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26/05/2017

Compulsory Purchase Orders: the stumbling block or the solution to development?

Written by Samuel Carr

From the smallest regional house-builders to multi-national giants of the industry, developers and consultants across the country know that the planning process can be lengthy, bureaucratic, and contentious. Although the government’s recent Housing White Paper indicates that ministers and civil servants appreciate the importance of increasing the rate of house building across the country, the same cannot be said of all local councillors. While some are to be commended for their constructive attitude to development, many others default to a mind-set of obstruction and hostility to even the most modest of proposals. Nothing demonstrates the significance of this difference in approach more clearly than local authorities’ attitude to Compulsory Purchase Orders (CPO).

Compulsory Purchase Orders

In brief, Compulsory Purchase Order refers to a series of statutory provisions which, in certain circumstances, empower a local planning authority to force third-parties to sell their land to make way for development. They are designed to allow local authorities to acquire key areas of land which impede the construction of critical development proposals, and thus ensure that highly localised groups cannot hold out forever. The case law on Compulsory Purchase is extensive, but the key principles which govern the use of these orders are that:

  • they must only be used as a last resort to secure the assembly of land for development;
  • acquiring authorities must offer a compelling case that the development fulfils a sufficient public interest to outweigh existing property rights;
  • councils or government agencies must provide compensation to those deprived of land equivalent to the market rate, and;
  • housebuilders are obliged to demonstrate that they have taken reasonable steps to acquire property by voluntary agreement before a CPO can be considered.
How can local authorities’ use of Compulsory Purchas Orders assist development?

If local councils or planning authorities have confidence in a housing or commercial proposal, CPOs can prove the vital solution in two key respects. First, in that local authorities can use these instruments to pressure housing developers to build on land by threatening to acquire land they fail to use. By agreeing the use of Compulsory Purchase in principle, councils sometimes seek to incentivise builders to break earth on their plans or to impose a timetable on them. Second, in that they are an absolutely necessary step in the construction of critical national assets by local and central governments. Without this process it would be impossible to put together the considerable contiguous parcels of land needed for major new housing estates such as Ebbsfleet or Aylesbury, or deliver on national infrastructure plans such as High Speed 2 and the Olympic Park.

It should be stressed, however, that CPOs cannot be used without attracting major local and political controversy. A case to use them must be sufficiently compelling to pass the public interest test, and even in this instance considerable efforts will need to be made to overcome the opposition and sense of unfairness which will be felt by those pressed to move. Local authorities will need significant political capital to move forward, and the developers who work with them may suffer in the public relations contest. They are, furthermore, time-consuming and expensive to administer. Confirmation through a minister; the need for the developer to fund a detailed public inquiry; and the burden of compensation for disturbance, property, possessions, mortgage, and chartered surveyor, all add to the material cost of development. Experience and a well-prepared business plan will be useful in coming to a judgement as to their value-for-money on a case-by-case basis.

However, Compulsory Purchase Orders can also be used to hinder development

If a local authority is determined in their opposition to most housing and commercial development, as is sometimes the case in more rural parts of England, compulsory purchase orders can also be used as a tool to prevent development going forward.  Just as CPOs can be used to gather contiguous parcels of land to enable development, councils can acquire large stretches of land in order to prevent development in the area. Engagement with local authorities as Local Plans are implemented is necessary to influence and to mitigate this practice to benefit the cause of development.

In the end, although Compulsory Purchase Orders are a vital tool, they cannot be used without cost in financial and public relations terms. They will continue to be an important tool in the work to meet the country’s housing and infrastructure needs moving forwards, but developers, councils, and consultants would be advised to make very careful assessment of their financial and public relations cost before they are pursued.

Want to know more about how Compulsory Purchase Orders could affect your  project? Get in touch

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