LGA response to MHCLG consultation on Compulsory Purchase Process and Compensation Reforms

Department for Levelling Up, Housing, and Communities
3rd Floor, Fry Building
Marsham Street
London SW1P 4DF

11 February 2025

Dear Compulsory Purchase Consultation Team,

I am writing in response to the government’s consultation on Compulsory Purchase and Compensation Reforms, open from 18 December 2024 to 13 February 2025.

As the consultation document rightly points out, compulsory purchase orders (CPO) are an important tool available to councils to assemble land and develop infrastructure needed to help deliver vital regeneration that helps local areas to prosper and grow. Councils recognise that the use of a CPO to acquire land should be used as a last resort, where it has not been possible to secure acquisition through an agreement with the landowner. Also, in establishing a fair price for land acquired through the use of CPO, it is vital that a balance is struck between protecting the human rights of the landowner and the ability of councils to deliver their statutory planning responsibilities to meet the infrastructure needs of communities. 

In principle, the LGA support the objective of the proposed reforms in seeking to make the process for compulsorily acquiring land more efficient by the removal of the payment of hope value; ensuring that the balance of assessment of compensation to landowners is fair; enabling quicker decisions on CPOs to be made and reducing the administrative costs of the CPO process. 

More detailed comments on specific elements of the consultation can be found below:

Changes to the power to limit compensation payable for the prospects of planning permission (“hope value”)

We support the proposal that directions to remove compensation payable for prospective planning permissions (“hope value”) should be included in CPOs made on behalf of parish/town or community councils by principal councils under section 125 of the Local Government Act 1972 where the schemes underlying the orders are providing affordable or social housing. This would support the appetite amongst some local (town, parish and community) councils for a more proactive approach to be taken to the use of CPOs on their behalf as highlighted in the consultation and supported by the National Association of Local Councils. However, a potential increase in requests from parish/town or community councils as a result of these changes, will require councils to have sufficient capacity and expertise to act on their behalf. Further information on resourcing is covered later in this letter. 

We also agree with the proposal that where a CPO includes a direction to remove hope value but there are no objections to the CPO, that the confirmation decision can be taken by the acquiring authority. This will speed-up the decision-making process, although recognising that decisions on the confirmation of CPOs which include directions to remove hope value where there are objections will be undertaken instead by inspectors. More broadly, the LGA has long-argued that the default position should be that acquiring authorities should be able to confirm their own compulsory purchase orders and as a backstop, the Secretary of State could retain the ability to use his/her recovery powers in specific circumstances. 

It is considered that there is also scope for the Government’s proposals to go further and automatically limit the payment of hope value in compulsory purchase more generally. As a result of this approach, we consider that there would be more instances of land being acquired by an agreement with the landowner, before a CPO is required. This is because it would restore the credibility of using a CPO as a tool to encourage and negotiate with landowners to release their land voluntarily at an early stage. 

Serving of notices by electronic means

We agree that notices and documents required to be served under the various Acts cited in the consultation should be capable of being served electronically if parties agree in writing to receive services in that way or where the recipient is a public authority. This should support the modernisation, speed and reduction of administrative costs of the CPO process. 

Content of information required to be included in newspaper notices of the making and confirmation of CPOs

We agree that the information relating to the description of land published in newspaper notices of the making and confirmation of CPOs should be simplified. However, we consider that the proposals should go further than this and remove the requirement for the publication of public notices in local newspapers entirely. The results of an LGA survey published in 2023 estimated that upwards of £28 million is spent per year on statutory notices which could be saved if the law was changed. The statutory requirements date back more than 50 years, when local and weekly newspapers and radio were popular sources of local information. Since that time there has been vast changes in technology and shifts in consumer preferences. This requirement, which essentially amounts to taxpayer subsidy of the commercial newspaper industry, remains in force despite evidence to show that the public’s news and information consumption habits have changed (a move online and to mobile technology) and the circulation of local newspapers is falling.

Allowing confirmation decisions to be taken by acquiring authorities where orders require modification

We support the proposal to speed-up the decision-making process for CPOs, by allowing confirmation decisions to be taken by acquiring authorities where orders require non-controversial modifications to be made, as outlined in the consultation. 

