Consultation on Compulsory Purchase Process and Compensation Reforms

Overview

The Levelling-up and Regeneration Act 2023 (“LURA”) introduced reforms to the compulsory purchase order (“CPO”) process to make it easier to use. It also made changes to the compensation regime to ensure the balance of compensation and costs associated with the prospects of planning permission for appropriate alternative development is correct and more akin to normal market conditions.

Whilst the reforms introduced by the LURA have been implemented, this Government wants to go further. In its manifesto for the 2024 General Election, the Government committed to further reforming compulsory purchase compensation rules to improve land assembly, speed up site delivery, and deliver housing, infrastructure, amenity, and transport benefits in the public interest. It promised to take steps to ensure that for specific types of development schemes, landowners are awarded fair compensation rather than inflated prices based on the prospect of planning permission.

The Government’s ‘Plan for Change’ outlined the commitment to deliver 1.5 million new homes this Parliament to address the housing crisis along with the vital infrastructure needed to grow our economy and support public services.  Reform is needed to ensure we deliver this commitment so that home ownership is in reach for all our communities, the shortage of housing is addressed to lower high rents and people have access to safe and secure homes. Reform is also needed to reduce the high costs to local authorities of paying for temporary accommodation which could be alleviated by delivery of more affordable housing.  

The Government is concerned there is significant amount of suitable land available for housing which is currently lying vacant or underutilised and not coming forward for development or, where it is coming forward for development, the provision of affordable housing offered on those sites is below the minimum ask of the local authority.  

Our reforms will ensure the process for compulsorily acquiring land with a direction to remove the payment of hope value for schemes in the public interest is more efficient. Also, that the balance of the assessment of compensation awarded to landowners is fair and quicker decisions on CPOs can be made allowing schemes in the public interest to progress. In addition, the administrative costs of undertaking the CPO process can be reduced.