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!

Property No 1 - Land Auctions - Via Local Authorities (Update No 1 - 28 November 2011)

Vague memories of something called the "community land scheme"(CLA) (c 1976) came to mind when I read of misgivings about the policy proposal for land auctions by local authorities.


Briefly, the land auctions scheme is that owners of property with development potential will "offer" their land to the local authority at a sealed-bid price. If the council decides to "buy" the land at that price, it will then obtain planning permission. Subsequently the local authority will sell the land at auction to the private sector for development, ie in the expectation of a price higher than the bid price.


The proposal is (very very loosely) akin to what I imagine might have happened after the "second appointed day" (SAD) of the CLA - that day did not arrive! [If memory serves correctly, aftre SAD the land was bought by the LAs at "current use value" not at a sealed bid price.}Will the same fate await land auctions via local authorities?

Community Assets No 2 - Moratorium on a Disposal (Update No 2 - 23 November 2011)

The Localism Act 2011 requires an owner who has a property which is listed on the local authority's list of assets of community value to give notification of disposal. This will kick in an interim moritorium period of disposal, ie six weeks in which a community group may declare an interest in exercising their right to bid for the property. If one does so a full moratorium  period on the disposal arises, namel six months.

It follows that the stakeholders will all have to be alert to the impact of such a moratorium, namely:

• the owner should be aware that the property is on the list and be concerned that the appropriate "notification of disposal" (see section 96)  is made;
• any owner's estate agent should take into account the timing of the various periods given in the chapter, eg "full moratorium period", "interim moratorium period" and "protected period";
• prospective buyers (both community buyers or private buyers) will need to understand the nature and timings of any possible delays;
• any community interest group (see section 95(6)) wanting the property will need to comply with the procedures;
• the local authority (see section 106 (1), (2), (3), and (4))  will need to be geared up to give effect to the procedures.

Once the Regulations are published (probably in a few months) the full gamut of the legislation will begin to bear!


A point to bear in mind: where the vendor has a "going concern", eg as a branch in a bank and decides to close the bank branch, it may be difficult afterwards to maintain or claim the "community value" in the empty property. The issue is that the "community value" may lie in the continuation of the use, in this case banking: it is not in the property per se.

Community Assets No 1- Glossary - "Assets of Community Value" (Update No 1 -16 November 2011)

"Community asset" is a relatively new term which is being "enclosed" with a new statutory aura of terminology; so this post attempts a short list of the new jargon. I must admit that I have a layman's understanding of such matters so I am pleased at last to delve into the Localism Act 2011 which has just received Royal Assent (16 November 2011). Now we must await the pethora of Regulations!  

To the glossary - where the Bill is lacking in detail it might be expected that forthcoming regulations will fill gaps. Let the hunt begin!


Part 5, Chapter 3 of the Localism Act 2011 (sections 87 to 108) sets out the law of "assets of community value. " Under these provisions new terms we have to deal with include the following:

• community value - (see section 88(1)(a) - This is not a reference to monetary value such as "open market value" but to a quality of the land in its current use in furthering the "social wellbeing or social interests of the local community" [Note tht further detail is given in the section!];
• list of assets of of community value (see section 88) - The lists are to be drawn up by the local authority (see section 106(1) and (3)), eg district council, county council, etc.
• community nomination (see Section 89(2)(a) and (b)) This allows community councils, town councils and parish councils and their ilkies (certain voluntary bodies) to nominate land for the list. [They seem to be in a relatively weak position.];
• land of community value - "land" is widely and interestly defined (see section 108(1));
• owner - (see section 107) is defined in relation to land as to whether the estate held is freehold or a freehold with one or more leases. [In the latter the owner owns the leasehold furtherest from the freehold!]
• list of land nominated by unsuccessful community nominations (see section 93)
• moratorium on disposing of listed land - (see section 95(1)) - here  land on a list cannot be disposed of unless Conditions A, B, and C have been fulfilled (see Section 95 (2), (3) and (4));

My first look excited curiosity and revealed my general "cloud of unknowing" about such matters. A whole new field of interpretation is about to hit me - or so methinks! Later posts will explore these terms and more further.

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 No 9 CPOs for Community Assets (Update No 1 - 18 November 2011)

The Localism Act 2011 (15 November 2011)) has possibly made it more likely that more than one community group is going to be asking their local authorities (LAs) to compulsorily acquire a private (or public?) asset which the community group regard as a being a land of  community value. [Note: This post assumes that the bits and pieces of the Act are operating - that is as time lordsladies we are in the future after the regulations are approved by Parliament.]

Initial steps before the CPO is likely to be considered are:

• if the LA has not put the asset on its list, a "person"  aka  the community group nominate the land (and buildings) as an addition to the LA's list of assets of community value.
• it then requires a notification of disposal of the owner; and
• a moratorium on the disposal.

In the past such groups have sometimes been able to purchase privately a local post office, shop, pub etc which is threatened with closure and hence cease to exist. At other times they have failed - perhaps for lack of time. It might be expected that a CPO will enable due process (and delays) - if successful, it will lead to the creation of a community-owned asset


The main purpose of this post is only to identify the main steps in the practice and procedures of obtaining a compulsory purchase order in the context of the Localism Act 2011 as they might be applied to creating an asset of community value. (Later posts will examine the steps in more detail.)


In outline the steps involve the following:

1. Initiation and relevant community body in operation;
2. Community body prepares and demonstrates the "case" to the LA and other stakeholders;
3. Relevant public body and authority to obtain powers to acquire land;
4. Making and submitting (if necessary) a compulsory purchase order;
5. Confirmation of the CPO and possible action in the High Court;
6. Notice to treat and possession against the owner (and occupier if different);
7. Assessing compensation for those entitled;
8. Completion and payment of compensation; and,
9. Commissioning as an asset of community value.