Sample Law and Compulsory Purchase

© Hussein Hijazi 2016 1

F.A.O: Mr David Ashlee Town Clerk & Chief Executive Grove House 76 High Street North Dunstable Beds LU6 1NF

SAMPLE

COMPULSORY PURCHASE ADVISORY REPORT

Land for Shopping Centre Expansion Scheme in

Dunstable

By: Hussein Hijazi


Contents 1. Introduction ................................................................................................................................ 3

2. Is a CPO the best way to proceed? ........................................................................................... 3

3. Estimated Costs of Acquisitions and Compensation ................................................................. 4

4. Funding and Phasing ................................................................................................................ 5

5. Press Office Briefing and Political Mitigation ............................................................................. 6

6. Land Acquisition Timeframe ...................................................................................................... 7

7. Disclaimer .................................................................................................................................. 8

References....................................................................................................................................... 9

Statutes ........................................................................................................................................ 9

Cases ........................................................................................................................................... 9

Sources ........................................................................................................................................ 9

Appendices .................................................................................................................................... 11

Appendix 1: Relevant Sections of Section 226 of the 1990 Act .................................................. 11

Appendix 2: Relevant Sections of the 1981 Act .......................................................................... 12

Appendix 3: Notice to Treat, and subsequent Notice of Entry .................................................... 14

Appendix 4: GVD ........................................................................................................................ 15

Appendix 5: Statutory Provisions for Compensation .................................................................. 16

Appendix 6: Valuation and Compensation for Victorian Cottages .............................................. 17

Appendix 7: Valuation of Shop ................................................................................................... 19

Appendix 8: Valuation of Ransom Land ..................................................................................... 21

Appendix 9: CPO Indemnity Agreement ..................................................................................... 22

Appendix 10: Acquisition of Land (Rate of Interest after Entry) Regulations 1995 (SI 1995 No.

2262) .......................................................................................................................................... 22

Appendix 11: Section of the 1961 Act ........................................................................................ 23

Appendix 12: The Pointe Gourde Principle................................................................................. 23


1. Introduction

This advisory report is for the attention of Mr David Ashlee, Chief Executive of Dunstable Town

Council, Bedfordshire, in regards to the Compulsory Purchase Order (CPO) of land that consists of:

1. A freehold pair of semi-detached Victorian cottages

2. An owner occupied freehold shop

3. A vacant freehold yard of 2,000 square feet (sqft)

4. Two narrow freehold parcels of land of 250 and 500 sqft respectively

2. Is a CPO the best way to proceed?

It is advised by central Government that the acquiring authority (AA), you the council, should first

seek to acquire land by agreement, i.e. through contacting the qualifying persons who have interest

in the relevant land directly and enter negotiations into acquiring the land and the agreed

compensation to be paid. Some of the main benefits of acquiring land by agreement is the exclusion

of statutory procedures that could be lengthy in time and involve substantial legal and administrative

costs. However, if negotiations of acquisition by agreement fail, it is impractical to do so, the AA has

the relevant statutory powers and can prove that the land acquired is for a purpose that has a

“compelling case in the public interest”, then acquisition through a CPO is applicable (DCLG, 2015).

If a CPO is to be pursued in acquiring the aforementioned land, then “the purpose for which an AA

seeks to acquire land will determine the statutory power under which compulsory purchase is

sought” (DCLG, 2015). In recognition of the brief provided, the land to be acquired for the expansion

of the shopping centre and the relevant highway works are part of the council’s “local modernisation

programme” of the area, where the land for the shopping centre expansion has been identified as

an “opportunity employment area” and the land for the highway works have been discussed at the

council’s last Cabinet meeting as part of a plan.

As it is evident that the land probed for a CPO is for development and planning purposes, the

statutory powers under which the AA can submit a CPO are under Section 226 of the Town and

Country Planning Act 1990 (1990 Act) [Appendix 1]. Pursuing a CPO under the 1990 Act, requires

the application of the procedures set out under Part II of the Acquisition of Land Act 1981 (1981

Act), with particular reference to Sections 11 and 12 of that Act [Appendix 2].

