Site assembly

Compulsory purchase has become a key component of urban regeneration schemes to facilitate site assembly, but it can be a minefield to navigate. Here are the answers to some of the most commonly asked questions:

Who can use compulsory purchase orders?

Many statutory organisations have compulsory purchase powers, including local authorities, government departments, regional development agencies and statutory undertakers. In practice, local authorities and highways authorities are most likely to use these powers. These organisations can use their compulsory purchase powers to bring forward publicly funded development and regeneration schemes.

How can a private developer take advantage of compulsory purchase powers?

Private developers can ask a local authority to use its compulsory purchase powers to assist in bringing forward a development scheme provided that they can meet the statutory tests. To protect both the local authority and the developer, a development agreement is used to regulate the roles and responsibilities of both parties in relation to the process.

If it is agreed that the developer will bear the costs of obtaining the CPO, an indemnity agreement will be put in place. The local authority must continue to provide the CPO, and to promote the acquisition of the land in the local authority’s name following due process under the statutes. Local authorities must show the use of powers is in the public interest and not just a case of balancing one commercial interest in favour of another.

Can compulsory purchase powers be used for every development?

No, CPOs are a last resort for developments in which the voluntary acquisition of land cannot be negotiated with the relevant landowners. The local authority must approach all relevant landowners to ascertain whether it is possible to acquire by agreement.

In addition, even if landowners are unwilling to sell, it must be shown that the making of a CPO would facilitate the development, re-development or improvement of the area or that a CPO is required for a purpose, which it is necessary to achieve in the interests of proper planning of the area. The local authority must decide whether a CPO is necessary by reference to one of these two tests. In addition, the CPO will need to contribute to the achievement of economic, social, environmental wellbeing.

This crucial decision will take into account the planning policy documents in place for the site. The local authority will eventually prepare a detailed statement of reasons for the CPO to justify its use of CPO powers.

What is acquired by a compulsory purchase?

Any interest in land that is necessary to progress the development – freehold, leasehold, licences and easements, such as rights of way and the benefit of restrictive covenants.

It is essential that detailed research is carried out in relation to land ownership, known as referencing. The boundaries of the scheme must be identified precisely and a map and schedule of all affected land produced.

What compensation will be paid to affected landowners?

Generally speaking, all those affected by the exercise of compulsory purchase powers have a right to compensation, which is calculated by reference to statutory and case law rules. These rules are complex and the amount payable will need to be determined in each case.

What is involved in a CPO?

Once a scheme has been formulated, the local authority will make a formal resolution to use compulsory purchase powers. This resolution will define the land to be acquired, and the purpose for which the land is required. The local authority will reference the land, as described above, and once this exercise is complete, will be ready to make the CPO.

The CPO is publicised in newspapers and at the development site. All affected landowners will be served with notice of the CPO. Objections can be made by those affected, and if they are not withdrawn, a public inquiry is held before a government inspector. In limited circumstances, objections can be dealt with by a written representations procedure. The inspector will produce a report on which the government minister with responsibility for planning matters will make a decision. The minister can confirm, reject or modify the CPO. If the CPO is confirmed, the local authority will publicise the decision. A copy of the notice of confirmation and CPO is fixed on the development site and served on affected land owners.

There can be a challenge to the CPO within six weeks of confirmation on limited statutory grounds. Assuming there is no challenge, the local authority will acquire the land either by general vesting declaration or notice to treat. This process must commence within three years of the date of confirmation of the CPO.

How are compulsory purchase powers used most effectively?

Good project management is essential, and the administrative aspects of the process must be dealt with in an organised manner. All parties – local authority, developer and consultants – must work to a realistic programme and have clear roles and responsibilities. Managing the process carefully will reduce the number of objections, and therefore the length and cost of the procedure.

It is important to approach the local government office at an early stage in the development, to help highlight issues that will need to be addressed. Clear channels of communication with all affected parties and stakeholders is key to the success of the CPO process.