CLA Kent Debate on Compulsory purchase laws and the need to reform – what does this mean for landowners in the South East?

One of the challenging issues addressed in the debate was the need for further reforms to the antiquated compulsory purchase laws. In this article Lee highlights the need for reform, following the recent judgement of the Supreme Court (in the case of HCA v JS Bloor (Wilmslow) Ltd [2017]) which demonstrates the complexity of the law on compulsory purchase valuation.

In 2002 the HCA compulsorily acquired 26.85 acres of land from JS Bloor for the development of a business park. The amount of compensation to be paid to the former landowner could not be agreed. The claimant’s sought £2,539,000 on the basis that the land had significant hope value for residential development. The HCA offered existing use value of £50,000. The matter had to be determined by the Lands Chamber of the Upper Tribunal.

The huge disparity between these two valuations arose from very different interpretations of what is known as the Point Gourde rule, also known as the “no-scheme” rule. This is a rule which requires that when assessing the amount of compensation to be paid following a compulsory purchase order (CPO) any increase or decrease in value solely attributable to the scheme which underlies the CPO should be disregarded.

The rule has been the subject of much controversy and has proven to be hard to apply in practice. For example. How far should the rule extend? Does it include just the land taken under CPO powers or a wider area? Does the “scheme” to be disregarded include all policies which support the development of the land? The answers to these questions can result in huge differences in compensation to be paid.

The Tribunal ultimately awarded the claimant £746,000 on the basis that there would have been a 50% chance of obtaining planning permission for residential development. The Supreme Court upheld that ruling. There have been numerous changes to the rule over the years in case law and through legislation, including amendments under the Localism Act 2011, however, this has resulted in a complex and confusing legal position.

There are currently proposals working their way through parliament in the Neighbourhood Planning Bill which will seek to clarify the law and bring it all together in a single piece of legislation. In giving their judgement the Supreme Court stated that:

“It is to be hoped that the amendments currently before Parliament will be approved, and that taken with the 2011 amendments they will have their desired effect of simplifying the exercise for the future.”

Whilst the need for reform is clear the devil is (as always) in the detail. Part of the proposal in the Neighbourhood Planning Bill is to specify that the “no-scheme” rule applies to “relevant transport projects”. Thus, where a new transport project raises land values that project could be included in the “scheme” so that the uplift in value is disregarded.

Whilst the Supreme Court may welcome the clarification of the law landowners will be concerned that in practice they will receive less in compensation than would otherwise have been the case.
Lee May is a Partner in the Commercial Property team at Brachers. Please contact the team to discuss any issues raised in this article on 01622 690691 or Lee on leemay@brachers.co.uk.

This article was previously published in the April 2017 issue of South East Farmer

This content is correct at time of publication