If there are no objections to the CPO by the relevant persons in respect of the aforementioned land,

as per Section 13 of the 1981 Act, and the confirming authority (CA) has approved the CPO, then


the AA can proceed in acquiring the land through following the provisions of Section 15 [Appendix

2] of the 1981 Act and either serving a Notice to Treat, and subsequent Notice of Entry [Appendix

3], or through a General Vesting Declaration (GVD) [Appendix 4].

In regards to this case, the AA is advised to acquire the land through a GVD as per the Compulsory

Purchase (Vesting Declarations) Act 1981 (GVD Act), which defers from the Notice to Treat process

as it “simplifies this process as it replaces the notice to treat and the conveyance with one procedure,

which, on a certain date, automatically vests title in the land with the authority” (Denyer-Green, 2014,

p 85).

The AA is thus obliged to pay compensation, which is fully assessed in the next section, in regards

to the acquired land to the relevant qualifying persons as per provisions set out under the Land

Compensation Act 1961 (1961 Act), Compulsory Purchase Act 1965 (1965 Act) and the Land

Compensation Act 1973 (1973 Act). See [Appendix 5] for a full breakdown of the relevant statutory

provisions.

3. Estimated Costs of Acquisitions and Compensation

“The underlying principle is that compensation following a compulsory acquisition of land is the

principle of equivalence…Courts have determined the compensation by ensuring that the property

owners are in no better and no worse position financially than they would have been if the interest

had not been compulsorily acquired” (Vaughan and Clements Smith, 2014, p185).

As per Section 5A of the 1961 Act, the relevant valuation date will be the earlier of the relevant

“vesting date” or “the date when the assessment is made”. It can thus be assumed that the relevant

valuation date is the date affixed to this advisory report.

The Victorian cottages, assumed to be wholly owner occupied by their respective freeholders with

no mortgages and the owners have conveyed their intention of purchasing equivalent alternative

dwellings, can be valued using the comparable method of valuation as applied by Parmar v Barnet

London Borough Council [2015] PLSCS 290 and Lewicki v Nuneaton and Bedworth BC [2013]

UKUT 120 (LC). Additionally, both parties are entitled to a “home-loss payment” and corresponding

“disturbance” and “other matters” payments as per Rule 6 of the 1961 Act. The total estimated

compensation is therefore £696,000. See [Appendix 6] for a breakdown of compensation.

Compensation in regards to the owner occupied shop is to be assessed using the investment

method of valuation as applied by Wong v Manchester City Council [2013] UKUT 431 (LC) and CHP


Property Group Limited v Wigan Metropolitan Borough Council [2007] R.V.R 326. The owner is

entitled to a “basic-loss payment” in addition to Rule 6 compensation of goodwill. Additionally, it is

assumed that the shop owner has decided to extinguish the business, as a result, compensation to

be paid should be equal to the value of the business to the owner and not the open market value

(Isurv.com, 2016). The total estimated compensation is therefore £165,000. A breakdown of the

valuation and comparable evidence is shown under [Appendix 7].

In assessing the compensation for the land required for the highway works, the method in Stokes v

Cambridge Corp [1962] 13 P. & C.R. 77 is applied. This is because the 2,000, 500 and 250 sq. ft.

land are assumed to be owned by the same freeholder as ransom land, under different title deeds.

Thus, the value of the compensation to be paid to the freeholder in this case will include the statutory

“basic loss payment” including the market value of the land under Rule 2, deducted from the value

of the total land acquired for the shopping centre expansion. The total estimated compensation is

therefore £230,000. A full valuation and corresponding compensation is shown under [Appendix 8].

Based on the principles above and relevant calculations under the Appendices section, the total

compensation for the entire scheme is estimated to be say £1,100,000 as of the date of this advisory

report.

4. Funding and Phasing

In order to justify a CPO for any underlying scheme, the AA must provide information as to the

source of funding and when that funding will be available. In this case, the AA is advised to enter

into CPO Indemnity Agreement [Appendix 9] with the private developer, requesting that funding for

the entire CPO procedure and compensation be available from the date of this advisory report. As

a guide, however, funding should be available as per the estimated timeframe under Section 6 of

this report; within a period of four months from the date when CPO procedures begin.

