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A Guide to Compulsory Purchase Order Compensation

Anyone who is faced with the prospect of having a land interest or rights interfered with through compulsory purchase due to an infrastructure or regeneration scheme affecting their property (e.g. HS2) will be all too familiar with the uncertainty and the risk this poses to their home life or livelihood.

Taking Action

If your property or land is at risk of compulsory purchase, it’s crucial not to ignore the issue. While dealing with compulsory purchase might not be your top priority, this is an opportunity to engage in meaningful negotiation with the acquiring authority. Early agreement can minimise disruption and help protect your interests.

Understanding Compensation

When statutory notices are served for land acquisition or rights interference, you become entitled to claim compensation under what’s known as the ‘Compensation Code.’ This body of law governs how losses are assessed, ensuring you are neither financially ‘worse off’ nor ‘better off’ due to compulsory purchase.

Assessing Losses

Losses stemming from compulsory purchase include the market value of acquired land and the impact on retained land’s value (if applicable) at the date of possession or vesting – the transfer of title to the acquiring authority. If your occupation is ‘disturbed,’ you may also be entitled to compensation for disturbance losses.

Key Principles

Understanding the principles of compensation is essential:

  • Causation: There must be a direct link between the loss and the acquisition/possession or the threat of it due to the project.
  • Remoteness: Losses due to acquisition must not be too remote and should be a ‘natural and reasonable consequence’ of dispossession.
  • Duty to Mitigate: Claimants must mitigate their losses, following what a ‘reasonable businessman’ would do with their own money.

Maximising Compensation: Top Strategies

Here are some strategies to reduce risks and ensure you receive fair compensation:

  1. Stay Engaged: Participate actively in the process, especially during the objection period, to address concerns other than financial settlements.
  2. Maintain Records: Keep a clear audit trail, including decision-making records and invoices for incurred costs.
  3. Obtain Quotes: When relocating, seek quotes for expenses to demonstrate value for money.
  4. Be Cost-Conscious: Be mindful of expenditure, aligning it with the principle of equivalence.
  5. Specialist Adaptations: Costs for specialist adaptations to a relocation property are recoverable as disturbance items.
  6. Losses in the ‘Shadow’: Losses due to the threat or prospect of compulsory purchase may be claimable once statutory notices are served.
  7. Statutory Loss Payments: Depending on your situation, statutory loss payments may be available, acknowledging hidden losses due to upheaval.

Requesting Advance Payment

Don’t forget to request an advance payment of compensation to secure funds ‘on account.’ This can be a valuable tool in your negotiations.

Remember Your Rights

Businesses and individuals facing compulsory purchase have up to six years following possession or vesting to refer their claim to the Upper Tribunal (Lands Chamber). Seeking assistance from a compulsory purchase surveyor can be a proactive step.

Contact Us

Gerald Eve’s Compulsory Purchase and Compensation team, as RICS members, adhere to strict standards of conduct and honesty. We are here to guide you through the process, protect your rights, and ensure you receive fair compensation. Contact us today to discuss your situation.

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Adam Rhead