Compulsory purchase and compensation: A guide for owners, tenants and occupiers in Scotland

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Compensation and other payments

60. Generally, once the authority takes possession of the property, the people who used to have an interest in it are entitled to compensation from the authority. So you may be entitled to compensation to put you in the same financial position you were in before the authority bought the property under the compulsory purchase order.

61. The authority will ask you to make a claim for compensation and will usually negotiate with you about the amount of compensation you are entitled to. Once you and the authority reach an agreement, the authority will pay you the compensation. Read pages 12 to 17 to find out more about what you may be entitled to.

The law relating to compulsory purchase compensation is complicated and specialised, so you will probably need expert advice.

At the end of this guide there is a list of organisations that you can contact for help and advice.

52. The total amount of compensation cannot be more than your total financial loss, and you must do what you can to lessen your financial loss. It is up to

62. Whether you are entitled to compensation, and how much compensation and other payments you are entitled to, will depend on your circumstances. But compensation may take account of the following.

The market value of your interest in the property

63. This is based on what you could expect to get if you willingly sold your interest in the property on the open market, without the threat of the compulsory purchase. This means that any reduction or increase in value because of the compulsory purchase order (and the scheme behind the compulsory purchase) is ignored.

64. The market value is usually based on what you use the property for at the moment. But in some cases an owner might be able to show that they would have been able to get planning permission to use the property for something else if it wasn't for the scheme behind the compulsory purchase order. If this is the case, the market value may take that into account.

Compensation for 'disturbance' and other losses

65. Selling your property under a compulsory purchase order may mean that you have to pay costs such as expenses related to moving and professional fees. You may be able to claim back your reasonable costs.

66. This may include reasonable costs associated with buying or renting another property (but not the price of the property or the rent itself) and reasonable costs of moving into and making changes to the new property. For example, you may be able to claim for moving expenses, legal and surveyors' fees to buy another property, stamp duty, the cost of any special changes that you need to make to the new property, the cost of altering soft furnishings and moveable fittings and fixtures to fit your new home (but not the cost of new soft furnishings), disconnecting and reconnecting services such as a phone, electricity and gas, and the cost of having your post sent on to your new address (for a reasonable period).

It is up to you to claim compensation and to prove that you are entitled to it. You should keep a detailed record of all costs you have to pay. You should keep all relevant evidence such as receipts, invoices and fee quotes.

Business disturbance

67. If you own, rent or use business property that is being bought under a compulsory purchase order, compensation for business disturbance may be based either on the costs of relocating your business or bringing the business to a close. This will depend on your circumstances. Normally, the authority will expect you to relocate your business. If this is not possible, it may be necessary for the business to close, in which case compensation may be based on the costs of doing this.

68. If you relocate your business, you may be entitled to claim your reasonable costs. This may include loss of profits, moving expenses, legal fees, surveyors' fees and architects' fees. You may also claim for temporary loss of profits caused by relocating.

69. There may be circumstances where the costs of relocating the business are higher than the value of the business. If this is the case, the authority might argue that compensation should be based on closing the business instead of relocating it. However, the authority should look at each case individually.

Home loss payment

70. If you live in the property, you may be entitled to a home loss payment (even if the property is owned by someone else). This recognises the distress and discomfort that being forced to move out of your home may cause you. Whether or not you are entitled to a home loss payment will depend on how long you have lived in the property.

71. An owner-occupier who qualifies for a home loss payment is entitled to 10% of the market value of their interest in the property, with a minimum payment of £1500 and a maximum payment of £15,000. If you are a tenant who qualifies for a home loss payment, you are entitled to a fixed payment of £1500. If more than one person qualifies for a home loss payment, the amount due will be divided equally between you.

Farm loss payment

72. If your property is an agricultural property, you may be entitled to a farm loss payment. This recognises that your profits may go down for a while as a result of moving to unfamiliar land. The amount of farm loss payment will depend on your circumstances.

Professional fees

73. You will generally be entitled to claim the reasonable professional fees of the person you appoint to negotiate the amount of compensation you are entitled to. You may also be entitled to claim any reasonable legal costs you have to pay to transfer the legal ownership of your interest in the property to the authority.

74. You aren't entitled to claim the costs of general professional advice about the compulsory purchase order, such as any fees involved in objecting to the compulsory purchase order. But you may be able to get free help and advice from some of the organisations listed at the end of this guide.

75. The authority has to repay professional fees to you only once the authority becomes the legal owner of your property and takes possession of it. Until then, you must pay any fees your adviser charges.

76. Early in the compulsory purchase process the authority should tell you the terms on which it will repay any professional fees you have had to pay. Before employing an adviser you should make sure that you, the authority and your adviser are all agreed on the way their fees will be worked out and how and when they will be paid.

77. As a general rule, you are not entitled to reclaim any expenses you might have to pay in connection with an inquiry or hearing into the compulsory purchase order. But if your objection to the compulsory purchase order is successful, you may get some or all of these expenses back. This will depend on the circumstances. (Please see page 9 to find out more about the inquiry or hearing.)