Compensation for the land will become “payable to the claimant for the whole site covered by that

notice of entry from that date” (DCLG, 2015). However, claimants can request for an “advanced

payment” to be made through a written request in respect of the land to be acquired, as per Section

52 of the 1973 Act. The resulting payment will be equal to 90% of the acquiring authority’s estimate,

or 90% of the agreed compensation. The advance payment will have to be made within three months

of the qualifying person’s written request. However, if the three months expires before possession

of the land is taken, then payment will have to be made on the date of possession (Denyer-Green,

2014).


Failure to pay compensation on the date of possession could result in interest being incurred from

the date at which possession of the land is taken until full compensation is paid, as per Section 11

of the 1965 Act, at the prescribed rate, as per the Acquisition of Land (Rate of Interest after Entry)

Regulations 1995 [Appendix 10].

5. Press Office Briefing and Political Mitigation

One of the biggest issues facing CPOs today is the acquisition of land that will result in private gain

outweighing the intended benefit to the public. Indeed it is within statute, under Section 226(1A) of

the 1990 Act that the AA should not exercise its CPO powers unless it can satisfy one or more of

the objects under that Section of that Act.

Additionally, several consequences as a result of CPO have become well document in the media

today, and the ethical and moral backbone of the fairness of CPO powers have come into question.

Such as in the case of Mrs Hunt as reported by (Telegraph.co.uk, 2001) and more recently in the

case of the Hendon Waterside project as reported by (Jones, 2015). One the other hand, there is

the issue of private developers holding onto land after acquiring them in what is known as “land-

banking” leading to political leaders having to consider drastic actions (Crerar, 2013).

Therefore, the AA is strongly advised that in publication of the CPO and the associated procedures,

particular emphasis is to be placed on the overall public benefit that the scheme will result in after

its completion, with extra measures taken into account outside the monetary value of the CPO in

respect of the well-being and welfare of those affected by the CPO.


6. Land Acquisition Timeframe

It is advised that the land is acquired through a GVD, for which the associated timeframe involved

from the start to finish of all proceedings for all the required land is shown in Table 1 below.

Procedure Time Cumulative Time (weeks)

1. Publish a notice in one or

more Local Newspapers and

serving of notice to each

affected qualifying person

2 Weeks (14 days) 14 days

2. Submission of objections

including objections from

each qualifying person.

Objections can be submitted

from the day the publication

was first made

21 days 21 days

3. Consideration of CPO by

acquiring authority after

submission of objections

deadline passes (estimate)

14 days 35 Days

Assuming no objections, confirmation of CPO by confirming authority. Commence with

GVD.

4. Publish and serve notice of

intention

1 week (7 days) 42 days

5. Execution of declaration 2 months (60 days) 102 days

6. Notice of making vesting

declaration

2 days 104 days

7. Vesting date (from date of (6)

above)

28 days 130 days

Based on the above timetable following acquisition through the GVD, the land could be acquired in

approximately 130 days or 4 months’ time provided that no objections are made by the relevant

persons.


7. Disclaimer

The information provided within this report are for advisory purposes only. Due to the limitations of

the provided brief, several assumptions and estimations have been made. Therefore, the

information provided within this report are by no means exhaustive and the AA should make further,

more detailed enquiries regarding the CPO of the said land.


References

Statutes

Acquisition of Land Act 1981

Acquisition of Land (Rate of Interest after Entry) Regulations 1995

Compulsory Purchase Act 1965

Compulsory Purchase (Vesting Declarations) Act 1981

Land Compensation Act 1961

Land Compensation Act 1973

Planning and Compulsory Purchase Act 2004

Town and Country Planning Act 1990

Cases

CHP Property Group Limited v Wigan Metropolitan Borough Council [2007] R.V.R 326

Horn v Sunderland (1941) 2 KB 26 CA

Lewicki v Nuneaton and Bedworth BC [2013] UKUT 120 (LC)

Parmar v Barnet London Borough Council [2015] PLSCS 290

Pointe Gourde Quarrying and Transport Company Limited v Sub Intendent of Crown Lands

