Compulsory Purchase Compensation UK 2026 — Market Value, Disturbance, Home Loss Payment, Basic Loss Payment, Advance Payment and Upper Tribunal Lands Chamber Dispute Resolution

Heads of CPO compensation: market value, disturbance, home loss, basic loss, advance payment and Upper Tribunal dispute resolution

The complete CPO compensation framework for landlords:

• Market value (no scheme world), disturbance compensation, injurious affection and severance: MARKET VALUE (LCA 1961 s.5 RULE 2): the primary head of compensation is the open market value of the freehold or leasehold interest compulsorily acquired — the amount that a willing seller would accept from a willing buyer in an arm's-length transaction at the valuation date (the date of entry — when the acquiring authority takes possession; or the date of the General Vesting Declaration if that is later). THE 'NO SCHEME WORLD' (LCA 1961 s.5 Rule 3; further clarified by the Neighbourhood Planning Act 2017): the market value is assessed ignoring the scheme for which the land is being acquired — both the enhancement in value caused by the proposed development (e.g., land near a new station being worth more because of the station) and the blight (reduction in value caused by the announcement of the scheme — e.g., a CPO blight that has depressed the price below what equivalent unblighted land would achieve). The 'no scheme world' is a legal construct applied by the RICS valuer — it can significantly affect the assessed value in either direction. Example: land being acquired for a major road scheme may have been blighted (reduced in value) by the announcement of the scheme; the no-scheme world value is the value without the blight, which may be higher than the current blighted market price. INDEPENDENT RICS VALUATION: the landlord should appoint their own independent RICS-qualified Red Book valuer to assess the no-scheme world value — the acquiring authority will have their own valuer; the two valuers negotiate; if they cannot agree, the UTLC determines the value. PROFESSIONAL FEES: the acquiring authority must pay the landlord's reasonable professional fees (valuer; solicitor; structural engineer if required) — both in connection with the compulsory acquisition and in negotiating the compensation. DISTURBANCE COMPENSATION (LCA 1961 s.7 and POINTE GOURDE principles): 'disturbance' is the compensation payable for losses that flow naturally and directly from the acquisition and that are not reflected in the market value of the land. Examples: (a) REMOVAL COSTS: the cost of physically removing furniture; fittings; trade fixtures; equipment from the property (commercial tenants and mixed-use landlords); (b) RELOCATION COSTS: the cost of finding and moving to alternative premises; legal costs of acquiring a new lease or freehold; costs of fitting out alternative premises; (c) LOSS OF RENTAL INCOME: where the landlord lets the property to residential or commercial tenants and the CPO requires vacant possession to be given — the landlord loses rental income while tenants are given alternative accommodation and during the period until a replacement property can be acquired; (d) TEMPORARY ACCOMMODATION: if the landlord occupies part of the property, the cost of temporary accommodation while a permanent replacement is found; (e) PROFESSIONAL FEES FOR RELOCATION: surveyors; relocation agents; legal fees on the purchase of a replacement property. DISTURBANCE MUST BE CAUSED BY THE ACQUISITION: if the landlord would have incurred the same costs regardless of the CPO (e.g., they were already planning to move), disturbance compensation is not available. INJURIOUS AFFECTION AND SEVERANCE (LCA 1961 s.7): where PART ONLY of a landlord's land is acquired, the diminution in value of the retained land is also compensable. SEVERANCE: where the physical division of the landlord's land by the acquisition reduces the value of the retained land — e.g., the road is built through the middle of the landlord's farm, separating two fields; INJURIOUS AFFECTION: where the retained land is diminished in value by the construction and use of the scheme works — e.g., noise; vibration; loss of support; interference with access; change in character of the neighbourhood caused by the scheme. Injurious affection (of retained land) is only available in connection with a PARTIAL ACQUISITION; injurious affection by the exercise of statutory powers without compulsory acquisition is a different claim under LCA 1973 Part I.
