On 1 March 2024, the Department of Levelling Up Housing and Communities wrote to chief planning officers in Homes England and all CEOs of development corporations and local education authorities to remind them that compulsory purchase orders (CPOs) can be the catalyst for attracting new investment to town centres.

CPO powers are notoriously inflexible and difficult to use and of course their use needs to be balanced against the interests of the landowner.

The Levelling Up and Regeneration Act 2023 (LURA) has made changes to the CPO process to make it easier to use and this includes:

• Giving local authorities in England a clearer legal basis on which to use CPOs to deliver regeneration projects.
• Streamlining the CPO process to allow, for the first time, CPOs to be conditionally confirmed. This helps to reduce risk for the acquiring authority by enabling the submission of further information to overcome difficulties to scheme delivery.
• Digitisation of the CPO process.
• Removal of the automatic right for a public inquiry to be held in response to an objection. We know that these can be costly and time consuming where not appropriate.
• Striking a better balance in the assessment of compensation by simplifying the process of obtaining a certificate of appropriate alternative development (CAAD) and the removal of the requirement for the acquiring authority to cover a landowner’s costs in relation to their application for a CAAD. This means planning will have to be more sensitively assessed and the position is more akin to a normal market position.
• More flexibility by extending time limits for implementing CPOs and giving more flexibility to vary vesting dates, where the parties agree, better suiting bigger schemes.
• Most significantly, the changes made by LURA, allow the removal of hope value (the value linked to the prospect of planning permission being granted at a future date) in certain circumstances. Local authorities (and other bodies) can apply to the Secretary of State to remove ‘hope value’ from the compensation payable. An application can be made on schemes providing public benefits, such as affordable housing, new schools and new hospitals.

The reforms give much needed certainty to determining an authorities upfront cost for a CPO, assist with viability, improve confidence in the valuation process, draw a line under costly disputes linked to ‘hope value’ compensation and hopefully avoid delay and uncertainty in the process.

The reforms commenced on 31 January 2024 in relation to transactional arrangements.

For further information on the compulsory purchase reforms or any planning or regeneration matter, contact Stuart Evans or Emma Lloyd.