You will generally be able to claim your adviser's reasonable fees for negotiating the amount of compensation you are entitled to.

Before employing an adviser, you should make sure that you, the authority and the adviser are all agreed on how the adviser's fees will be worked out and paid.

You aren't entitled to claim the costs of general professional advice about the compulsory purchase, such as any fees in connection with objecting to the compulsory purchase order.

If the authority is only buying part of your property

78. The compulsory purchase, or the public work that was the reason for the compulsory purchase, might affect any property that you will be left with. This may affect the amount of compensation you are entitled to.

79. In extreme cases, the effect on the rest of your property could be so severe that you may be entitled to force the authority to buy the whole of your property. In other cases, the authority may consider carrying out work on the land you are left with to reduce the effect. (Please see the rest of this page to find out more.)

Compensation

80. You may be entitled to compensation if the market value of your interest in the property that you are left with has been reduced. You may also be entitled to compensation if the use of the public work that was the reason for the compulsory purchase has a negative effect on the property you are left with.

81. But if the market value of your interest in the property you are left with increases because of the public work, the authority might reduce the amount of compensation you receive as a result.

Notice of objection to severance

82. If the effect of the compulsory purchase or the public work on the property that you would be left with is particularly severe, you may be able to serve a notice of objection to severance on the authority. This may force the authority to buy the whole of your property. There are set time limits and conditions for serving this notice, depending on the type of property and what your interest in the property is.

Accommodation work

83. The authority might agree to carry out accommodation work on the property you are left with to reduce the effect of the compulsory purchase or the public work on you. Accommodation work might include fences, hedges, ditches, cattle grids, holding pens and new crossings.

84. The authority will usually reduce the amount of any compensation you receive by the cost of any accommodation work it carries out.

If the authority is buying only part of your property, you may be entitled to compensation or accommodation work (or both) because of the effect on the rest of your property.

If you would prefer the authority to buy all of your property, you may need to act quickly.

At the end of this guide there is a list of organisations that you can contact for help and advice.

Compensation where the authority is not buying any of your property

85. Sometimes, the value of a property can go down because of the effects of public work, such as noise, vibrations or fumes. In some cases it may be possible to claim compensation for this even if the property was not included in a compulsory purchase order, but there are strict rules for this.

If your property is badly affected by public work, you may be entitled to compensation even if your property has not been included in a compulsory purchase order.

Blight

86. The value of a property might go down because it has been earmarked for a public purpose, such as a new road. This effect is sometimes known as 'blight'. Sometimes it can take many years for a project to happen, and during that time those with an interest in a property that has been earmarked for the work might have difficulty in selling their interest. In some cases those owners can serve a blight notice on the authority. This can force the authority to buy the owner's interest in the property at its value before it was affected by blight, but there are strict rules for this. If you think your property might be affected, you should get professional advice.

If you are having difficulty selling your property because it has been earmarked for a public purpose you may be able to force the authority to buy it from you.

Disputes about compensation

87. If you and the authority are unable to agree the amount of compensation, you or the authority can refer the dispute to the Lands Tribunal for Scotland.

88. The Lands Tribunal is an independent organisation, like a civil court. The tribunal will hear valuation evidence and legal submissions from you and the authority before deciding the amount the authority must pay you as compensation. There are fees for applying to the Lands Tribunal.

89. Referring a dispute to the Lands Tribunal can take over a year, depending on the circumstances. You may be able to claim back your expenses if you're successful. But if you're not successful, the authority may try to claim back its expenses from you . This will depend on the circumstances of the case. You should get professional advice from a solicitor or surveyor before applying to the Lands Tribunal.

90. To find out more you can contact the Lands Tribunal.

Lands Tribunal for Scotland
George House
126 George Street
Edinburgh
Phone: 0131 271 4350
Website: www.lands-tribunal-scotland.org.uk

91. Instead of referring the dispute to the Lands Tribunal, you can ask the authority if it is willing to use mediation or some other method of settling disputes to reach agreement. Mediation involves an independent person, who does not work for the authority, talking to all the people involved to try to come to an agreement. It can be quicker, less formal and less expensive than referring the dispute to the Lands Tribunal. In some cases mediation could save time and money for both you and the authority.

If you can't reach agreement with the authority about the amount of compensation that you are due, you can refer the dispute to the Lands Tribunal for Scotland. But you should consider this carefully and get professional advice before applying to the Lands Tribunal.

You can ask the authority if it is willing to use mediation instead of the Lands Tribunal. In some cases using mediation could save time and money for both you and the authority.

Advance payment of compensation

92. Disputes about compensation can take a long time to settle. In the meantime, you may be entitled to claim an advance payment of compensation. If you qualify for an advance payment of compensation, you are entitled to a payment of 90% of the amount of compensation you are likely to be entitled to. The authority must pay you this within three months of the date that you apply for an advance payment. In some circumstances you may be able to claim interest on the compensation. You can claim an advance payment of compensation at any time after the authority takes possession of your property.