[1947] AC 565

Stokes v Cambridge Corp [1962] 13 P. & C.R. 77

Vyricherla Narayana Gajapatiraju v Revenue Divisional Officer, Vizagapatam (the Indian case)

[1939] AC 302

Wong v Manchester City Council [2013] UKUT 431 (LC)

Sources

Crerar, P. (2013). Start building or I’ll make you sell land, Mayor Boris Johnson tells. [online]

Evening Standard. Available at: http://www.standard.co.uk/news/politics/start-building-or-i-ll-make-

you-sell-land-mayor-boris-johnson-tells-developers-8629130.html [Accessed 26 Apr. 2016].

DCLG, (2010). Compensation to Residential Owners and Occupiers. Compulsory Purchase and

Compensation. [online] London: Department for Communities and Local Government (DCLG).

Available at:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/7719/147648.pdf

[Accessed 24 Apr. 2016].

DCLG, (2015). Compulsory purchase process and the Crichel Down Rules. London: Department

for Communities and Local Government.

Denyer-Green, B. (2014). Compulsory Purchase and Compensation. 10th ed. [ebook] London:

Routledge. Available at: https://www.dawsonera.com/readonline/9780203712627/startPage/60


Isaac, D. and O'Leary, J. (2012). Property valuation principles. Basingstoke: Palgrave Macmillan.

Isurv.com. (2016). Relocation or extinguishment? - Assessing compensation where an interest in

land is acquired - isurv. [online] Available at:


http://www.isurv.com/site/scripts/documents_info.aspx?documentID=459&categoryID=126&pageN

umber=10 [Accessed 22 Apr. 2016].

Jones, R. (2015). Great gran forced out of her home of 30 years by compulsory purchase order.

[online] mirror. Available at: http://www.mirror.co.uk/news/uk-news/great-gran-forced-out-home-

5180794 [Accessed 26 Apr. 2016].

OPDM, (2004). Compensation to Business Owners and Occupiers. Compulsory Purchase and

Compensation. [online] London: Office of the Deputy Prime Minister. Available at:

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/11488/147642.pdf


Telegraph.co.uk. (2001). Can you resist compulsory purchase?. [online] Available at:

http://www.telegraph.co.uk/finance/personalfinance/4483510/Can-you-resist-compulsory-

purchase.html [Accessed 26 Apr. 2016].

Uk.practicallaw.com. (2016). Practical Law. [online] Available at: http://uk.practicallaw.com/0-594-

8686?q=&qp=&qo=&qe= [Accessed 25 Apr. 2016].

Vaughan, D. and Clements Smith, L. (2014). An introduction to compulsory purchase valuation

principles spanning 150 years. Journal of Building Survey, [online] 3(2), pp.184-189. Available at:

http://www.blmlaw.com/images/uploaded/File/News/Sep14/JBSAV106.pdf [Accessed 20 Apr.

2016].

Zoopla.co.uk. (2016). Property details for 69 High Street Eaton Bray Dunstable LU6 2DN - Zoopla.

[online] Available at: http://www.zoopla.co.uk/property/69-high-street/eaton-bray/dunstable/lu6-

2dn/13883781 [Accessed 22 Apr. 2016].


Appendices

Appendix 1: Relevant Sections of Section 226 of the 1990 Act

“226. — Compulsory acquisition of land for development and other planning purposes.

(1) A local authority to whom this section applies shall, on being authorised to do so by the Secretary

of State, have power to acquire compulsorily any land in their area [...] —

(a) if the authority think that the acquisition will facilitate the carrying out of development, re-

development or improvement on or in relation to the land;

(1A) But a local authority must not exercise the power under paragraph (a) of subsection (1) unless

they think that the development, re-development or improvement is likely to contribute to the

achievement of any one or more of the following objects–

(a) the promotion or improvement of the economic well-being of their area;

(b) the promotion or improvement of the social well-being of their area;

(c) the promotion or improvement of the environmental well-being of their area.

