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Compulsory Purchase & Business

Roger Hannah has been involved in a substantial number of compensation claims on behalf of businesses, both locally, regionally and nationally.

The underlying principle of compensation is that of equivalence. This means that a claimant should be no worse and no better off in financial terms than they would have been if the interest had not been compulsorily acquired.

There are 7 key ‘Heads of Claim’ applicable:

I. Market Value:

 

A claimant is entitled to the Market Value of their land / property. A Compulsory Purchase Order can effect 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.

 

II. Disturbance

 

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, see attached list of potential claims.

 

 

III. Relocation or Extinguishment?

 

Compensation payable would include the costs of relocating the business or the cost of extinguishing it. A business proprietor will normally be expected to mitigate their loss and seek to relocate his/ her business. A business proprietor may seek the Acquiring Authority to acquire their business if as a direct result of the CPO the business is not able to relocate. The burden of proof will be on the business owner, who will need to show that the business cannot practically be relocated to other premises, in order to succeed in a claim for extinguishment.

 

Under the ‘relocation’ basis, the owners of the businesses are able to claim the costs of relocation and any temporary losses. The ‘extinguishment’ basis assumes that the business is closed down and compensation is based on the value of the business.

 

A business owner will have to show that the property that is being acquired is so unique that the business cannot possibly carry on at alternative premises, or that the costs of relocating the business are greater than the value of the business and that no prudent business owner would incur the costs of relocating the business, if these far exceeded the end value of the business.

IV. Extinguishment By Right

 

Section 46 of the Land Compensation Act 1973 states that business proprietor may seek a claim for extinguishment where the following criteria are met:

– The claimant is over the age of 60.
– All other shareholders in the business (with the exception of the claimant’s spouse) are over the age of 60.
– No part of the business’ goodwill has been sold.

In these circumstances, the Acquiring Authority will acquire the business, but the Claimant will be prohibited from re-opening a similar business.

 

V. Loss Payment

 

Business owner occupiers who meet the qualifications can claim a Basic Loss Payment. This payment is calculated at 7.5% of the value of an interest up to a maximum sum of £75,000. In addition, an “occupier”, whether they be an owner occupier or a business tenant (subject to qualification criteria) may also be entitled to an Occupier Loss Payment.

 

The Occupier Loss Payment equates to an additional 2.5% of the value of the interest, or £25 per sq m of building taken (or £2.50 per sq m of land) subject to a minimum sum of £2,500 and a maximum payment of £25,000.

The Role of Mediation

In 2015 Roger Hannah was appointed by a client in respect to a CPO promoted in St Helens. Following negotiations over the last 4 years the Total Extinguishment claim was ultimately considered at mediation.

Case study

National Coverage

Our dedicated Compulsory Purchase Team have experience in dealing with CPO matters throughout the country.

Key contacts

Simon Cook

BSc (Hons) MRICS
Registered Valuer

  • Managing Director

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Angela Juszczyk

BA (Hons) MSC MRICS Registered Valuer

  • Director

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