Compulsory Purchase of Houses in the UK

Although something we deal with every day at Olden Property, it surprises most people to learn that in 2024 you can have your house forcibly acquired from you in the UK. This can be your home that has been in your family for 100s of years or the buy to let investment you purchased three years ago. It can be a farm with land or a flat in the centre of London.

If a scheme is designed, be that a railway project like HS2 and Crossrail or a town centre regeneration scheme like Woolwich Exchange or the Church Street redevelopment in Westminster, it is likely that a mix of property will be acquired including retail, possibly industrial and residential property.    

Acting for clients whose home is being acquired via compulsory purchase can be difficult, especially when it is a family home which brings emotional toil to those concerned.

The first question is generally how can we stop this compulsory purchase? We cover this topic here so the rest of this blog is on the assumption that the CPO has been made and confirmed.

Once it is confirmed the next question is how long do I have before they take my property? This can be as little as three months from the date a council or other acquiring authority has been given permission to compulsory purchase a house in the UK. In many instances more notice is given but it is important to be aware it could be as little as three months to find a new home.

In a normal transaction this isn’t a huge amount of time and when you are being forced to move it really is not that much time at all. This becomes more of an issue if you are being forced to sell an inner city flat in a concrete block where values are low and hoping to stay in the same area where the surrounding property, in more modern developments which are not of concrete construction sell for much higher values. Relocation locally can be very difficult which is why councils offer Shared Ownership or Shared Equity schemes.  

The next question is what compensation are we entitled to? This is slightly different for owner occupiers of houses in the UK affected by CPO and investment owners. The first and most important element of your compensation is the Market Value of your property. This is the biggest proportion of your claim and requires the input of a surveyor well versed with compulsory purchase.

The key to a valuation for compulsory purchase is ensuring your valuation reflects the ‘no scheme world’ market value of the property. This is where a local agent or surveyor not used to valuing for compulsory purchase can unknowingly make mistakes. The evidence you use to value the Property should not be impacted by the wider scheme or negative impacts on value they may have brought.

Once you have established the market value of the Property, the item of compensation is a statutory loss payment. If you occupy the house this will be calculated at 10% of the market value of the Property and is known as a home loss payment. The Home Loss Payment is capped at £81,000 as of 1 October 2023. If you are not an occupier of the Property you are entitled to a Basic Loss Payment calculated at 7.5% of the market value of the property capped at £75,000.

Once the market value and loss payments are established, you are then entitled to claim Disturbance compensation. Disturbance payments are made to compensate a residential occupier for reasonable expenses in moving from the house. Disturbance payments cover reasonable expenses incurred generally during or before moving. Anyone relocated from their house which had been adapted for disabled people are entitled to the comparable cost of those modifications in their new home.  

The meaning of reasonable expenses can be debated but a broad rule is that the expense must be directly incurred as a result of the CPO. They refer to expenses that relate to the move, and expenses reasonably incurred as a direct and natural consequence of the displacement. Redecoration expenses, re-connection charges and redirection of mail will also be allowed. 

Costs associated with purchasing a relocation or reinvestment property will also be compensated and are an important element of a compensation claim. Council regularly try to agree a fixed, generally low figure for this when negotiating in advance of a CPO and it is advisable to not agree to this. Costs to purchase a new Property include legal fees and a building survey fee. Also Stamp Duty Land Tax which will be higher if it is a second home.

And finally professional fees. Any professional fee incurred in dealing with the compulsory purchase of your house in the UK are compensated. These fees broadly cover the costs of your compulsory purchase surveyor and your legal advisor who mainly deals with the conveyancing of the Property to the acquiring authority. You may also incur accountancy fees if there are complex tax implications brought about by the sale.

If your home or investment property is under threat of compulsory purchase, please get in touch.