What Is a Compulsory Purchase Order?
A compulsory purchase order (CPO) is a legal mechanism that allows certain public bodies — including local authorities, central government departments, and some statutory undertakers — to acquire land or property without the owner's consent, where the acquisition is required for a purpose that Parliament has authorised. Examples include road schemes, regeneration projects, housing developments by local authorities, and infrastructure such as railways and utilities.
CPOs are not common in day-to-day property ownership, but they become relevant if you own property in an area subject to a significant infrastructure or regeneration scheme. Understanding how the process works, and what you are entitled to, is important if a CPO affects your property.
When Can a CPO Be Used?
CPOs can only be used where the acquiring authority has the legal power to acquire land for the relevant purpose. The acquiring body must also show that the acquisition is necessary, that it serves a public purpose, and that there is a compelling case in the public interest. The process is overseen and confirmed by the relevant Secretary of State or an inspector appointed by them.
Owners and those with interests in the land affected have the right to object to a CPO. Objections are considered through a public inquiry process, where the acquiring authority must demonstrate the case for the compulsory acquisition. If objections are sustained and the case for the CPO is not sufficiently strong, the CPO may be modified or rejected.
What Happens to Your Property If a CPO Is Confirmed?
Once a CPO is confirmed and the acquiring authority serves the necessary notices, you are required to transfer your interest in the property to the authority. In return, you are entitled to compensation. This is a statutory right, not a gift from the acquiring authority, and it is governed by the Land Compensation Acts and the Compulsory Purchase Act.
The compensation package includes the open market value of the property (the price that would be agreed between a willing buyer and seller in the open market), disturbance costs (reasonable costs arising from having to move, including legal fees, removal costs, and certain business losses), and in some cases home loss and basic loss payments where you are a residential owner-occupier or qualifying tenant.
How Is Compensation Assessed?
Compensation is assessed by reference to the open market value at the valuation date, ignoring any increase or decrease in value caused by the scheme itself. This is known as the no-scheme world assumption — the property is valued as if the CPO scheme did not exist, to prevent the authority benefiting from a reduction in value caused by its own scheme.
It is strongly advisable to appoint a chartered surveyor with CPO experience to act on your behalf in negotiating compensation. The Lands Tribunal (now the Upper Tribunal, Lands Chamber) can determine compensation if agreement cannot be reached.
CPOs and Renovation Projects
If you are planning significant renovation works on a property that is in an area subject to a CPO, you need to consider the impact on your position. Works carried out after a CPO is confirmed (or sometimes after the scheme is announced) may not attract full compensation for the improvements you have made, as compensation is based on market value before the scheme, not the enhanced value resulting from your works.
Taking professional advice before committing to major expenditure on a CPO-affected property is essential.
Blight Notices
If your property is blighted — that is, its value or saleability has been reduced because it is shown on a planning document as being required for a future scheme — you may have the right to serve a blight notice on the acquiring authority, requiring them to purchase the property at open market value even before the CPO process is complete. Blight notices are available to qualifying owner-occupiers and are subject to various conditions.
At RCB Design and Build, we work across a wide range of renovation and construction projects across Greater London. If you are planning works on a property in a regeneration or infrastructure corridor, we can help you think through the implications and programme your works appropriately. Contact us to discuss your project.