(3) Where a local authority exercise their power under subsection (1) in relation to any land, they

shall, on being authorised to do so by the Secretary of State, have power to acquire compulsorily—

(a) any land adjoining that land which is required for the purpose of executing works for facilitating

its development or use;

(7) The Acquisition of Land Act 1981 shall apply to the compulsory acquisition of land under this

section


Appendix 2: Relevant Sections of the 1981 Act

11.— Notices in newspapers.

(1) The acquiring authority shall in two successive weeks publish a notice in the prescribed form in

one or more local newspapers circulating in the locality in which the land comprised in the order is

situated.

(2) The notice shall—

(a) state that the order has been made and is about to be submitted for confirmation,

(b) describe the land and state the purpose for which the land is required,

(c) name a place within the locality where a copy of the order and of the map referred to therein may

be inspected, and

(d) specify the time (not being less than twenty-one days from the first publication of the notice)

within which, and the manner in which, objections to the order can be made.

(3) In addition, the acquiring authority shall affix a notice in the prescribed form to a conspicuous

object or objects on or near the land comprised in the order.

(4) The notice under subsection (3) must–

(a) be addressed to persons occupying or having an interest in the land, and

(b) set out each of the matters mentioned in subsection (2) (but reading the reference there to first

publication of the notice as a reference to the day when the notice under subsection (3) is first

affixed).

12.— Notices to owners, lessees and occupiers.

(1) The acquiring authority shall serve on every [qualifying person] 1 a notice in the prescribed

form—

(a) stating the effect of the order,

(b) stating that it is about to be submitted for confirmation, and

(c) specifying the time (not being less than twenty-one days from service of the notice) within which,

and the manner in which, objections to the order can be made.

(2) A person is a qualifying person, in relation to land comprised in an order, if–

(a) he is an owner, lessee, tenant (whatever the tenancy period) or occupier of the land, or

(b) he falls within subsection (2A).

(2A) A person falls within this subsection if he is–

(a) a person to whom the acquiring authority would, if proceeding under section 5(1) of

the Compulsory Purchase Act 1965, be required to give a notice to treat, or

(b) a person the acquiring authority thinks is likely to be entitled to make a relevant claim if the order

is confirmed and the compulsory purchase takes place, so far as he is known to the acquiring

authority after making diligent inquiry.

http://login.westlaw.co.uk/maf/wluk/app/document?src=doc&linktype=ref&context=38&crumb-action=replace&docguid=IB8DE5E10E44811DA8D70A0E70A78ED65#targetfn1


(2B) A relevant claim is a claim for compensation under section 10 of the Compulsory Purchase Act

1965(compensation for injurious affection).

13 Confirmation of order: no objections

(1) The confirming authority may confirm a compulsory purchase order with or without modifications

if it is satisfied–

(a) that the notice requirements have been complied with, and

(b) that one of the conditions in subsection (2) is satisfied.

(2) The conditions are–

(a) no relevant objection is made;

(b) every relevant objection made is either withdrawn or disregarded.

(3) The confirming authority may require every person who makes a relevant objection to state the

grounds of the objection in writing.

(4) If the confirming authority is satisfied that an objection relates exclusively to matters which can

be dealt with by the tribunal by whom the compensation is to be assessed it may disregard the

objection.

(5) The notice requirements are the requirements undersections 11 and 12 to publish, affix and

serve notices in connection with the compulsory purchase order.

15 Notices after confirmation of order

(1) After the order has been confirmed, the acquiring authority must–

(a) serve a confirmation notice and a copy of the order as confirmed on each person on whom a

notice was required to be served under section 12, and

(b) affix a confirmation notice to a conspicuous object or objects on or near the land comprised in

the order.

(2) The notice under subsection (1)(b) must–

(a) be addressed to persons occupying or having an interest in the land;

(b) so far as practicable, be kept in place by the acquiring authority until the expiry of a period of six

weeks beginning with the date when the order becomes operative.

(3) The acquiring authority must also publish a confirmation notice in one or more local newspapers

circulating in the locality in which the land comprised in the order is situated.

