If you’re a business affected by the possibility of compulsory acquisition, this guide shows you how to navigate the process, and where Newmark can help you.
Perhaps you are affected by the proposed Lower Thames Crossing, or East West Rail, or another scheme? Maybe you are wondering how to tackle the threat of compulsory purchase.
Newmark’s compulsory purchase and compensation team advise both acquiring authorities (‘AA’) and parties affected by compulsory acquisition - the right of certain public bodies to buy private property, and/or interfere with rights without the owner’s consent. Read on to understand what to do, and where to take prompt advice and action.
Benefits of Early Engagement
Engagement with the AA in advance of the making and confirmation of a compulsory purchase order (‘CPO’) is advantageous for various reasons such as securing a greater understanding of the proposed scheme and its likely impact, exploring the possibility of exclusion from the scheme or reducing impact.
Establishing at an early stage if a suitable relocation option is available, either in the scheme or elsewhere, or if the extinguishment of the business is more likely, assists business planning. Practically, having a greater understanding for managing, and preparing for, the impacts of acquisition can maximize time to arrange an orderly exit and fit-out of the relocation property. Finally, early engagement provides an opportunity to negotiate a private treaty agreement at a time when the AA is most receptive, and should this not be possible, can assist in forming a comprehensive objection to the CPO.
Objecting to the CPO
Information obtained in early engagement can inform a reasoned and comprehensive objection to the CPO, when a private treaty agreement cannot be reached or in parallel with private treaty negotiations. The leverage an objection creates may result in negotiating favorable terms for a private treaty agreement with the AA, in exchange for its subsequent withdrawal. Alternatively, a statement of case may be submitted prior to the public local inquiry into the CPO.
Outcome of the CPO Inquiry
CPOs are commonly confirmed and followed with the issue of statutory notices to enable possession: Notice to Treat (‘NTT’) and Notice of Entry (‘NoE’), or General Vesting Declaration (‘GVD’). The former provides the AA with possession but not title, and a GVD provides title and the power to take possession.
Claimant’s duties
- mitigate losses – acting as a ‘reasonable businessman’ would do with their own money. Evidencing the decision-making processes for actions taken, for example, can assist in supporting a claim.
- seek alternative premises - identifying the businesses’ property requirements such as size / location / configuration etc. assists in focusing the search. The timing for providing vacant possession and fit-out of the relocation property can also be key to a successful relocation.
- provide vacant possession – on the nominated day and in accordance with statutory notices.
- evidence the claim - good record keeping is essential.
The quantum of a claim for relocation is often lower than for the extinguishment of a successful business. However, significant loss of profits resulting from moving to an unsuitable location, or high costs of adapting the relocation property, are instances where the reverse may occur. Claimants must be vigilant to the quantum of the anticipated claim.
Principles of compensation
- Remoteness - losses must not be too remote and must be a natural and reasonable consequence of the dispossession.
- Causal - there must be a causal connection between dispossession and the loss.
- Mitigate - claimants must mitigate their losses, acting as a ‘reasonable businessman’ would do with their own money.
Compensation for compulsory acquisition is intended to put the claimant in the same position financially as if his land had not been taken.
Assessment of compensation
Assessment is based on the ‘Compensation Code’, the body of law which governs assessment. In addition to the parameters of the legislative background, found primarily in the Land Compensation Acts 1961 and 1973, there is a wealth of case law on which to rely.
The principal heads of claim include:
- market value of the acquired land at the date of possession or vesting;
- cost of disturbance from the land and ‘other matters’;
- the reasonable cost of professional advice;
- statutory loss payments and;
- interest on unpaid compensation.
- Where applicable, value for money and ‘betterment’ are applied to the claim as deductions from the compensation that would otherwise be payable.
Our years of experience show that an in-depth understanding of the process, keeping accurate records and maintaining good communication significantly aids the process, resulting in better outcomes. We have achieved successful outcomes for businesses affected by HS2, the Silvertown Tunnel, Coventry City centre and other infrastructure projects, to name a few.
Seeking advice at an early stage is critical; contact our experts for thoughtful and experienced guidance.
