Estates Gazette • 15 February 2025 • Compulsory purchase

Chloe Gershon outlines the proposals in the Law Commission’s consultation paper on compulsory purchase, and how readers can have their voices heard on potential reform

Compulsory purchase is the acquisition of land without the consent of the owner. It can only be carried out with statutory authority, for a public purpose and with payment of compensation to the owner. On 20 December 2024, the Law Commission published its consultation paper on the law of compulsory purchase procedure and compensation. It now seeks your views to inform its recommendations to the government for a faster, simpler and more modern land acquisition process.

This is not the first time the Commission has examined the law of compulsory purchase. In 2001, the then Lord Chancellor asked the Commission to undertake a review of this area of law. This resulted in the publication of two reports: one on compensation that was published in 2003 and one on procedure that was published in 2004.

Although the reports were favourably received by stakeholders and commentators, the Commission’s recommendations were not taken forward by the government. Its view at the time was that an attempt to repeal and replace the existing legislative framework would require considerable resources and could risk creating its own difficulties.

Since then there have been several piecemeal reforms to the law of compulsory purchase, including in the Localism Act 2011, the Housing and Planning Act 2016, the Neighbourhood Planning Act 2017 and, most recently, the Levelling-up and Regeneration Act 2023. Although some of these reforms reflected recommendations made by the Law Commission in its previous review, the net result of these incremental changes is that the law is even more fragmented, complicated and in need of modernisation than it was 20 years ago. The current government plans to make further changes in the Planning and Infrastructure Bill expected this later year.

Recognising the need for another comprehensive review, the Department for Levelling-up, Housing and Communities, as it was then known, asked the Law Commission in January 2023 to have another look at the law of compulsory purchase procedure and compensation.

The current Law Commission consultation should not be confused with the recently concluded consultation on compulsory purchase by the Ministry of Housing, Communities and Local Government.

The consultation paper is divided into three parts: procedure, compensation and supplementary matters. The following summarises some of the key provisional proposals and questions.

This part of the paper addresses both the authorisation and implementation of a compulsory purchase order. The main statutes considered are the Acquisition of Land Act 1981, the Compulsory Purchase Act 1965 and the Compulsory Purchase (Vesting Declarations) Act 1981.

Chapter 2 examines the authorisation of CPOs. For example, it considers whether the two separate statutory procedures in the Acquisition of Land Act 1981 for the authorisation of a CPO should be amalgamated. If a CPO is issued by a government minister, the procedure to be followed is set out in Schedule 1 to the Act. If the CPO is issued by a non-ministerial body (eg a local authority), the procedure to be followed is set out in Part II of the Act. The procedures largely overlap. The consultation paper therefore suggests that there is little purpose in maintaining the distinction.

The paper also questions whether the terminology used for non-ministerial CPOs could be confusing to those whose land is included within a CPO. Authorisation is a two-stage process. First, the acquiring authority issues the CPO. Then it must be confirmed by the confirming authority. These stages are given different names for ministerial and non-ministerial CPOs. Non-ministerial CPOs are “made” and then “confirmed”, while ministerial CPOs are “prepared in draft” and then “made”.

Stakeholders told the Commission that members of the public are quite often under the impression that they must leave their property immediately once an order is “made”. This is a legitimate misunderstanding, given the ordinary meaning of the words “make an order”. The Commission therefore asks consultees what terminology should be used in any consolidated compulsory purchase legislation to describe the stages of authorisation.

Chapter 3 then goes on to explore the two alternative procedures for implementation of a compulsory purchase: the notice to treat and the general vesting declaration. The notice to treat procedure is the older of the two, having originated in the 19th century. It is also the lesser used of the two, with the great majority of acquisitions now being implemented by GVD.

The Commission asks whether the existence of two separate implementation procedures makes the current law much more complex than it needs to be. The paper therefore considers whether it would be feasible to consolidate the legislation such that only one unified procedure, based on the GVD procedure, remained — perhaps the most significant reform on which the Commission seeks views. Where there are legitimate aims behind the use of a notice to treat that cannot be accommodated by the GVD procedure, the Commission explores ways of augmenting the GVD procedure to retain current flexibility.

Compared with compulsory purchase procedure, much of the law on compensation comes from the case law. Therefore, one of the main objectives in the second part of the paper is to examine how best to achieve a satisfactory code for the assessment of compensation. On disturbance compensation, for example, the Commission provisionally proposes in chapter 8 that the principles found in the leading case of Director of Buildings and Lands v Shun Fung Ironworks Ltd [1995] 1 EGLR 19 be put on a statutory footing. Broadly speaking, this means that a loss would be recoverable so long as it is: (a) causally connected to the acquisition; (b) not too remote; and (c) reasonably incurred.

This part of the paper also grapples with the lack of clarity in the law itself. This includes, for example, the vexed question of whether post-valuation date evidence is relevant in the assessment of compensation for injurious affection and severance. The problem here arises because there may be a significant time lag between the valuation date (usually the date the acquiring authority takes possession) and the later date on which compensation is either agreed or determined by the Upper Tribunal (Lands Chamber). The assessor must therefore engage in an exercise to ascertain what land values were applicable at the valuation date, and what the hypothetical parties would have known about the circumstances prevailing or reasonably anticipated at that date.

On one hand, allowing the assessor to take into account knowledge of the actual impact of the acquiring authority’s scheme after the valuation date might result in compensation that more accurately reflects a claimant’s loss. This is because the full effects of the scheme on the claimant’s retained land may not have been known at that date. On the other hand, it appears to be orthodox valuation practice to consider only matters that are known or foreseen at the valuation date. In chapter 7, the Commission therefore asks for the views of consultees on this matter.

The paper finally deals with other ISTOCK supplementary matters. For example, it looks at the circumstances in which a compulsory purchase is contemplated but is not proceeded with (an “abortive order”). It also considers the provisions, in both the Compulsory Purchase Act 1965 and the Land Compensation Act 1973, on compensation where no land is taken from the claimant and yet their land is adversely affected by the acquiring authority’s scheme.

Other topics not covered in this article that feature in the paper include procedures for divided land, advance payments of compensation, additional statutory payments in the Land Compensation Act 1973, costs in tribunal compensation disputes and compulsory purchase enabling powers.

So why should you respond? The modern law of compulsory purchase has a long history, dating back to 1845. Much of this law is still on the statute book. One senior judge with whom the Law Commission met described the law in this area as “Byzantine” in its complexity. Now is your chance to shape the future of the law of compulsory purchase so that it is simpler, more accessible and modern. The Law Commission’s final report will be accompanied by a draft Bill. That Bill will aim to provide a consolidated, coherent and logical framework to put compulsory purchase law on a new footing for the 21st century. The government will be under a duty to respond to the Commission’s final report within one year.

The consultation is open until 31 March 2025. The Law Commission is keen to hear from anyone with an interest in or experience of this area. During the consultation period, the Commission will host or attend a number of consultation events to give people the chance to speak to members of the team directly.

The full consultation paper, as well as a summary (in English and Welsh), can be found online at: https://lawcom.gov.uk/project/compulsory-purchase/. Any of these documents can be provided in an alternative format, if needed.

It is important to note that consultees do not need to answer every question if they are only interested in certain aspects of the consultation.

Chloe Gershon is a research assistant at the Law Commission of England and Wales