On budget day the government launched a consultation exercise on reforms to the compulsory purchase (CPO) process, including revised and updated guidance to replace the current circular which is now over 10 years old. A link to the consultation can be found at the end of this briefing. The deadline for consultation responses is 9th June 2015.
Key proposals for reform are set out below and we would be happy to discuss these with you or any other detailed aspects of the consultation or prepare representations on your behalf.
- Encouraging public authorities to offer good levels of compensation - the proposal is to issue guidance to acquiring authorities encouraging them to make higher offers at the outset which reflect the possible costs associated with having to go through the CPO process. This flexibility may well prove helpful in terms of encouraging early settlements but developers and authorities will need to factor in additional possible costs when setting their budgets. There is also a risk that higher offers may set the tone for negotiations across a regeneration area and it is also possible that the Lands Chamber may treat such offers as evidence of market value – so great care would need to be taken in formulating such enhanced offers.
- Powers of entry – the proposal is to standardise rights of entry for surveys for all acquiring authorities. This makes a good deal of sense as there is no obvious justification for different authorities having different powers in this area.
- Statutory targets and timescales for the confirmation process – the proposal in a nutshell is that once the starting date letter has been issued for the inquiry/written representations process, it will be subject to time limits which can be varied only in exceptional cases. The prospect of more predictable time frames for the confirmation process will be welcome news for those planning development programmes. However, there is a concern that the quality of decision making may suffer if there is an over-emphasis on adhering to time limits so some flexibility is essential. Clearly, it is critical that the Planning Inspectorate have the resources to respond to this initiative.
- Delegating decisions to inspectors – the proposal is that decisions which are of ‘local importance’ could be determined by inspectors rather than the Secretary of State. This seems sensible subject to clarity over what is of ‘local importance’ as this can often prove a difficult issue in planning decision making.
- Reforming High Court challenges – the headline proposal is that where the confirmation of the CPO is successfully challenged this should not mean that the CPO itself is quashed – in other words the acquiring authority would not have to restart the entire process. This would help to avoid wasted time and costs associated with having to make a fresh (and possibly identical) CPO. Other proposals include ensuring that challenges to CPO refusals proceed using the same statutory challenge mechanism that applies to confirmations and, importantly, in the event of a challenge, that the clock should be stopped on the three year period for implementing a CPO. The latter measure will help in terms of certainty of delivery of schemes and in discouraging spurious court challenges aimed at frustrating the implementation of CPOs.
- Extending and harmonising the notice of entry period – the proposal is that the minimum period for entering onto land once notice of entry is given should be increased from 14 days to three months. This appears an unhelpful proposal from a developer/acquiring authority point of view as it is often important to have the flexibility of gaining possession quickly - and in reality owners and occupiers usually get plenty of notice, even where a notice of entry is used. Giving acquiring authorities enhanced powers to take temporary possession of land may assist but this is not a measure suggested in the consultation.
- Advance payments of compensation – the key proposal here is to bring forward the date from which an advance payment can be claimed. The proposal is to allow a claim to be made at any time from the date of confirmation which then must be paid within two months of the date of the notice to treat/execution of the GVD. This may mean that acquiring authorities/developers are faced with claims before they are ready and this could impact on cash-flow and funding arrangements. The proposals for a fast-track service to determine the amount of and enforce the making of advanced payments could exacerbate this problem and fetter an authority’s ability to argue its case in the Lands Chamber at a later stage. Finally, acquiring authorities and developers are unlikely to welcome the suggestion that the CPO cannot be implemented following a reference to the fast-track service until the matter is resolved as this could severely impact on programme.
- Improved Levels of Interest on Outstanding Compensation – the proposal is to increase interest due on compensation from 0.5% below base rate to 1% above it with a 1% interest rate floor. Compound rather than simple interest is also mooted as in recent years the amount of interest paid has been negligible.
- Transferring mortgages to avoid negative equity – the proposal is to work with lenders and the Financial Conduct Authority to secure a voluntary agreement on ‘porting’ mortgages between properties. This will be particularly helpful when it comes to CPOs supporting housing regeneration schemes.
- Extending powers to override easements and restrictive covenants – the headline proposal here is to extend existing powers to override covenants and easements enjoyed by some acquiring authorities to other authorities. Ensuring a consistent approach in this area seems entirely sensible.
- Revised CPO Guidance – this does not radically alter the approach in the existing circular guidance – key concepts such as the need to demonstrate a compelling case in the public interest have stood the test of time and have been retained. One element that could be usefully borrowed from the equivalent Scottish CPO guidance would be to include a table identifying selected Acts, the relevant section, the promoting body and a summary of the CPO power - this has proved a really useful resource for those involved in CPO action north of the border.