Community Assets No 6 - Compensation Issues No 1 (Update No1 - 18 November 2011)

With the prospect of local land being listed under the Localism Act 2011 (November 2011) as assets of community value there may develop a market "niche" for those who seek to agree claims for compensation upon the compulsory purchase of a such assets. It may, therefore, become appropriate for the stakeholders to get an idea of the following:

• the approaches to compensation which might arise; and,
• the possible pitfalls along the line.

Firstly it may be noted that community value is not really about open market value (OMV) but the view in section 88 (1),(2), and (3) that a property furthers the social wellbeing or social interests of the local community. "Social wellbeing" is not defined in the section but in section 88(6) "social interests" covers
(a) cultural interests;
(b) recreational interests; and,
(b) sporting interests.


The Act is silent as to whether these interests have to be "lawful"!  As an aside - this aspect of the Localism Act 2011 takes my mind to lawful sports and pastimes of the Commons Act 2006 - one of the "measures" of judging land use when determining land as a prospective village green or town green. Will such land be considered as an asset of community value? The 2006 Act suggests that it could be! [At present the government has a consultation out on heritage greens.]

The basics of compensation for assets of community value are likely to be very similar to (if not the same as) that for other property affected by a compulsory purchase order (CPO). However, a CPO for community property is likely to involve only one parcel of land (or land with building(s)). In other words the surveyors involved may have little in the way of current transactions as comparatives for determining the value of the community asset. Here, however, the post is about the legal framework for determining the basis of value.


The law provides that the owner should be compensated in a manner which means that he or she should not be worse off after the event than before the event - the event is the act of acquisition under the CPO but the date at which compensation is assessed is determined in law. If an interest  happens (in the unlikely event) to be unlawful,  it cannot be reflected in the OMV since the six rules of compensation should be used by the acquiring body to exclude it as being immoral etc (see the Land Compensation Act 1961 (as amended).


Cutting to the bone, broadly and briefly there are statutory rules and assumptions which, in effect, allow two bases of compensation; the owner claims the higher of the following:

• open market value of the property assuming it is in the present use, together with "disturbance" (together with, legal fees and costs and surveyor's fees); and,
• open market value based upon development potential (together with legal fees and costs and surveyor's fees).

By way of illustration, a village shop with a large yard might be valued as a shop at say, £490,000 including disturbance and fees etc: as a redevelopment site it for housing it might be valued at say, £900,000 including fees etc. In this instance owner would be entitled to the latter sum.

However, in a case (Greenweb v London Borough of Wandsworth (2008) (similar to a CPO situation) the claimant company had originally paid £30,000 for a small parcel of land. The land was open space - seemingly available to the public. The acquiring authority and the claimant agreed that its market value was a sum of £15,000 but the company argued that under the statutory rules etc, it was entitled to much more - as a result of the Lands Tribunal decision going before the Court of Appeal the company ended up with £1,600,000!

Community Assets No 8 - Authority and Power to Compulsory Purchase (Update 1 - 18 November 2011)

For competent bodies there are about 150 (at least) separate statutory provisions available to purchase land with the power of compulsory acquisition, ie to buy land using a compulsory purchase order. The powers will cover the likes of:

• land and buildings for schools;
• land and buildings for housing;
• land and buildings for roads;
• etc.

The issue is "What is the nature of the powers which are available to buy a "community asset"?


It may be noted that power to buy property by agreement is usually available under the particular statute - the CPO provisions are there to back up the competent authority's position for the following reasons:

• against say, reluctant owners and/or occupiers;
• to speed up the process; or,
• to ensure approval by a higher authority, ie the appropriate Secretary of State.

A competent authority, eg a local council, is one able to seek powers of compulsory acquisition under a statute. The wording of the Act will or should make this clear. In England's rural areas this is likely to be the district council or the county council. In urban areas it will be the stated local authority. The issue is "What bodies are able to buy by compulsory purchase land and buildings for use as a "community asset"?


Firstly, it is not likely that a parish council or town council has or will have the statutory powers to buy land for community asset purposes by CPO: they may be able to do so by agreement...? Otherwise, it seems that a competant authority may seek to obtain a CPO for a "community asset" provided:

• the community asset is specifically covered by an existing power of compulsory purchase, ie included in the purpose of the enabling Act, say social care purposes;
• the community asset is such that it could be included in a particular scheme of acquisition, eg a regeneration project;
• finally, it may be bought under more general power, eg for planning purposes or economic development purposes.

