Legislation in England and Wales allows various authorised bodies to acquire land where you are unwilling to settle via an agreement. A number of acts of parliament set out the process of compulsory purchase and the compensation to which people are entitled to.
So what are the key things you need to know when the authorities want a piece of your land?
The principle set
You are entitled to compensation following the compulsory acquisition of part or all of your land. The level of compensation is worked out using the principle of “equivalence”. This means your financial position should be no worse (or better off) than before the compulsory purchase.
The effects of the compulsory purchase order are not taken into account when compensation is assessed, the land is valued on its open market value.
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Acquisition of part of the land
How does this work when an authority only acquires part of your land, not all of it?
Here are the key ways in which you can expect to be compensated.
Severance and injurious affection
If an authority only acquires part of your land there is a possibility of additional compensation due to potential adverse effects on the land which remains under your ownership. This covers the depreciation of the land you end up keeping.
Severance
Severance occurs when the land acquired by the authority forms part of the value of the land that you retain, meaning that when it is severed, the remaining land diminishes in value. For example, if tramlines are built on part of your garden it will make the house less desirable to buyers as the size of the garden had previously increased the value of the property.
Injurious affection
This term applies to the reduction in value of retained land due to the proposed construction on, and use of, the land claimed by thelocal authority. Using the tram example, if part of the garden became tramlines then noise, lack of a view and the instillation of electricity lines could reduce the value of your home further.
It's worth remembering that the impact of the whole scheme has to be taken in to account, not only the effect on the area acquired from you.
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The 'before and after' approach
If just a bit of your house is acquired, your claim for land taken, severance and injurious affection can be still be sorted in one fell swoop using what is termed the 'before and after' approach. This essentially tallies with the equivalence principal outlined above which makes it clear that your financial position should be the same after the acquisitions as it was before.
In practice, the way this works is to agree the value of the property as a whole before the acquisition, assuming the scheme hasn’t gone ahead and compare this to value of the part of the property you will own after the acquisition.
The difference, if any, will be payable to you as compensation.
Betterment
When compensation is assessed, the acquiring authority take into account any increase in value to the retained land as a consequence of the scheme. This is known as betterment and there are certain schemes which may make your remaining land more valuable.
In these instances, the authority buying part of your land/home will attempt to offset any value increases against the compensation owed for the land that they took hold of. However, the authority have to be able to explain how and why their scheme has caused an increase in the value of your land.
In rare cases you might not receive any compensation if the increase in value of the land retained matches, or is greater than the compensation for the acquired land.
Don't worry though, there are no circumstances under which the authority can demand money from you!
Material Detriment
The final course of action that you could take is a claim for material detriment. This is when you seek to make the acquiring authority take the whole of the property interest not just a part.
Gov.uk state “Where part only of your property (such as some or all or your garden) is to be acquired you may require the authority to acquire the whole where the part retained will be less useful or less valuable in some significant degree. In the case of a dispute the issue will be determined by reference to the Lands Tribunal. This can be a complicated matter which you should discuss with your professional adviser.”
For more on the compulsory purchase process, visit the government website.
