Compulsory Purchase Order and Side Roads Order

A CPO is a legal function which allows an Acquiring Authority to obtain land or property without the consent of the owners. CPO powers are granted to an Acquiring Authority to compulsorily purchase land in order to carry out a function which Parliament has decided is in the public interest.

A Side Roads Order (SRO) is a statutory order in the UK which authorises highway authorities to make alterations to roads or other highways affected by a road scheme - e.g. stopping up, diverting or connecting them to a new or improved road and stopping up and replacing private accesses affected.

The CPO process is made up of a number of stages, these are:

1. Formulation / Information Gathering - The Acquiring Authority decide that land is required for some particular purpose or scheme and that they are prepared to use compulsory purchase powers to assist in achieving this. Boundaries are defined and information is gathered.
2. Resolution - A formal resolution is made to use compulsory purchase powers. For the A614/A6097 MRN junction improvements, the appropriate County Council Committee will consider a report that will be prepared by officers and will seek to approve the use of compulsory purchase powers if required.
3. Referencing - Acquiring Authorities collect and record information on land ownership and occupation. The process builds upon the initial information gathering exercise which an Acquiring Authority would have undertaken during the formulation stage.
4. Making the Order - The Acquiring Authority makes the CPO. The CPO will have a heading or title which identifies the general area within which the land is situated and the year in which the CPO was made.
5. Notification and Publicity - Before the Acquiring Authority submits the CPO for confirmation, all known persons with an interest are informed by the Acquiring Authority serving a notice on them. A notice is also published for two successive weeks in one or more local newspapers and must also be fixed on or near to the land included within the order.
6. Objections - The notifications of the making of the CPO invite the submission of objections to the Secretary of State.
7. Public Inquiry – If valid objections are received, the Secretary of Statement for Transport will consider whether or not to hold a Public Inquiry. If objections are received from landowners/occupiers or certain statutory bodies it is probable that a Public Inquiry will be ordered. The date on which the Secretary of State orders a Public Inquiry is known as the relevant date and the Acquiring Authority must serve a Statement of Case on the Secretary of State and each remaining objector within six weeks of this date. This sets out the case to be put forward at the Public Inquiry and justifies the reasons for making the CPO.
8. Decision- After considering the Inspectors Report, the Secretary of State will decide to confirm, modify or reject the CPO. All persons with an interest are notified of the decision and the decision must also be published in one or more local newspapers. Once the CPO is confirmed, the Acquiring Authority has the power to compulsorily acquire or seek possession of property.
9. Challenging the Decision– Once confirmed, there is limited scope for challenging the decision (within a strict timetable). Challenges may be on the basis that the powers granted are ultra vires, that procedural rules have not been followed, or that the Secretary of State or Inspector has not acted properly in reaching a decision.

The Department for Communities and Local Government has produced four guides which explain, in simple terms, how the compulsory purchase system works. These are:

• Compulsory Purchase Procedure (guide 1)
• Compensation to Business Owners and Occupiers (guide 2)
• Compensation to Agricultural Owners and Occupiers (guide 3)
• Compensation to Residential Owners and Occupiers (guide 4)

It is important that guide1 is read first before reading the others in the series as it provides an overview.

The titles of guides 2, 3 and 4 are self-explanatory and you need only read the ones which deal with the type of property you own or occupy. Guides 2 to 4 explain your rights to compensation and how it should be assessed. 

This guidance is a useful point of reference but precedes the current MHCLG guidance and a number of recent changes to enactments that govern the CPO process.  It is not a substitute for professional advice and if your property is the subject of a CPO you should seek advice from a professionally qualified person such as a chartered surveyor or solicitor. They should be able to advise on your rights and act on your behalf if appropriate.

Legislation in England and Wales gives many authorised bodies (often referred to as Acquiring Authorities) the power to acquire land compulsorily where the landowner or occupier is not willing to sell by agreement. In the case of the A614/A6097 MRN junction improvements, the Acquiring Authority is NCC as Local Highway Authority.

Confirmation of a CPO is required from the Secretary of State, after a Public Inquiry if objections to the Order are made and not withdrawn. The Minister has the power to confirm, modify or reject the CPO.

