Compulsory purchase rules to change

Compulsory purchases - clearer, faster and fairer?

The process of compulsory purchase and the rules of compensation (CPO) are extremely complicated. So the government's announcement in its Autumn Statement that it will bring forward 2015 Budget proposals to make CPOs "clearer, faster and fairer", has got to be good news.

At the moment, the nature of the proposals is still unknown. Both the Country Landowners and Business Association and the British Chambers of Commerce have long campaigned for increased levels of compensation, though the latter's claim that the French pay considerably more compensation is a distortion of the truth.

Boris Johnson, too, has long advocated a significant increase in compensation. But I think it is very unlikely the government will support his "wall of gold" approach. The rules for paying compensation, known as the "Compensation Code" are formed by a series of acts of parliament extending back to 1845, together with legal decisions from 1845 to 2014. This makes the rules incredibly complex, contradictory and difficult to interpret. In my view a complete codification of the law is needed in a consolidating act. I fear ministers have already put this in the "too difficult" box.

However, HS2 (High Speed 2 Rail Route) has already extended the statutory compensation rules slightly for those affected, and it is probable that these rules will be extended to CPOs in general. Such minor tinkering will not significantly increase the cost of compensation to projects.

The government's reforms are much more likely to be focused on the procedure for CPOs. Rather than increase costs for promoters of infrastructure, streamlining the process will save them money. Equally, speeding up the process reduces the uncertainty for those whose properties are affected by the proposals. 

Because CPOs have such an impact, property owners and businesses have to be given time to prepare objections, and for those objections to be heard. Since 2008 there has been a process used for major infrastructure projects which specifies deadlines for delivery of CPOs. These deadlines must be met if the project is to go ahead. This is the first time that such deadlines have been imposed and the Development Consent Order process (DCO), as it is known, under the Planning Act 2008, has proved successful in meeting them, with a very low failure rate.

My view is that the DCO process will be extended, subject to suitable modification, to other forms of CPO. In which case, CPOs may become clearer, faster and fairer in 2015.

Further information

For more tips and advice, contact Savills Compulsory Purchase.

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