Compulsory Purchase: Recent and future changes

The Levelling Up and Regeneration Act 2023 (‘LURA’) heralds the introduction of a range of statutory measures intended to reduce geographical disparities and spread opportunities more equally across the country.

These measures include several amendments to existing compulsory purchase legislation aimed at improving the process:

• Enable a confirming authority to confirm a CPO conditionally (i.e. following grant of planning permission / once funding conditions are in place)
• Enable a confirming authority to authorise a longer period for implementation of confirmed compulsory purchase powers than previously allowed
• Enable an acquiring authority to agree in writing to a later vesting date where appropriate
• Simplify certificate of alternative appropriate development (CAAD) provisions; if the landowner pays for and obtains a CAAD, land to be compulsorily acquired is to be valued with the benefit of planning consent. The prospect (or hope value) of obtaining a planning consent at some later date is for the market valuation process to determine
• Enable the confirming authority to issue a direction alongside a confirmed CPO for housing/education/NHS facilities - where there is a compelling case for acquiring land in the public interest - that ‘hope value’ for appropriate alternative development is to be disregarded for valuation.

The aim of these provisions is to streamline compulsory purchase procedures to make it easier and quicker for regeneration schemes - wherever required - to get up and running. 

These provisions are either newly in force or not yet operational, making their impact largely untested. It will be interesting to see whether they operate to encourage promoters to bring forward more regeneration projects across the country.  In addition to the changes introduced by LURA, there has long been a call for a comprehensive review of the compulsory purchase and compensation regime. This is particularly relevant given the current political will to promote large-scale projects to improve both local and national infrastructure, especially in light of the UK’s net zero targets.

In separate, but related news, there has been a long held view that a whole-scale review of the compulsory purchase and compensation regime is overdue in order to make the statutory and legal framework underpinning compulsory purchase and compensation fit for purpose. This is pertinent given the current political will to promote ever more large-scale projects to improve both local and national infrastructure, particularly in light of the UK’s net zero targets. 

A Law Commission Review in the early 2000s (Towards a Compulsory Purchase Code) lead to Law Commission recommendations in 2003 and 2004 which were well received but which have (still) not been implemented in full.  There has since then been an increasing use of the development consent order procedure (incorporating compulsory purchase powers) for nationally significant infrastructure projects since introduced in 2008 meaning increased use of compulsory purchase powers.

Whilst there has been some piecemeal reform of compulsory purchase and compensation legislation, including - most recently - the introduction of the Levelling Up and Regeneration Act 2023 provisions outlined above, there has been no root and branch reform of compulsory purchase law as the Law Commission envisaged there should be. 

The call for a comprehensive modern compulsory purchase code continues and the Ministry of Housing Communities and Local Government (formerly the Department for Levelling Up Housing and Communities has asked the Law Commission to review; (i) procedures governing acquisition of land through compulsory purchase orders (CPOs); and (ii) the system for assessing CPO compensation, with the aim of producing a draft Bill consolidating the law and introducing technical changes to ensure the law in this area is fit for purpose, accessible and internally consistent.

Topics for consideration as part of the forthcoming consultation may include:

• Promotion of a single compulsory purchase code including a codified test for compulsory purchase (in contrast to current reliance on a wide range of legislation, caselaw and common law)
• Use of modern rather than archaic language in relevant legislation to make the law current and accessible
• Whether there is a case for a single implementation procedure (at present compulsory purchase powers can either be implemented by notices to treat and enter or by general vesting declaration)
• Should landowners be entitled to compensation where a CPO scheme has been abandoned? (this is particularly relevant in light of the recent political U-turn on HS2)
• Should compensation be treated as a single global figure with a single valuation date for consistency (at present compensation is broken down into its constituent elements (with different valuation dates) of market value, hope value and disturbance etc)?
• Would it be helpful to have an express statement of the general objective of the compensation code (the current principle of equivalence derives from caselaw)?
• When calculating compensation for severance and injurious affection, should (i) set off for betterment be retained; and / or (ii) should before and after valuations be permitted?
• Is there merit in replacing the current two limb statutory test for ‘disturbance and other loss’ with a new ‘consequential loss’ test. If so how would this test be worded and should it expressly provide for a failure to mitigate/ reflect personal circumstances etc. When would such right to compensation arise?

A consultation paper is anticipated this year (2024) which no doubt will touch on these and other points.  It will be interesting to see how the Government responds and what reforms, if any, are made.

In the meantime, I would encourage Local Planning Authorities firstly, to engage with the forthcoming consultation but, secondly, to think about how the new LURA changes can facilitate greater, and potentially faster, delivery of regeneration schemes in your area.