Proposed changes to compulsory purchase compensation in England and Wales will see landowners forced to sell their land for below market value to facilitate new development warns the Central Association of Agricultural Valuers.
The consultation proposes changes to the compulsory purchase system in the name of aiding public sector development including housing, regeneration and infrastructure. However, Jeremy Moody, secretary and adviser to the CAAV warns it will enable local authorities and other public sector acquirers to take land without necessarily paying for ‘hope value’ where there is already the opportunity for development.
“The principle of equivalence has long lain at the heart of compulsory purchase compensation,” says Mr Moody. “While sounding fair, its inbuilt downward pressure on price encourages resistance, delay and extra cost for projects, such that George Osborne advocated changing it seven years ago.” Then Chancellor of the Exchequer, Mr Osborne said: “If you pay people a little more, you’d get planning a little quicker and the whole process could cost less.”
However, the Government is now proposing the opposite – so that there would be one price when land is sold in the open market and another lower one when it is taken by compulsory purchase. “History shows that such a two-tier market will be seen as unfair and leads to difficulty and complexity,” says Mr Moody.
The Levelling Up and Regeneration Bill would allow ‘public sector entities’ to ask the Government for authority to cap compensation at existing use value. The consultation proposes to go even further, by capping or removing hope value either for compulsory purchase generally or in relation to specific types of schemes. It argues that a ‘fair’ price would aid the viability of the scheme. “But it opens the door to paying less than market value for property taken by a public sector body.”