Chris Skinner examines the vital role for compulsory purchase in the regeneration of housing estates.
Council and housing association estates are redeveloped for a variety of reasons. The properties may be hard to let, it may be uneconomic to keep repairing them, or the layout of the housing may contribute to anti social behaviour. Housing estate regeneration has been undertaken for many years but the concept was given a boost in January 2016 when David Cameron made a speech emphasising the importance of regenerating “sink” estates. In December 2016 DCLG published “Estate Regeneration National Strategy – The Role of Local Authorities”. This document recognises the opportunities that such schemes can provide. Also in December 2016 the Government announced that £172m was available for estate regeneration projects.
Whilst some of the homes on the estate will be owned and let by the local authority or housing association, a number will have been sold under the right to buy. Of the latter properties, some will be owner occupied and some will be let to private tenants. Where a lot of properties have been sold under the right to buy, the possibility of acquiring them all by agreement within a reasonable time is small. The only way to ensure that the project proceeds in a timely manner is to make a compulsory purchase order early on. It is worth bearing in mind that although a CPO with no objections is likely to be confirmed within a few months of it being made, a CPO with objections can take 18 to 24 months to be confirmed. The CPO will need to include the right to buy properties and any private tenancies, but could also include tenancies granted by the council or housing association. There will certainly be the ability for the landlord to end such a tenancy on the ground of redevelopment, but it might be useful to have the ability to end it pursuant to CPO powers. These latter powers would then act, in effect, as an insurance policy.
There are two CPO powers that can be used for estate regeneration schemes. Under section 17 of the Housing Act 1985 existing housing can be compulsorily acquired in order to provide new housing. Under section 226(1)(a) of the Town and Country Planning Act 1990 property can be compulsorily acquired to secure its redevelopment, provide that this will bring social, economic or environmental benefits. It really does not matter which power to use. The DCLG online CPO guidance (October 2015) makes it clear at paragraph 109 that the Secretary of State will not refuse to confirm a planning CPO just because it could have been made under housing powers, and vice versa.
The test that the Secretary of State applies in deciding if a CPO should be confirmed, and the one that should be applied by the council in deciding whether to make a CPO, is that of a “compelling case in the public interest”. The particular issues to address when making an estate regeneration CPO are
- The problems with the estate that necessitate its redevelopment
- What other options have been considered and discounted
- Ensuring full consultation has taken place with owners and occupiers
- Details of the new housing that will be built and the form of tenure
- Details of the funding for the project
- Details of the planning permission for the new development (Although the DCLG Guidance does not specifically insist on a planning permission, it is in practice better to have it in place).
- The benefits of the new development
- How existing council or housing association tenants will be dealt with, what assistance will be given to private tenants to find new accommodation, and what assistance will be provided to owner occupiers to find new homes (A CPO made by Southwark Council was not confirmed because insufficient provision had been made for people in the latter category)
With any successful CPO project you have “a problem”, “a solution”, with the CPO being the link between the two. It is worth bearing this in mind when you are considering whether you meet the compelling case test. Any CPO interferes with the human rights of those with an interest in the land. If the compelling case test is met then any interference with human rights will be proportionate and lawful. However the importance of early consultation with affected parties, and ensuring any inconvenience they suffer is minimised, cannot be over emphasised.
Understandably one of the things owners and occupiers want to know is how much compensation they will be entitled to. Compensation is a complex area but in a nutshell the position is as follow:
Owner occupiers will be entitled to the market value of their home plus a home loss payment of 10% of market value. In addition they will be entitled to be paid the incidental costs of buying a replacement property (e.g. legal fees). They may also be entitled to claim the costs of, for example, altering curtains and carpets.
Private landlords will be entitled to the market value of their property plus a basic loss payment of 7.5% of market value. If they purchase a replacement property to rent out within a year, the ancillary costs of such a purchase can be recovered (e.g. legal fees)
A tenant (private, council or housing association) will, if they have held a tenancy for a year and are displaced from the dwelling in consequence of the CPO, be entitled to a home loss payment of £5,800. In addition they will entitled to claim for items such as the costs of moving to new accommodation. The question in each case is whether it was the CPO that resulted in the tenant moving out. However section 29(6) of the Land Compensation Act 1973 may well allow a private tenant to claim a home loss payment even though the property was purchased by agreement.
It is also important to note that section 39 of the 1973 Act places a duty on the council to secure alternative accommodation where it is not otherwise available. With a private tenant this duty will be discharged by, perhaps, providing a list of landlords with property to let.
Whether you are making a CPO to acquire a few dwellings to secure the redevelopment of one block of flats, or you are seeking to acquire many properties to enable the redevelopment of an estate, the principles are the same.
Chris Skinner is Practice Director for nplaw, the shared local authority legal service hosted by Norfolk County Council. He also heads nplaw’s CPO Consultancy Service, that undertakes CPO work for local authorities across England and Wales. The Service has dealt successfully with a range of housing estate regeneration projects.
This is the second in a series of articles on CPOs. See also: CPOs and run-down listed buildings