POSTED 21 May 2018 General

Compulsory Purchase Order - Compensation (Part 2)

So you’re affected by a Compulsory Service Order? If so you’re not alone; this legal procedure allowing land to be acquired without permission began in the 18th century to allow canals and railway lines to be built. It sounds strange, but anyone in the way of the Channel Tunnel in 1988 also experienced a CPO.

Click here for information on how they work and how to oppose them. Or read on for more information on how to claim your Compulsory Purchase Order compensation.

I should be in for a lot of money, right?

Hmm. The idea is that you shouldn’t be any worse off (financially) than before your land was acquired, but you shouldn’t be better off either. If you’re a renter who’s been thinking of buying, or you’ve been looking to more, there might be good news for you though.

They surely give you something for the massive inconvenience?

Compensation falls under four categories:

The value of the land taken: You’ll be paid the value of your house or land, as if the development wasn’t taking place, and as if you were willing to sell providing you got the best possible price.

Severance and injurious affection: this would be if you were retaining part of the land, and it was worth less as a result of the development, for example, if you ended up with a railway line going through your garden. Of course, you might not have chosen to live in a house which came with a hundred trains instead of a garden; in this case you might be able to claim for ‘material detriment’, and force the acquiring authority to buy the whole property. This could end up disputed and referred to the Lands Tribunal so get professional advice.

Disturbance: applies to occupiers of the property, and refers to the cost of buying a new place. This could include moving costs, the legal fees, stamp duty and surveyors fees, any special adaptions you might have to do, soft furnishings, the difference if your new mortgage rate isn’t as good… the onus is on you to justify the claim so KEEP EVERY RECEIPT AND INVOICE, and make a note of how much time it’s all taking up as well. It’s a pain, but it is necessary to ensure you get what you're entitled to.

Fees: any ‘reasonable’ surveyors and/or solicitors fees you racked up while preparing and negotiating the compensation settlement.

You must make your claim for compensation within 21 days of being served the Notice to Treat or the General Vesting Declaration.

What if I don’t technically own my house; I mean everyone’s got a mortgage.

You’ll get compensation for the amount you’ve paid off, and the bank will get the rest. The only time this won’t happen is when what’s left to pay on the mortgage is actually more than the value of the house, if you’re in negative equity or you’ve built up arrears.

In this case, the compensation is only paid to the lender. You might be entitled to compensation if you incur losses after having to take out a new mortgage; this would fall under ‘disturbance’.

No amount of money can deal with the inconvenience of all of it? 

Maybe. If you’ve lived in your house for a year or more you might qualify for a ‘home-loss payment’.

This is ten per cent of the market value, up to £58k. It’s separate from other compensation, to recognise the distress of being compelled to move out of your home. You must make your claim in writing within six years of moving out.

A neighbour needs re-housing. Any advice for them?

If you’re to be re-housed by the council, note that this doesn’t affect any compensation you’re entitled to, such as for disturbance. Don’t let the council subtract anything from your compensation to pay for the re-housing.

What if someone was storing something on my land?

They could claim compensation for removal costs; a lot of this compensation is at the acquiring authority’s discretion, so there’s not much to lose - except time and sanity - by making a claim.

What about if you don’t have to sell your land, but you now live next door to a sewage works? That can’t be OK? 

People affected by CPOs where none of their land is bought can claim compensation if they’re affected by: noise, vibrations, smells, fumes, smoke, artificial light, or discharge onto the land of solid or liquid substances.

If it’s not on that list, it doesn’t qualify, so a view being blocked isn’t a legitimate cause for complaint, strangely. Note that compensation will be based on the price of the house after the development has been open for 12 months. Selling before this time, you have to claim between exchanging contracts and completion or you lose your right to compensation.

Of course, money doesn’t actually remove a smell or noise from your home; acquiring authorities have a duty to noise insulate if you can prove it’s bad enough, and at their discretion might mitigate the damage in other ways, such as acquiring more land than is needed or earth-moulding.

I can’t believe what a long, complicated process this is from start to finish.

There are a lot of deadlines to keep you eye on. And interestingly, if within ten years of the valuation date new planning permission is granted which increases the value of the land, you are entitled to the difference between what you were paid and this new price.

it’s worth keeping an eye on the place for a decade after.

So basically, there’s money available but it’s entirely up to me to do all the maths and paperwork?

Exactly. And it’s well worth doing. Our final tips are:

Know your timings. Submitting a complaint / compensation claim has to be done within quite a narrow window; don’t miss out on a lot of money for the sake of a day.

Keep going. It can be easy to think submitting claims and filling out forms and seeking legal advice is all more trouble than it’s worth. But this is YOUR money on the line; try and talk to neighbours about what they’re doing to help motivate each other and keep on top of things.

Push your luck. If you’re not sure something qualifies for compensation, add the receipt and let the acquiring authority decide; an awful lot is done at their discretion.

Keep all receipts. Everything. We can’t stress this enough. Don’t get on a bus to an inquiry or put a stamp on an envelope without noting the cost. On that note, go away and record how much time you just spent researching compulsory purchase orders. Go on. And best of luck.