(4) A confirmation notice is a notice–

(a) describing the land;

(b) stating that the order has been confirmed;

(c) (except in the case of a notice under subsection (1)(a)) naming a place where a copy of the order

as confirmed and of the map referred to there may be inspected at all reasonable hours;

(d) that a person aggrieved by the order may apply to the High Court as mentioned in section 23.

(5) A confirmation notice must be in the prescribed form.


Appendix 3: Notice to Treat, and subsequent Notice of Entry

Once the CPO is confirmed, acquisition can occur through a Notice to Treat under Section 5 of 1965

Act which is served on every qualifying person after the CPO has become operative, for up to a

period of three years as per Section 4 of the 1965 Act, for which the notice will remain active for a

further three years under Section 5(2A) of the same Act.

The qualifying persons who have been served a Notice to Treat, then have a period, usually 21

days, to respond using a Notice of Claim, to state his interest and his claim in respect of the land

(Denyer-Green, 2014). The acquiring authority can then examine the claim made by the qualifying

person and can thus enter into negotiations in respect of the compensation to be paid either by

agreement or accepting the claim made by the qualifying person. Failure to respond within 21 days,

or if an agreement regarding compensation is not reached, under Section 6 of the 1965 Act the case

can be referred to the Tribunals Service (Denyer-Green, 2014).

Once the council has decided upon a date to gain possession of the land, under Section 11 of the

1965 Act, the council is required to serve a Notice of Entry stating a date that is “not less than

fourteen days’ notice of its intention to gain entry” (DCLG, 2015, p 28). It is important to note that

the council can serve a Notice to Treat and a Notice of Entry at the same time. Possession of the

land thus takes place on the date specified on the Notice of Entry for which the qualifying person

will have to convey his interest in the land to the acquiring authority, for which that date also becomes

the relevant valuation date.


Appendix 4: GVD

As an alternative to the former method, a GVD can be used to gain possession of the land under

the CPO through provisions within the Compulsory Purchase (Vesting Declarations) Act 1981 (GVD

Act). The main difference between a Notice to Treat route and a GVD is that a GVD “ simplifies this

process as it replaces the notice to treat and the conveyance with one procedure, which, on a certain

date, automatically vests title in the land with the authority” (Denyer-Green, 2014, p 85).

The procedure involves four steps, which include:

1. A notice of intention: which is a notice published in a local newspaper and to all qualifying

persons, of the acquiring authority’s intention to execute a GVD and, as per provisions under

Section 3 of the GVD Act. This notice can be served with the notice that a CPO has been

confirmed and is to be carried out, but before any notice to treat is served (Denyer-Green,

2014).

2. Execution of declaration: the GVD is then executed at least two months after the publication

of the notice of intention. The time period can be less than two months if every qualifying

persons consents in writing to the acquiring authority.

3. Notice of making vesting declaration: following on from step 3, the acquiring authority must

serve a notice as soon as possible stating the effects the GVD and the land in question to all

qualifying persons.

4. Vesting date: within the “notice of making vesting declaration”, the acquiring authority can

specify a date which is at least 28 days after the “execution of the declaration” as the vesting

date, for which it is on this date “the title to the interest in the land will then vest with the

authority together with the right to enter and take possession” (Denyer-Green, 2014, p 86).

The relevant valuation date thus becomes the stated vesting date or the date at which the council

gains entry and possession of the land.


Appendix 5: Statutory Provisions for Compensation

Part II, Section 5 [Appendix 11] of the 1961 Act, states six rules for assessing the value of

compensation, for which Rule 2 is the most commonly used and principal rule, also known as the

“market value rule”, for which “it envisages a hypothetical sale of the property in the open market by

a willing seller” (Vaughan and Clements Smith, 2014, p187). See (Denyer-Green, 2014, p. 159-163)

for an in-depth analysis of the application of Rule 2.

However, as the land being acquired compulsorily is to be developed to incorporate the expansion

of the shopping centre and associated highway works, the value of the land in the open market

should take into account the potential increase in value of the land (hope or development value) due

to the potential development that is to occur on the land (Vyricherla Narayana Gajapatiraju v

Revenue Divisional Officer, Vizagapatam (the Indian case) [1939] AC 302, as explained in (Vaughan

and Clements Smith, 2014, p. 187). Nonetheless, this can be ignored under Section 6 of the 1961

Act, or where Pointe Gourde Quarrying and Transport Company Limited v Sub Intendent of Crown

Lands [1947] AC 565 (Point Gourde principle [Appendix 12]) can be applied.

