Compulsory purchase orders: Recent legal developments
Compulsory Purchase Orders (CPOs) remain an essential tool for local authorities to assemble land for regeneration, housing, and infrastructure delivery. The Law Commission is reviewing the compulsory purchase process, looking principally at procedure and compensation issues and is due to publish its report and a draft Bill in 2027. In the meantime, the legislative landscape is evolving, as a fresher modern approach is gradually being developed through changes to the existing legislative framework.
Exclusion of hope value – Levelling-up and Regeneration Act 2023
Levelling-up and Regeneration Act 2023, s.180 and Schedule 16
This is one of the more controversial changes as it undermines a basic principle of compulsory purchase compensation, namely that a landowner should be put back into the position they would have been in, in compensation/financial terms, had the CPO that underpins the scheme they are affected by not been made. This is known as the principle of equivalence.
Acquiring authorities may now apply to the Secretary of State for a direction to exclude “hope value” (i.e. the element of compensation attributable to the prospect of future development) from compensation payable under a CPO. This provision applies to land acquired for affordable housing, education, and health purposes, which could be at a significant discount to what the market would have otherwise paid. It feels like an expropriation of value, which undermines the principle of equivalence.
The application must be made at the CPO making and confirmation stage, supported by evidence that the exclusion of hope value is proportionate and compatible with Article 1 of Protocol 1 ECHR (protection of property) as enshrined in English Law through the Human Rights Act 1998.
The Planning and Infrastructure Bill (as introduced to Parliament in November 2024) goes further and proposes additional changes, including enabling acquiring authorities to determine exclusions in uncontested cases and permitting general directions for specified land types.
Practical help
A local authority promoting a CPO for affordable housing on a brownfield site may now seek to exclude hope value, thereby potentially improving a scheme’s viability.
Temporary possession powers – Neighbourhood Planning Act 2017
Statutory Reference: Neighbourhood Planning Act 2017, Part 2, ss.16–26
It’s not yet in force but is likely to be following the enactment of the Planning and Infrastructure Bill.
This will empower the temporary possession of land. Given that such powers exist under Transport and Works Act Orders and primary legislation (e.g. HS2 Act) this change has been a long time in coming. Where these powers are exercised, authorities will have to serve Temporary Possession Notices and comply with statutory safeguards, including paying compensation and complying with reinstatement obligations once any temporary use has ended.
Practical Help
A council requiring temporary access to private land for temporary construction purposes will be able to do so more easily than at present.
CPO Powers for community and parish councils
Statutory Reference: Local Government Act 1972 (as amended by the Levelling-up and Regeneration Act 2023, s.181)
Town, parish, and community councils are now empowered to promote CPOs for affordable housing and regeneration, subject to support from principal authorities. The power to exclude “hope value” compensation for these bodies is not yet commenced.
Practical Help
A parish council seeking to acquire a derelict site for community-led housing may now promote a CPO, provided it works in partnership with the district council and complies with statutory requirements.
Practical changes in the pipeline
In addition to the above, the Planning and Infrastructure Bill introduces significant reforms to modernise and streamline the compulsory purchase process, aiming to make land assembly faster, fairer, and more cost-effective for public benefit projects.
Five key practical changes are:
The Bill proposes delegating decisions on CPOs and related directions to inspectors or acquiring authorities in cases without objections. It is hoped this will reduce reliance on central government approval and thereby accelerate delivery of housing and infrastructure schemes.
Authorities will gain powers to take earlier possession of land under General Vesting Declarations.
The Bill allows electronic service of notices and simplifies newspaper publication requirements, reducing administrative costs and improving efficiency in the CPO making and confirmation processes, which has historically been very document heavy.
The Bill revises compensation rules, by switching the percentages around for basic and occupier’s loss payments. Currently owners receive an addition payment of 7.5% of the market value of their property (up to £75,000) and occupiers displaced by CPOs, 2.5% (up to £25,000) – in future the owners will only receive 2.5% and occupiers 7.5%.
New powers will allow bodies like Natural England to use CPOs for implementing Environmental Delivery Plans, supporting biodiversity and sustainability goals.
Summary
The legislative trend is towards gradual reform and modernisation. This includes: measures to limit the level of compensation where the acquisition is for defined public purposes; extending CPO powers to different types of organisation; and allowing more decisions to be taken at a local level. The objective is to make the CPO process more attractive and easier to use, which is a step in the right direction.
This is all happening in parallel with the Law Commissions’ review, so there is definitely a lot more in the pipeline!
If you have any questions regarding the contents of this legal article please get in touch with Nathan Holden.
The content of this page is a summary of the law in force at the date of publication and is not exhaustive, nor does it contain definitive advice. Specialist legal advice should be sought in relation to any queries that may arise.
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