What is a Compulsory Purchase Order?

Compulsory purchase orders (CPO's) are issued by local authorities and they enable them to purchase property at some time in the future.

It gives them the right to acquire property for a specific purpose. You normally find CPO's in place in areas that are undergoing widespread regeneration, or perhaps where they are widening a road or doing some other major works. However they can sometimes appear to be random.

For example, a few years ago a lot of properties in Burnley were subject to compulsory purchase orders, but it wasn't uncommon to have half the properties on a street subject to them and the other half not.

It is the government’s aim that no property or land owner should be worse off as a result of being subjected to a compulsory purchase order.

The government has stated that this power that is given to local authorities is an important way of assembling land that is needed to help with the delivery of Urban Regeneration. CPO’s are a legal way to acquire land but they are normally only used as part of a much wider regeneration or redevelopment scheme or project.

However, there can be an inherent problem in CPO's in that, yes, you may get full market value for them, but at what time is it classed as full market value?

Do the local authorities give you a price at the time they issue the CPO or do they give you a price two years down the line just before your property is demolished?

The difference here is crucial, since just before your property is demolished it could be practically worthless because most of the other properties around it at that time are probably going to be already empty and the area potentially deserted because it is undergoing major regeneration.

This is why the local authority just stating that it is going to give you full market value is simply not enough; you need to know when it is going to calculate it.

We have come across many investors who have been quite happy with their payment from their local authority, but we have also come across some who have been duped. Make sure you don't end up in the later category.

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