The CPO will be made under 239, 240, 246, 249 and 250 of the Highways Act 1980 and the Acquisition of Land Act 1981.

The principles of compensation are governed by the compensation code, which is derived from statute, case law and established practice. One of the main principles is that of equivalence, that is a claimant should be placed in no better or worse position in financial terms after the acquisition than they were prior to the acquisition.

In accordance with Rule 2 of Section 5 of the Land Compensation Act 1961, a claimant is entitled to the value of their land/property. Because of the effect a Compulsory Purchase Order can have on property values, when assessing the level of compensation, regard is paid to the "no scheme world", that is the effect of the CPO, both positive and negative, is ignored.

Rule 6 of section 5 of the Land Compensation Act 1961 provides for 'compensation for disturbance or any other matter not directly based on the value of land'. Generally, compensation for disturbance is only paid to a claimant who has occupied land or premises acquired but there is provision in the Compensation Code for investors to make certain disturbance claims.

A claim for disturbance will be made up of loss suffered by a claimant due to the dispossession or threat thereof. This might include but is not limited to costs associated with securing alternative accommodation, business losses and mortgage costs.  Losses must directly arise from the exercise of the powers and claims relating to the general impact of the wider works are not permitted.

In respect to professional fees incurred in negotiating a claim for compensation, the Acquiring Authority will usually pay the reasonable surveyor’s and legal fees which are incurred in negotiating the claim. [If the matter is not agreed and referred to the Upper Tribunal (Lands Chamber) then associated costs will be dealt with separately.]

When compensation is agreed with the Acquiring Authority, this will be paid at the earliest opportunity, subject to the Acquiring Authority seeking appropriate internal approvals.

Where land or property is taken by the Acquiring Authority under a CPO and the claim for compensation has not been settled, Section 52 of the Land Compensation Act 1973, provides for claimants to request an Advance Payment. An Advance Payment is based upon 90% of the Acquiring Authority’s assessment of the claim and must be paid within two months of the request subject to the claimant having provided sufficient information for the assessment. The balance of the claim can be settled by negotiation or ultimately determined by the Upper Tribunal (Lands Chamber) if settlement cannot be reached.

Under the compensation code there are a number of loss payments which can be paid, subject to claimants qualifying. If you are a qualifying occupant of a residential property you may be entitled to a Home Loss Payment which equates to 10% of the Market Value of your interest, subject to a current minimum payment of £6,500 and a maximum payment of £65,000. The limits for these payments are changed intermittently by Regulation.  

Under Section 33 of the Land Compensation Act 1973, claimants who meet the qualifications can claim a Basic Loss Payment. This payment is calculated at 7.5% of the value of an interest up to a maximum sum of £75,000. In addition, an “occupier”, whether they be an owner occupier or a business tenant (subject to qualification criteria) may also be entitled to an Occupier Loss Payment. This payment equates to an additional 2.5% of the value of the interest or assessed on an area basis.

Injurious affection and Severance may apply where an Acquiring Authority only acquires part of someone's property ownership. For example, an Acquiring Authority may need to acquire a portion of the rear garden of a house but not the house itself. If the loss of the land has a negative impact on the value of the retained property this is severance and could form part of a claim for compensation. If the execution and use of the authorised works cause a reduction in value of the retained land this is injurious affection.

If the authorised works result in an increase in the value of retained land this is known as betterment and could potentially be off-set against the claim.

There are circumstances where a person who loses part of their property can obligate the Acquiring Authority to take the whole. Notice would need to be served on the Acquiring Authority under the Acquisition of Land Act 1981 or the Compulsory Purchase Act 1965 on the grounds that it has caused a significant level of material detriment. If the Acquiring Authority accepts the counter notice then they would be obligated to acquire the whole interest. An Acquiring Authority may contest a counter notice in which case the matter is determined by the Upper Tribunal (Lands Chamber).

Compulsory purchase and the assessment of associated compensation is a complex and wide-ranging area of law and affected parties are advised to seek appropriate professional advice.