Sector trends

Compulsory purchase orders: what do UK farmers need to know?

After years of neglect, investment in UK infrastructure is on the increase, and with that comes an associated rise in compulsory purchase orders (CPOs), which can mean major disruption for the farming community.

What is compulsory purchase?

Compulsory purchase involves the forceful but legal acquisition of private property rights by authorities undertaking infrastructure schemes that are of benefit to society – such as new road and rail projects, power lines and water supply. CPOs can have a massive impact on farmers and other landowners, and the rules surrounding them are complex.

In order to minimise the impact and disruption to their business, farmers need to seek timely advice, says Jamie Presland, public lawyer at One Pump Court. This is because different provisions apply to CPOs, depending on whether they’re made under general statutory powers, such as those governing a local authority, or under particular legislation for a given project, such as HS2.

“Sometimes specific legislation provides for a temporary use of land, for example, to lay a pipeline,” he explains. “But in general, the acquiring authority has no power to take only temporary ownership, so the process of a CPO can ensue. Once the CPO is drawn up, discussions with the landowner may follow to secure a temporary licence to carry out the works. But the landowner is free to require the land to be compulsorily purchased, and be entitled to compensation.”

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Compulsory purchase procedure is a complicated area of the law, and the first port of call for a farmer should be to a solicitor or a surveyor, who can advise on the CPO process, grounds for objection and representation at the public local enquiry, as well as offering practical advice on business contingency planning.

The advice to farmers from Andrew Shirley, chief surveyor at the Country Land and Business Association (CLA), is to keep an eye out for news of any development proposals. He says: “Whether it’s a new road bypass or an electricity company installing new pylons, compulsory purchase often starts with announcements being made at local authority (LA) level, or notices being placed in the local paper.

“When a local authority is working up its local plan, it’s worth looking at that because it could include some development proposals that you’re not happy about, and that’s when you need to make your representation. Farmers must make the time to see what’s going on, especially at LA level. The sooner they can get in there, the easier it is to get things changed and minimise the effect on their business.”

Objections and negotiations

David F Delaney, partner and head of planning at Aaron & Partners Solicitors, agrees farmers and other landowners should engage at the earliest opportunity and not wait for a draft CPO.

He says: “A ‘deal’ may well be able to be reached with an authority and the land acquired by agreement. A notice must be published in the local newspaper for two successive weeks [detailing] the making of the order, and there is then a minimum 21-day period in which to object. A farmer can negotiate prior to the making of a draft CPO. However, the district valuer, who will negotiate compensation on behalf of the authority, is unlikely to be formally appointed until the draft order is confirmed. Compensation can then be calculated based on land value, business loss and material loss arising from the division of land ownership.”

There’s a six-year window during which both parties must reach agreement as to the level of compensation, but if they fail to do so, the Upper Tribunal (Lands Chamber) will determine the sum.

How is compensation calculated?

The compensation is based on the principle that the owner should be paid neither less nor more than their loss, and represents the value of the interest in land to the owner, including the open market value of the land itself, which can include potential planning permissions that could have been obtained. If the loss of the land acquired results in the claimant’s retained land becoming less valuable, ‘severance’ compensation is payable. Compensation can also include disturbance and other losses, such as inconvenience and disruption caused by the acquisition. Advance payments of up to 90% of the value may be available within three months of the claimant’s request or the date of possession.

Department for Communities and Local Government (DCLG) guidance on compensation for farmers in England and Wales can be found here, while guidance for Scottish landowners on CPO compensation is available here.

Legislative changes

With the introduction of the Housing and Planning Act 2016 came changes to advance payments, both in terms of payment timescales and compensation for late payment.

The earliest date by which a payment will be due has now changed from the point of entry to the date a notice of entry is served. In addition, the acquiring authority will be required to pay interest if it fails to make the payment within the new time limit.

The effect on tenant farmers

As well as landowning farmers, tenant farmers can also be affected by compulsory purchase. Delaney says: “Where the tenancy is either a fixed term with less than one year to run, or a yearly tenancy, the authority can either serve a notice of entry, or acquire the reversionary interest, and then serve a notice to quit, or in the case of a fixed term for not more than two years, wait until the term expires.”

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