In Focus: Compulsory purchase – how it works

Compulsory purchase is the legal process of forcing someone to either sell land or a right over it. A ‘right over land’ can mean an existing lease or something more specialised such as an ‘easement’ for utilities.

When the term “compulsory purchase” is heard it can bring to mind very large projects such as power stations or HS2. Actually compulsory purchase can be used for projects at any scale. Compulsory purchase powers might sometimes be used to obtain a right for a new gas pipe to run under a field, for example.

The compulsory purchase process runs in two stages. First some entity needs to be given compulsory purchase powers over a specific area of land. Then they need to use those powers to actually take control of the land.

The best known mechanism is called a compulsory purchase order or CPO. There are lots of pieces of law which can allow certain types of entities to compulsory purchase land for certain purposes. For example, Schedule 2 of the Electricity Act 1989 lets licensed electricity suppliers compulsory purchase land as needed for their licenced activities, and Section 155 of the Water Industry Act 1992 lets water companies compulsory purchase land to meet their legal functions of, for example, supplying drinking water.

If a water or electricity company (for example) wishes to use these powers it must apply to the relevant minister for a CPO. This is done through the same procedure regardless of the source of the powers. The company will need to specify which land it thinks it needs and why, and the minister will then assess whether the compulsory purchase is in the public interest. Where there are objections (which there will usually be), this will lead to a full public inquiry. The minister will make a decision (which may be delegated, for example to the Planning Inspectorate) on whether to ‘confirm’ the order after the inquiry concludes.

While CPOs are perhaps the best known way for compulsory purchase powers to be granted, there are a handful of others. One mechanism is directly by an act of parliament. HS2 was granted this way due to its sheer scale, but in general this method is used rarely

Another method which is more frequent is the Development Consent Order, or DCO. This is for those types of larger project which people might think of when they hear the phrase “compulsory purchase”. East-West Rail, road widening schemes on the A66 and A303 and the construction of Hinkley Point Power Station were all undertaken by DCO. A DCO is unique in that it grants compulsory purchase powers and also planning permission and various other types of consent. As such, DCOs are their own detailed area of practice and CLA national and regional teams spend a substantial amount of time advising members about them.

Transport and works orders are yet another mechanism used specifically for rail improvements which do not meet the threshold for being a DCO, and also for urban tram systems. It is also technically possible for the government to give organisations blanket compulsory purchase powers by an Act of Parliament, which has been used historically to for the military during wartime.

Once the process for granting of powers has taken place, whether by a compulsory purchase order or another mechanism above, the organisation may then use its new powers to purchase the land. There are two ways it can do this.

The first, more common, of these is via a general vesting declaration or GVD which works as follows:

• First, when the powers are granted, a ‘confirmation notice’ must be published. This must notify everyone eligible to make a compensation claim on the land sought that a GVD could be implemented.
• Then, notice is given to anyone with land or rights the authority wishes to acquire. This declares that title of the land will be transferred to, or “vested in”, the acquiring authority on a set date. This date cannot be less than three months from service of the notice.
• Then, the day after the notice’s expiry, the acquiring authority becomes legal owner of the land.

Note that the word “payment” does not appear in any of the above steps. That is because this is essentially a separate, parallel matter – compensation is mandatory but may be agreed and paid before or after the vesting date. On proper service of notice, title is transferred on this date regardless of whether compensation has been agreed. There are certain caveats to this, such as a right to request an advance payment of compensation, but these are a separate topic.

The other, somewhat rarer method, of exercising compulsory purchase powers is via a ‘notice to treat’. This works as follows:

• First, a document called a ‘notice to treat’ is served on a landowner (or tenant etc) specifying the land the authority wishes to acquire.
• The landowner must then respond with a ‘notice of claim’ within 28 days. This triggers a negotiation process which is out of the scope of this article.
• Once a notice to treat has been served, the authority may then serve a ‘notice of entry’ allowing it to take possession of the land, but this does not convey the title to it. This only happens after payment of compensation.
• If compensation cannot be agreed, the matter may be referred to tribunal, which will decide on a value for the interest acquired.
• On payment, the authority becomes legal owner of the land.

Therefore, the main practical difference between the GVD and notice to treat procedures is that a notice to treat requires two notices to be served and compensation to be agreed before the authority becomes legal owner of the land, even though it may have possession before this. In a GVD, it may take possession and become owner at the same time after one single notice, usually before compensation is agreed.

In practice there are two types of bodies that are likely to be granted compulsory purchase powers.

Firstly, there are branches of government. Government departments, local authorities and other types of public body such as Highways England or Historic England will tend to have some form of CPO mechanism connected with their general duties. The NHS can acquire land for hospitals and related infrastructure, for example, and mayoral development authorities can acquire land in order to build houses among other purposes.

Secondly, private sector infrastructure providers will often have compulsory purchase powers connected to whatever service they provide. Water companies can acquire land or rights over it to lay pipes or build reservoirs, electricity companies can acquire land to build substations and other electricity infrastructure, Network Rail can acquire land to build and upgrade lines and stations, and so forth.

The advice needed will heavily depend on the stage the acquisition has reached. Sometimes, legal advice will be required about the operation of powers. Other times, advice will be needed on how to make the acquirer pay attention to issues raised. Later on in the process, advice may be required on how the valuation process works or how to ensure that payment is made promptly.

Whatever stage you find yourself at, and regardless of the scale of the project, the CLA will be able to point you in the right direction. The first step is to contact the regional surveyor at your local office, who may be able to assist themselves or direct you towards appropriate professionals or bring in our national team.