Expedited notice process for vesting of interests in land

We broadly support the proposal for an expedited notice process for the vesting of interests in land and properties under the general vesting declaration procedure in the circumstances outlined in the consultation. We also agree that those with an interest in land included in a CPO should be able to enter into an agreement with the acquiring authority for their interest to vest in the authority earlier than the existing minimum 3-months’ notice period. 

Assessing compensation: Home loss payments exclusions

We agree that exclusions to home loss payments should apply where a property owner has failed to comply with a statutory enforcement notice/order served on them by the time the relevant CPO is confirmed. We consider that this will assist in lowering the costs for local authorities to deliver improvements to properties and bring them back into effective use through the CPO process, as well as providing an incentive for statutory enforcement notices/orders to be complied with. However, we consider that this exclusion should be discretionary for local authorities to apply, as there may be genuine reasons why an owner has been unable to comply, which is out of their control. 

More broadly, the LGA considers that there is further scope to reform other aspects of CPO legislation:

•    Stronger compulsory purchase type powers where permissions have expired and development has not commenced – “use it or lose it”. This would be used as a measure of last resort and with appropriate safeguards to allow councils to tackle sites which have had planning permission for a long time but which have not been built out. Councils would need to demonstrate plans for the development of the site within a reasonable period of time after acquisition. As well as incentivising developers to complete a timely build-out their scheme after planning permission has been granted, councils would be confident that they can act promptly and decisively to acquire land that is vacant to meet local needs. 

•    Stronger/streamlined compulsory purchase powers to tackle empty homes. To support council endeavours to bring empty homes back into use, they should be able to acquire time-limited leaseholds, enabling them to undertake refurbishment work to properties and bring them back into habitable states. Councils could then recoup their investment through rental income over the set time period, and even acquire nomination rights, returning the properties back to their owners at the end of the lease. There should also be a removal of the requirement for councils to pay compensation on long-term empty properties – currently 7.5 per cent of the property value, up to £75,000 and enable them to formally share costs and liabilities with a third party. This would provide the community benefit of reducing empty homes and prevent the risk of anti-social behaviour. It would also be an opportunity to optimise local, unused assets to tackle the housing crisis. 

•    Powers for councils to direct the use of publicly owned land. There is a need to speed up the process of assembly of surplus land owned by different public landowners in an area. Changes to compulsory purchase legislation provide an opportunity to implement the recommendation in the Elphicke-House report to give councils a power of direction on publicly owned land. This will enable councils to fast-track acquisition of un-used public land in their area to support redevelopment or regeneration opportunities. The reduction in processing time will enable councils to acquire land at an earlier stage.

A potential proposal that does not relate to legislation is as follows:

•     Councils must be sufficiently resourced and have an adequate supply of Compulsory Purchase Order expertise to respond to the needs of communities. Councils have highlighted that implementing the CPO process requires considerable resources to be of any significant use in facilitating town centre regeneration. Councils must be supported to access and build CPO expertise. As MHCLG’s Register of CPO decisions illustrates, there are only a small proportion of councils that currently use compulsory purchase powers under the Town and Country Planning, Housing and Local Government Acts. The LGA also has a role to play and could with appropriate funding support capacity-building through our sector-led improvement offer. The LGA has previously hosted a technical masterclass for local authorities on understanding compulsory purchase orders and compensation. 

Separately, we welcome the independent Law Commission’s consultation on compulsory purchase which seeks views on ways to simplify, consolidate and modernise compulsory purchase legislation and will submit a response in due course. The LGA has been arguing for more than a decade that there should be a more fundamental consolidation and streamlining of the legislative provisions for compulsory purchase. A number of different Acts and statutory instruments introduced over more than 150 years pertaining to compulsory purchase have resulted in antiquated legal terminology, inconsistences and uncertainties, all of which add to the costs of the CPO process and the scope for dispute. This has resulted in law relating to compulsory purchase becoming overly complex and increasingly inaccessible. There should be a fundamental review of all legislation pertaining to compulsory purchase with a view to bringing it all together in a single Act for a modern-day CPO system. 

As the Government continues to consider further how to deliver a compulsory purchase system fit for the 21^st century, the LGA and local authorities would welcome further engagement to ensure that it optimises the ability of councils to assemble land and develop infrastructure needed for local communities.

Yours sincerely

Councillor Adam Hug
Chair – Local Infrastructure and Net Zero Board, Local Government Association