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.
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 (view ‘What are loss payments? FAQ) 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 incurred.