New clause 17 - Assessment of compensation: valuation date

Part of Planning and Compulsory Purchase (Re-committed) Bill – in a Public Bill Committee at 6:00 pm on 14th October 2003.

Alert me about debates like this

Photo of Keith Hill Keith Hill Minister of State (Housing and Planning), Office of the Deputy Prime Minister 6:00 pm, 14th October 2003

I beg to move, That the clause be read a Second time.

With this new clause, we return to consideration of the compulsory purchase provisions of the Bill. The new clause is one of several that are intended to clarify or to amend the current compulsory purchase system in order to make it clearer and fairer. As the Committee is aware, the Bill contains various provisions on compulsory purchase in clauses 73 to 77. Clause 73 clarifies the purposes for which local planning authorities can exercise their compulsory purchase powers, while clauses 74 to 77 introduce a new element of compensation for loss. We shall, no doubt, return to those if time permits.

New clauses 17 to 21 concern the operation of the compulsory purchase processes. They form part of a wider package of reforms described in our policy statement of 18 July 2001 with a view to creating a simpler, fairer and faster compulsory purchase system.

Turning to the substance of new clause 17, the introduction of a new section 5A to the Land Compensation Act 1961 is intended to clarify the legal position as to the point in time at which land being compulsorily acquired is to be identified and valued for compensation purposes. The uncertainty has arisen as a result of conflicting case law. By removing that uncertainty, we hope that those having their property compulsorily acquired will find the negotiation for compensation to be quicker and fairer.

Subsections (3) and (4) of new section 5A will determine the date on which land and buildings that are being compulsorily acquired are to be valued. The valuation will reflect the nature, condition and market value of the land on that date. In the case of land being acquired through the notice to treat procedure, the date on which the land is to be valued for compensation purposes will be the date on which the acquiring authority enters the land and takes possession. A notice to treat informs the recipient of the acquiring authority's intention to acquire land and requests details of the recipient's interest in the land. The notice also invites the recipient to enter into negotiations—to treat—for the purchase of the land. The authority then has three years in which to take possession of the land. Alternatively, the authority can

obtain a right of entry by paying into court the sum claimed by the owner and by giving a bond that it will pay the full amount ultimately agreed or awarded to the claimant plus interest.

If the acquiring authority chooses to use the general vesting declaration method of taking possession of land, the relevant date for valuation purposes will be the date on which title to the land vests in the acquiring authority. This method is an alternative to the notice to treat procedure and it has the advantage to the acquiring authority of enabling it to acquire legal title to the land in the shortest possible time.

The only exceptions to the valuation date falling on the dates to which I referred are, in the case of both the notice to treat and general vesting procedures, where the compensation payable has already been assessed at an earlier date by the Lands Tribunal or where the parties have agreed a figure for compensation between them. The tribunal will normally become involved in compulsory purchase compensation cases only where the parties cannot agree the compensation to be paid. The date of its decision will then not be until some time after the authority has taken possession by either the notice to treat or the general vesting declaration route. The new provisions take account of the fact that the acquiring authority and the claimant may refer the matter to the tribunal at an earlier stage. Of course, it remains open to the parties to agree the compensation to be paid at any time during the compulsory purchase process.

I have mentioned that the date on which an acquiring authority enters and takes possession of land can be up to three years after service of a notice to treat on the owner and others with interests in the land. During that time, property prices may of course have changed considerably, as may the nature and condition of the land and buildings to be acquired. The purpose of clarifying the valuation date by legislation is therefore not only to provide certainty but to ensure that what is paid to the owner reflects property prices at the time he is being displaced and needs to find a replacement property. It will also prevent double compensation being paid—for example, if accidental damage were to occur to the property following service of the notice to treat for which he was entitled to receive insurance compensation.

Subsection (5) of proposed new section 5A also provides that the relevant valuation date for the whole of the land included in a notice of entry is to be the date on which the acquiring authority first takes possession of any part of the area. That means that compensation becomes payable to the claimant from the earlier date, so enabling him to negotiate meaningfully for a replacement site. In addition, in accordance with the provisions of subsection (6), he will be entitled to receive interest on the compensation due to him in respect of the value of the whole of the land to be acquired, pursuant to the notice of entry, from the date on which that first part of his land is taken until full payment is made.

The provisions offer a fairer way of dealing with compensation payable under the compulsory purchase procedure.