The Neighbourhood Planning Bill was published on 7 September 2016. The Bill has a number of aims:
■ it seeks to streamline the procedure for modifying neighbourhood plans, and to speed up the time when plans come into force after they are approved in referendums;
■ it seeks to introduce measures to help free up land for, and speed up the delivery of new homes; and
■ most controversially the Bill also contains provisions to “simplify” compulsory purchase, in particular by clarifying the compensation process which is currently made up of a number of statutes and case law, to provide “a fairer system” which will not affect the fundamental principles on which it is assessed.
The measures being taken forward in this Bill which will affect landowner or occupier compensation are to:
■ Codify and extend the disregard to value reflecting the “no scheme world” to include previously consented “relevant transport projects”. This means that any uplift in value of land as a result of early enabling infrastructure works (which is currently captured and claimable) will be disregarded, along with any uplift in value as a result of the scheme that underlies the compulsory purchase. The value of the land will be assessed as if no development at all had taken place.
A “relevant transport project” will be one where the regeneration or redevelopment that triggered the CPO formed part of the justification for the earlier transport scheme and whether the relevant transport project first opened for use more than 5 years after clause twenty two is commenced (mid-2022 based on current predicted commencement of mid-2017). Those who have purchased land after 8 September 2016, after the publication of the Bill, are expected to be aware of this difference and to factor it into the price.
Anyone looking to purchase land which could be affected by a CPO in the future must therefore be careful to factor this change into their negotiations in order to minimise the risk of buying land at a premium only to find that the uplift caused by enabling works cannot be recouped. The Bill also seeks to put in one place the current principles of the “no scheme world” derived from various judicial decisions and pieces of legislation.
■ Reform the “Bishopsgate” principle. Under the current rules, compensation for licensees is assessed by reference to how long the land might be available for the licensee’s occupation. In contrast, for short term tenants and tenants whose lease is subject to a break clause, the landlord is assumed to terminate the interest at the first opportunity. The reform will put compensation for short term tenants and tenants with a break clause on the same basis as for licensees.
For tenants without security of tenure under the Landlord and Tenant Act 1954, the likely prospect of a renewal tenancy must be taken into account.
■ Repeal Part 4 of the Land Compensation Act 1961, which governs compensation where the acquiring authority obtains a more valuable planning permission than expected. The government believes that Part 4 should not be necessary, as the potential for obtaining planning permission in the future already forms part of the statutory assumptions for calculating compensation but at the moment it is an explicit safeguard for affected landowners.
■ Provide for temporary possession, to allow bodies with CPO powers the power to temporarily enter and use land to deliver the scheme. The government will build safeguards into the power, for example regarding the reinstatement of the land and protecting the status of tenants. This will bring significant benefits to acquiring authorities and their development partners in terms of the compensation bill for a scheme, as often land and particularly rights over land are only required during construction but payment must be made for a permanent interference. Conversely, however, it may bring about a decline in engagement with landowners by authorities. Currently, where land or rights are only required on a temporary basis, authorities must engage with landowners and occupiers to agree temporary measures, or a relinquishment/sale back in the future to minimise objections and compensation. Often landowners can get a better deal by private treaty so they may need to be more proactive in future!
■ Repeal section 15(1) of the Land Compensation Act 1961, which assumes that planning permission would be granted for the acquiring authority’s scheme. This is an administrative tidying exercise as the section has already been made redundant by section 232 of the Localism Act 2011.
The Government has also committed to bring forward a package of further measures affecting the calculation of CPO compensation under secondary legislation, as soon as possible. These include:
■ Reversing the loss payment share for landlords and occupiers. Presently, owners of land are likely to receive more compensation than occupiers. This is unfair, the occupier suffers the greatest inconvenience by having to close down or relocate. Going forward, occupiers will receive the greater share of loss payments. Current caps on payments will also be reviewed.
■ Setting the penalty interest rate for late payment of advance payments at 8% above base rate.
■ Statutory blight. At present, owner-occupiers of nonresidential and non-agricultural properties may submit a blight notice if the property’s rateable value is below £34,800. The Government will set a higher rateable value limit in Greater London and will also consider whether a higher limit is required in other areas of the country.