Additionally, under Rule 6 of Section 5 of the 1961 Act, qualifying parties with an interest in land are

entitled to compensation in relation to “disturbance” and “other matters”. However, disturbance

compensation can only be paid to persons who were “occupier of the land or premises acquired, be

displaced from occupation, and be a person entitled to have received a notice to treat, i.e. the

freeholder or lessee…” (Denyer-Green, 2014, p 236). “Disturbance” and “other matters”

compensation depends on the circumstances in each case. However, compensation in terms of

goodwill, loss of profits, extinguishment, relocation and legal costs are well established

compensable items (Denyer-Green, 2014).

Finally, under Sections 29-32 of the 1973 Act, provisions for compensation are made for persons

who were in occupation of dwellings and are thus entitled to a “home-loss payment”, and Section

33A of the 1973 Act makes provisions for occupiers who are not entitled to a “home-loss payment”,

and are thus entitled to a “basic loss payment”. For a “home-loss payment” to be made, the occupier

must satisfy the conditions set out under Section 29(2) of the 1973 Act, and the corresponding value

of compensation is to be as prescribed under Section 30(1) of the 1973 Act. Conversely, persons

entitled to a “basic loss payment” will be paid compensation as set out under Section 33A of the

1973 Act.


Appendix 6: Valuation and Compensation for Victorian Cottages

Location of Properties High Street, Eaton

Bray, Dunstable, LU6

Property Information Type Semi-Detached

Number of Bedrooms 2

Number of Bathrooms 1

Additional Amenities Reception Room

Front and Back

Garden

Comparable Sales

(Source:

Zoopla.co.uk)

Property 1 Property 2 Property 3

Location 121 High Street, LU6

2DW

69 High Street, LU6

2DN

39 High Street, LU6

2DN

Type Semi-Detached Semi-Detached Semi-Detached

Number of bedrooms 2 2 4

Number of Bathrooms 1 1 1

Additional Amenities 2 Reception

Rooms

Front and Back

Garden

1 Reception Room

Front and Back

Garden

Garage

2 Reception

Rooms

Front and Back

Garden

Garage

Date of Sale October 2015 June 2014 April 2014

Value Sold £254,000 £239,999 £250,000

Based on the above comparables and the area analysis presented under Figure 1 below, the value of the Victorian cottages is

estimated to be between £270,000 and £300,000 each if sold on the open market under Rule 2. Taking into account worst case

scenario, and in order to appear favourable to the affected freehold owners, it is advised that the valuation is say £300,000 per

cottage, which is equivalent to the value of other cottages within the CPO area, keeping in line with the principle of equivalence.

Cottage 1 Cottage 2

Market Value £300,000 £300,000

Home-loss Payment

@ 10% off Market

Value

£30,000 £30,000

Disturbance and

Other Matters

Purchaser’s Cost

@5.75% off market

value (stamp duty and

legal fees)

£17,250 £17,250

Surveying of

equivalent dwellings

£500 £500

Cost of relocation £200 £200

Total Compensation £347,950 say £348,000 £347,950 say £348,000

Total Compensation

for Cottages £696,000


Source: (Zoopla.co.uk, 2016)


Appendix 7: Valuation of Shop

Location of Property High Street, Dunstable, LU6

Type of Property Shop (A1)

Size of Property 800 sq. ft.

