The principles of compensation are governed by the compensation code, which is derived from statute, case law and established practice. One of the main principles is that of “equivalence”, i.e. a claimant should be placed in no better or worse position (in financial terms) after the acquisition than they were prior to the acquisition.
WHAT ARE MY RIGHTS FOR COMPENSATION?
Section 5 of the Land Compensation Act 1961, lies at the heart of the Compensation Code. In accordance with Rule 2 of Section 5 of the Land Compensation Act 1961, a claimant is entitled to the value of their land/property.
Because of the effect a Compulsory Purchase Order can have on property values, when assessing the level of compensation, regard is paid to the “no scheme world”, i.e. the effect of the CPO (both positive and negative) is ignored and the value of the land/property to be taken is on the basis of open market value.
In addition to the value of land/property, a claimant is also entitled to additional compensation normally referred to as “disturbance” under Rule 6 of Section 5 of the Land Compensation Act 1961.
Disturbance compensation includes all costs reasonably associated with the CPO. The actual level of compensation will vary from claim to claim and is dependent upon the claimant’s specific circumstances.
However, a claimant has a duty to mitigate his/her loss. Examples of items which are claimed under “disturbance” include removal costs and acquisition fees incurred in purchasing a relocation property (including Stamp Duty Land Tax) as well as business losses.
There is also a series of loss payments which can be paid in conjunction with a claim. These payments are dependent upon the nature of the property (i.e. residential or non-residential), subject to certain qualifying criteria.
Finally, a claimant can claim for reasonable surveyors’ fees incurred in preparing and negotiating a compensation claim together with reasonable legal fees where incurred.
A claimant’s CPO compensation entitlement falls under a number of pieces of legislation. There is no one codified statute encompassing all the compensation provisions.
Key acts of Parliament include the Land Compensation Act 1961, Compulsory Purchase Act 1965, Land Compensation Act 1973 and the Planning and Compulsory Purchase Act 2004.
The purpose of CPO compensation is to put the claimant back into the position they found themselves prior to the Compulsory Purchase. Typical claims often include the following main headings:
- Market Value
- Loss Payments
- Disturbance (business and residential)
- Costs of reinvestment
- Professional fees
There can be a whole host of other claims, but usually they would fall within these headings.
Eg. ‘Business Disturbance’ can include claims for almost 40 different items from redundancy costs through to loss of profits.
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