Richard Farr, partner and compulsory purchase expert, explains what you should do if your local authority serves you with a compulsory purchase order.
Although only a small proportion of businesses will ever have to face the issue of compulsory purchase, the use of powers is increasing – not least because of national infrastructure projects like HS2 and Crossrail. Clearly it can be a very stressful time for any SME owner, but if you are aware of the situation, remain sensible and get the right advice, then there is no reason why you should be left short.
The first message I would give to any business owner and/or operator is to be aware of what is happening at a strategic level in your area. The first seeds of any CPO normally lie in the planning system and business owners should be conscious of emerging planning policies. At this stage, do not bury your head in the sand; if you fail to engage at public consultation stage, it could be used against you at a later date.
Once a local authority decides it is going to use powers of CPO, you will be notified if your property is affected. It is important to take professional advice at this stage, particularly if you occupy the property on an informal basis. Professional advice should not cost you a penny, because the acquiring authority is expected to pay for reasonable, professional fees on behalf of the claimant to cover valuers and solicitors.
You will be given a date (usually around six weeks after the Notice) by which any objection must be made in writing to the Planning Inspectorate, an independent body which deals with Public Inquiry in CPO in England and Wales. Crucially, the objection must focus on the scheme – whether it benefits the local area, if there is a commercial demand for the proposed new use, any deliverability alternatives etc – and not relate to the issue of compensation. The Planning Inspectorate will consider any objections and produce a report before a final ruling is made by the appropriate Government minister.
In parallel to any CPO, the acquiring authority is under a duty to engage with any individuals that are affected by the scheme. Their aim is to move businesses without the need to resort to a CPO so do not ignore them; engage with them, but be realistic. This is not a winning lottery ticket and many businesses lose out because their expectations are unrealistic.
When it comes to quantifying your claim, seek professional help – but beware, because anybody can claim to be a compensation specialist without regulation. The Compulsory Purchase Association offers a list of members by region and is a good place to find expert, professional support and my advice would always be to ask how many compensation cases they have dealt with in the last five years.
The principle of compensation is to provide equivalence – nothing more and nothing less. However, if you enlist professional help, you engage with the local authority and you have a good, viable business, you should be able to come out of a CPO slightly better off. For example, it is very difficult to move a small factory to ‘second-hand’ premises – moving to new facility should add some benefit for the business, whether it is improved connectivity, updated electrical wiring or better insulation.
Be sensible, be pragmatic and, most of all, be honest with your advisor. Engage from the start, don’t be greedy and take the professional advice that the acquiring authority are paying for. If you do all of that, you should come out on top, despite the stress of the situation.
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