Area Analysis; Source: CoStar Suite Commercial Property Database

Based on the area analysis as provided above, the average asking price per sq. ft. from the sale of

shops in the Bedfordshire area is £74 with a yield of 10.5% for the past year, whereas asking rent

per sq. ft. was £17.54. Applying the investment method of valuation to the shop in question for the

CPO, the total value and corresponding compensation for the land can be assumed to be:


A. Rent per sq. ft. £17.54

B. Total sq. ft. 800

C. Total Annual Rent (A×B) £14,032

D. Yield 10.5%

E. Yield Purchase in Perpetuity

@10.5% 9.5238

F. Total Value (C×E) £133,637.96

say £133,600

G. Basic-loss payment @ 7.5% £10,020

H. Disturbance Fixtures and Fittings £3,000

T. Extinguishment based on

average profit over 3 years

J. Average Profit over 3 years £10,000

K. Less Rent Nil (owner occupier)

L. Interest on Capital Nil (one-man

business)

M. Years purchase @ 3% for next 3

years 2.8286

N. Total Extinguishment (J×M) £28,286

O. Total Compensation

(F+G+H+N) £165,906 say £165,000


Appendix 8: Valuation of Ransom Land

Source: CoStar Suite Report

Source: Estates Gazette Interactive

Based on the comparable evidence shown above for the area of Dunstable and the vicinity, the

price per sq. ft. of sold land is £8.57, £6.88, £15.30, £6.24, £9.75. Taking an average of the above

transactions, the average price per sq. ft. is £9.38, say £9.40. Therefore, the open market value of

each individual land is:

£2,000 sq. ft. land £9.40 £18,800

£500 sq. ft. land £9.40 £4,700

£250 sq. ft. land £9.40 £2,350

Total £25,850 say £26,000

Applying the valuation method in Stokes v Cambridge Corp [1962]:

Value of Land Acquired for

Development

Value of Victorian cottages £600,000

Value of shop £133,600

£733,600

Less Developer’s Profit at 15% £110,040

Less Estimated Building Costs at

40%

£249,424

Value of land with necessary access £374,136

Less Total Market Value of all land

required for highway access

£26,000

Less Basic Loss Payment of open

market value @ 7.5%

£1,950

Increase in value due to access £346,186

Less allocated 1/3 to purchase of

access

£114,241.38

Total Compensation for Access

Land

£231.994.62 say £230,000


Appendix 9: CPO Indemnity Agreement

“An agreement between the acquiring authority and private developer to fund the compulsory

purchase order (CPO) process. It provides that the acquiring authority will exercise its compulsory

purchase powers if it is proper to do so and to ultimately transfer the land in return for the developers

paying all costs incurred by the process as well as compensation to the owners”

(Uk.practicallaw.com, 2016).

Appendix 10: Acquisition of Land (Rate of Interest after Entry) Regulations 1995 (SI 1995

No. 2262)


Appendix 11: Section of the 1961 Act

5. Rules for assessing compensation.

Compensation in respect of any compulsory acquisition shall be assessed in accordance with the

following rules:

(1) No allowance shall be made on account of the acquisition being compulsory:

(2) The value of land shall, subject as hereinafter provided, be taken to be the amount which the

land if sold in the open market by a willing seller might be expected to realise:

(3) The special suitability or adaptability of the land for any purpose shall not be taken into account

if that purpose is a purpose to which it could be applied only in pursuance of statutory powers, or for

which there is no market apart from [...] 1 the requirements of any authority possessing compulsory

purchase powers:

(4) Where the value of the land is increased by reason of the use thereof or of any premises thereon

in a manner which could be restrained by any court, or is contrary to law, or is detrimental to the

health of the occupants of the premises or to the public health, the amount of that increase shall not

be taken into account:

(5) Where land is, and but for the compulsory acquisition would continue to be, devoted to a purpose

of such a nature that there is no general demand or market for land for that purpose, the

compensation may, if the [Upper Tribunal] 2 is satisfied that reinstatement in some other place is

bona fide intended, be assessed on the basis of the reasonable cost of equivalent reinstatement:

(6) The provisions of rule (2) shall not affect the assessment of compensation for disturbance or any

other matter not directly based on the value of land:

and the following provisions of this Part of this Act shall have effect with respect to the assessment.

Appendix 12: The Pointe Gourde Principle

“It is necessary to value the property on the basis of its open market value without any increase or

decrease that could be attributed to the CPO scheme. Compensation should not include an increase

in value that is entirely due to the scheme underlying the compulsory acquisition” (Vaughan and

Clements Smith, 2014).

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Sample Law and Compulsory Purchase