What is a Compulsory Purchase Order?
A compulsory purchase order (CPO) is a legal process that allows acquiring authorities (including public and private bodies) to require those with interest in property, e.g. owners and occupiers, to sell their interests if they obstruct any development or infrastructure project that benefits the ‘greater public good’.
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CPO’s are common for public projects like road improvement and rail schemes, airport extensions, urban regeneration projects and utility and infrastructure developments. For a CPO to be successful, the acquiring authority must meet certain criteria, including proof that the purchase is of public interest. CPO’s can be issued by various acquiring authorities, including local government and regional development authorities, utility companies, government agencies and transport companies, e.g. HS2.
Acquiring authority cannot force a private homeowner to sell their land or property. Anybody looking to purchase private land needs to secure a CPO and can only do this after demonstrating why it is required. This is usually (but not always) through a public inquiry process. Sometimes, as in the case of water companies, powers giving access to land are contained in legislation specific to that utility. Additionally, special rules exist for very large schemes such as power stations and transport projects.
What Does It Mean to Get Served With a CPO?
As a private owner, receiving a CPO does not mean you are forced to sell. It is an indication that an acquiring authority is applying to a government department for the authority to either purchase your property or acquire an interest in it. Depending on the circumstances, this process may take months or even years to come into effect, if at all. Those with interest that are directly affected will have the right to object and negotiate changes to the proposals. Early engagement is key.
What Compensation Should I Receive?
As part of the CPO, private homeowners should receive compensation for their property or land. If your land has been purchased as part of a CPO:
- You should be paid compensation based on the market value of the existing use of your property or land that is acquired.
- You should also receive compensation to reflect the impact of value on any retained property you still own. This is called Injurious Affection.
- The compensation should leave you in the same position as you were in before the CPO.
- Overall, you should be compensated for the worth of the actual land or property acquired, as well as any reduction in value that occurred based on the CPO.
- You may also be compensated for temporary losses if these can be proven, as well as professional costs.
There are special equivalent reinstatement rules for properties that do not necessarily have a market value.
What is the Compulsory Purchase Order Process?
The process of a CPO can be lengthy and drawn out. Here we lay out the step-by-step compulsory purchase order procedure:
Step 1: The applicant must undertake a feasibility study of the area and surrounds to determine what extent of the land is required. The land being considered should form part of the feasibility study.
Step 2: The applicant will contact the landowner/occupier to make arrangements to negotiate.
Step 3: Once the initial negotiations are over, a draft CPO may be served should the landowner decline a sale. Landowners should contact the authority for a better understanding of the process and what is expected. You should also keep track of all events and expenses associated with the CPO. The applicant will then have to compile a CPO report in readiness for both landowner negotiations and an inquiry with the appropriate authority.
Step 4: The landowner must provide additional information, including proof of ownership of the land. Any failure to provide requested information or providing false information is illegal. If you have been served with a draft notice, you should seek legal advice immediately.
Step 5: Once all the relevant data has been collected, the authority can work towards an inquiry to uphold the draft orders. The draft CPO should include details like plans for the area, the owner’s particulars, and the details of any third parties. Additionally, a press release announcing the proposed CPO must be published in the local newspaper for at least two weeks and a physical notice must be erected on or near the area of interest.
Step 6: A separate notice will also have to be served to everyone who will potentially be affected by the draft CPO. These notices should also detail how and when objections will be considered and suggest a suitable time for a hearing.
Step 7: After the closing date for any objections has passed, it will be decided if an inquiry is necessary, depending on the legitimacy of the objections. The outcome of the inquiry will determine whether the CPO is accepted, rejected, or needs to be modified. Reasons for the decision should also be given.
Step 8: Once the CPO is successfully accepted, the landowner will be eligible for compensation, which will be calculated according to various factors like the value of the property.
Compulsory purchase orders can be complex, so it is advised that landowners seek professional and legal advice before agreeing to any compensation to ensure they are fully aware of their rights and legal position.