• Home loss payment, basic loss payment, advance payment obligation and Upper Tribunal (Lands Chamber) dispute resolution: HOME LOSS PAYMENT (LCA 1973 s.29 AS AMENDED): a statutory payment available to owners or tenants who are DISPLACED FROM THEIR MAIN DWELLING as a result of compulsory acquisition. ELIGIBILITY: the claimant must have been OWNER-OCCUPIED or OCCUPIED AS MAIN RESIDENCE for at least 12 months IMMEDIATELY BEFORE DISPLACEMENT; a 'qualifying period' of 12 months is required — if the claimant acquired the property less than 12 months before the CPO, no home loss payment is due; AVAILABLE TO BOTH OWNERS AND TENANTS: (a) freehold owners — home loss payment of 10% of the open market value of the acquired interest, minimum £7,800, maximum £78,000 (2023/24 DLUHC figures — reviewed annually in line with the House Price Index); (b) tenants (secure tenants; assured tenants; long leaseholders; agricultural tenants) — home loss payment of £7,800 (the minimum amount — tenants do not receive a percentage of value). HOW TO CLAIM: the claimant must submit a written claim to the acquiring authority stating that they are entitled to a home loss payment and the basis of their claim; the authority is obliged to pay promptly; interest accrues if the home loss payment is not made within 3 months of the qualifying displacement. BASIC LOSS PAYMENT (LCA 1973 s.33A-33C, ADDED BY PLANNING AND COMPULSORY PURCHASE ACT 2004): available to landowners who do NOT qualify for a home loss payment — most commonly investment landlords who own property as a BTL investment and do not occupy it themselves. ELIGIBILITY: the claimant must have held a qualifying interest (freehold; or leasehold with not less than 1 year unexpired at the date of service of the notice to treat or General Vesting Declaration) for at least 1 year before the notice to treat/GVD date. AMOUNT: 7.5% of the open market value of the qualifying interest acquired; no minimum payment; maximum £75,000 (2023/24 DLUHC figures — reviewed annually). EXAMPLE: investment landlord owns a BTL flat compulsorily acquired at market value £250,000 and has held it for 3 years (qualifying for the 1-year holding requirement); basic loss payment = 7.5% × £250,000 = £18,750 (within the £75,000 cap). HOW TO CLAIM: written claim to the acquiring authority. ADVANCE PAYMENT (LCA 1961 s.52 AS AMENDED BY THE NEIGHBOURHOOD PLANNING ACT 2017 AND LURA 2023): the acquiring authority MUST make an advance payment of 90% of the agreed compensation (or 90% of the acquiring authority's estimate if compensation has not yet been agreed) within 2 months of either: (a) the claimant's written request for an advance payment; or (b) the date of entry (if no written request but the authority has taken possession). INTEREST ON LATE PAYMENT: if the advance payment is not made within the 2-month period, interest accrues on the outstanding amount at the 'statutory interest rate' (prescribed by SI from time to time — typically base rate + 1%). LEVELLING-UP AND REGENERATION ACT 2023 (LURA 2023) REFORMS: LURA 2023 has introduced significant reforms to the compulsory purchase regime — in particular: (a) extending and strengthening the 'no scheme world' provisions so that the increase in land value attributable to the scheme is excluded more broadly; (b) provisions to speed up the CPO process (reduced confirmation timescales; streamlined General Vesting Declaration procedures); (c) improved advance payment provisions. LURA 2023 CPO reform provisions are being commenced in phases from 2024. UPPER TRIBUNAL (LANDS CHAMBER) DISPUTE RESOLUTION: where the acquiring authority and the claimant cannot agree on compensation, either party may refer the dispute to the UTLC. PROCEDURE: each party files a statement of case; expert RICS valuation evidence (each party appoints their own RICS Red Book valuer as expert witness); a hearing before a Tribunal Member; decision is binding and subject to appeal only on a point of law (to the Court of Appeal). COSTS IN THE UTLC: costs generally follow the event (the losing party pays the winning party's reasonable costs) — subject to the tribunal's discretion. CALDERBANK OFFER (SEALED OFFER): either party can make a sealed Calderbank offer of settlement — if the claimant's award exceeds the authority's sealed offer, the claimant typically recovers their costs from the date of the offer; if the award is less than or equal to the authority's sealed offer, the authority may recover its costs from that date. Making a well-judged Calderbank offer is an important tactical step in UTLC proceedings

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