An hypothetical example might be private land used as allotments. The section references are the Localism Act 2011 (November 2011)

The owner wishes to sell the land but the allotmenteers want the following:

• the land to be an the local authority's list of assets of community value (s 87(1));
• hence, to nominate (s 89) as a voluntary body (s 89(2)(ii)) the land as being of land of community value (s 88);
• once so listed, ensure the disposal of the land is subject to a moratorium (s 90); and,
• to persuade the parish council to persuade the district council to acquire the land by a CPO.

Of course, all of this requires;

• a good measure of time;
• an 'imbuination' of the details of the procedures under Part 5 Chapter 3 of the Localism Act 2011;
• support from the stakeholders;
• etc.

 A government circular, albeit dated, on CPO-ing is Circular 02/03 Compulsory Purchase Orders (see link) is nearly 100 pages of detail.
http://www.communities.gov.uk/documents/planningandbuilding/pdf/156360.pdf

Community Asset No 4 - Initiation of a Compulsory Purchase Order (Update No1 - 17 November 2011)

The references to sections are to those in the Localism Act 2011 (November 2011).

The actions required to obtain a compulsory purchase order need to be carefully planned and executed by the "stakeholders". The initiators are likely to be a small group of local residents who want to see a threatened local asset of community value (s 88(1)(a)).

• supportive local residents who might form themselves into a community group - to contribute ideas and raise funds for the project's immediate progression - they may want to make a community nomination (see s. 109(2) (a) and (b)) that the asset goes on the list;
• the relevant local authority - to be persuaded to make a CPO for what must be a justifiable community scheme;
• the local planning authority - to be consulted and may ultimately decide on the planning merits of the proposal;
• the owner (see s.107)and any occupiers of the property - (assumed for the purposes of this post to be opposed to the project); and,
• immediate neighbours who may be opposed to the project on amenity or other grounds.

Once formed the community group will need to make the case for project - particularly to the CPO-ing body. The main pointers on this score have been outlined by ministerial advice to the local authorities. No doubt further detail will emerge. For the purposes of this post the following is an attempted "interpretation":

• the nature of the worthwhileness or value of the project to the local community - the groups or groups of residents or visitors it will serve, the extent that life in the community becomes more sustainable....;
• the perceived threat to the asset - dereliction to the fabric of the building leading to its loss, retirement of the business owner, inappropriate development...;
• the future project in terms of its purpose, usage, management, and business (perhaps including its restoration, business development plan, funding)....;
• planning issues - the sustainability of the project for the future of the community, impact on neighbours and its amelioration....; and
• financing of the acquisition - local authority financing (if any), community groups financing etc...

Community Assets No3 - Compulsory Purchase (Update No1 17 November 2011)

Communities facing the loss of treasured property-based assets, eg a privately owned pub, post office or a shop, may now feel empowered and emboldened to seek a compulsory purchase order (CPO). They would have to do this "via" the appropriate local authority, ie one with the relevant powers of acquisition.

Local authorities are issued with new guidance (in Appendix KA of Circular 06/04) on the expectation. Once a community group get to hear of the guidance they may feel justified in going for the CPO route - particularly where private treaty negotiations have failed.

All parties in the process will feel the weight or impact of the paper work generated - particularly the private owner who may want to retire quietly from his or her business with a nest egg. It is probable that CPOs still take a minimum of about say, 15 months so the retirement and the prospect of a quick sale for other use may be lost.

Prior to any CPO the owner may face a moratorium on an intended disposal of his or her property (because it is deemed to be an asset of community value). This new procedure under the Localism Act 2011 (November 2011) is intended to give a community interest group a chance to declare an interest in buying the property.

Community Assets No10 Circular 06/04 Compulsory Purchase and the Critchel Down Rules (Update No 1 19 November 2011)

If you have an old copy of Circular 06/04 beware! It has been revised this month with a new Appendix KA on page 57! Otherwise "passage of time" changes are recorded in the Planning Portal (16 June 2011). The new appendix concerns advice for yet more CPOs. (See Community Assests -No 9 - Update No 1.)