant (not one of our clients) have a half a million pound claim reduced to zero as a result.