Law Society hits out at reforms to compulsory purchase

The Law Society has denounced the Government’s proposed reforms to compulsory purchase as a threat to human rights.

In its response to the Government consultation, Chancery Lane said: “We have concerns as to whether the compulsory purchase order proposals are justifiable, equitable and compatible with human rights (Article 1 of the First Protocol of the European Convention of Human Rights and, if it is a dwelling, Article 8) when balancing the public interest against individual rights, as failing to recognise the hope value attached to a property will result in properties acquired for existing use, which will be less than market value.

“Landowners will therefore be left in a worse position as a result of a CPO, violating the equivalence principle of CPOs by failing to pay full and fair compensation.”

The Government has said it wants “a faster, more efficient compulsory purchase system” to enable more rapid regeneration projects.

It also wants to avoid the payment of over-generous ‘hope value’ to landowners who believe they may have gained planning permission for development had they retained ownership of the site concerned.

Landowners may establish hope value at present reflecting either the prospect of a planning permission being granted on their land or through ‘appropriate alternative development’ (AAD) for which planning permission may be assumed.

The consultation stated: “Where AAD is established either for the relevant valuation date or a later date…it may be assumed that planning permission is in force on the relevant date.

“This leads to perverse outcomes: for instance, a requirement to assume 100% planning certainty for AAD when the planning likelihood may only be 51%. This artificially inflates compensation because a transaction in normal market conditions would reflect the actual risk associated with the likelihood of planning permission being granted.”

The Law Society said: “While we recognise that removing ‘hope value’ would almost certainly increase the viability of schemes which are not required to pay it, we do not consider the public benefits of the scheme being delivered will necessarily increase.

“This will only be the case if additional benefits are delivered with money saved instead of, for example, being absorbed by private developers.

“There are no details in the proposals indicating that this will be the case and therefore should not be used as the basis for a public interest test.”

CPOs might not be justifiable, equitable and compatible with human rights when balancing the public interest against individual rights, the society noted.

It also said the proposals potentially violated access to justice for some landowners and would bring “an inevitable increase in court challenges”.

The society explained: “The great majority of landowners do not read the local plan for their areas and have no understanding about the possibility of their land being taken until a formal notice is served on them.

“Legal advice is not usually sought until that stage. If, as is proposed, new rules allow acquiring authorities to seek a direction before the authority makes the relevant order, this will be deeply unfair to landowners who, at that stage, will not have had sight of the authority’s preliminary reasoning and justification for making the order or the directions application.”

The consultation closed last month and results are expected during the autumn.

The Law Society's response is available here.

Mark Smulian