Analysis of Compulsory Purchase Power in Real Estate Development

This report provides an analysis of compulsory purchase power (CPO) in real estate, focusing on the redevelopment and regeneration of mixed-use estates. It outlines appropriate CPO strategies, including adherence to legislative guidelines and the importance of fair procedures to maintain public trust. The report details the necessary steps for acquiring authorities, such as developing a plan, circulating notices, calculating claims, completing payments, and managing potential opposition from property owners. It also explains the compensation process, emphasizing the equivalence principle and the factors influencing compensation amounts, such as market value, loss compensation, and resettlement options. The report concludes by highlighting the importance of legal compliance and fair compensation in the compulsory acquisition of land and property, ensuring equitable treatment for all affected parties. Desklib offers this and other solved assignments to aid students in their studies.

Running head: COMPULSORY PURCHASE POWER IN REAL ESTATE
Compulsory Purchase Power in Real Estate
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Table of Contents
Introduction....................................................................................................................2
Appropriate strategies of CPO process..........................................................................2
Necessary steps to be taken............................................................................................4
Compensation process................................................................................................5
Conclusion......................................................................................................................6

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Introduction
This report is going to focus on redevelopment and regeneration of a part vacant
mixed use estate in the centre of the town where both the residential and offices of small and
medium sized businesses are currently present. As stated in Grover (2014), in order to
accomplish business opportunities of the responsible acquiring authority, they need to
consider compulsory purchase powers. Applying this power legally, the organisation can
vacant the rest of the building, remodel it and take necessary steps for their compensation as
well. The following report will advise on the appropriate CPO process they must require and
which actions will be necessary to generate and implement solution in such a situation. The
compensation process includes investment of a lot of monetary resources in the course of
compulsory acquiring of that building. Therefore, a section of the report will estimate the
amount in terms of conducting compensation programme for the people currently living or
operating business at the project site.
Appropriate strategies of CPO process
As per the study of Hien (2015), compulsory acquisition establishes balance between
public need for land or occupied property and the security of public property rights. While
finding the equity, the responsible authority imposes a set of principles which is considered
as compulsory purchase process. These principles are implemented whether for public use,
public purpose or for public interest. The decision of compulsory purchase has been taken as
the building needs remodelling and it must be dome for public interest of safety. According to
the country’s legislative, it provides compensation for the people who are going to be directly
affected during this process. As discussed in Denyer-Green (2013), along with that they have
right of hearing the news on time, right to receive notice as well. Moreover, they have right to
oppose the decision and appeal in the court against it. Such case of opposition is treated with

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high concern as if the entire programme is not implemented maintaining all the legislative
guidelines the economic, political and social compensation might be much higher than the
budget. It influences the AA authority to adhere with the legislative guidelines while
implementing the compulsory acquisition or purchase.
According to Ghatak et al. (2013), the compulsory Purchase Order process (CPO)
involves a number of stages. The stages can be followed only when CPO has been permitted
by the landowner or building owner in this case. Only then the power of compulsory purchase
can be applied by the acquiring authority. Compulsory purchase power is considered as
efficient tool of executing statutory responsibilities on behalf of acquiring authority. As
described in Porter (2014), this power enables such real estate business organisations to build
or reconstruct a housing or installing some new model for social welfare, comes to an
agreement with the landowners. This process is highly time consuming and it is a matter of
negotiation. The landowner or in this case the owner of the building must be interested in
terms of a smooth negotiation process. In general, the confirmation takes no less than one
year and sometimes more than that. According to Mittal and Kashyap, (2015), the following
principals can be opted for successful implementation of compulsory purchasing duties.
 Fair procedure must be the authority’s first priority to retain the trust of people over
justice system of country. Regulations should be followed in areas of consultation,
planning and handling objectifying appeals.
 Efficient governance reduces chances of corruption within the system.
 Right calculation of the compensation and it must be equivalent to everyone who are
directly involved (Hou 2018). Affected owners and occupants would receive money
or alternative accommodation for their residents or business units.

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As per the scenario the acquiring authority must consider section 47 of the
planning which serves the purpose of reconstructing and conserving buildings and
localities, Act 1990. In order to develop the project authority, as per the study of Kamal,
Grodzińska-Jurczak and Brown (2015), acquisition authority must follow these steps listed
below.
Necessary steps to be taken
 Developing a plan: For meeting both the public and organisational need the location
must be measured and due responsibilities are identified. During planning relevant
data are collected to execute the planning. The consequences are measured through
evaluation of affected owners’ interest.
 Circulating notice: AA authority must circulate notice to concerned occupants and
owners of residents living in that building. The notice includes purpose and detail
process of the acquisition along with requesting them to submit claim of
compensation.
 Calculating and submitting claims: As stated in Hu et al. (2015), claims will be
served at an equivalent rate after the submission received from owners and occupants.
Acquiring authority take steps according to the claims and yet maintains the boundary
of appropriateness. Negotiations will be encouraged in this course.
 Completion of payment: Acquiring authority will pay the compensation in form of
money or in form of resettlement.
 Takeover of the property: Legally, the authority can claim the property and work for
reconstruction after completion of above mentioned processes.
 Opposition from owners: The process is not that easy if owners oppose the
authority’s decision of occupying the building showing the cause of business. In case,

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meetings must be organised to offer better resettlement programmes and communicate
the purpose in a better way.
Compensation process
According to equivalence principle the land or building owner should be paid without
making loss of the acquiring agency and for all the owners and occupants the amount will be
measure following the same way depending on the area of their ownership and many more
aspects. While deciding the amount, as described in Ty, Van Westen and Zoomers (2013), of
compensation the market value of the building and land, loss compensation and resettlements
are provided as per the claims.
In case, the request has been made to pay compensation in advance under certain
emergency situation Acquisition authority may proceed with the process as per native charges
of lands and buildings. Although, it has not been decided yet that after redevelopment what
should be done with the building, it would be appropriate to provide temporary
accommodation. However, advance payment does not involve entire amount to be paid. The
authority keeps 90% of the amount due if they are acquiring before paying the compensation
and if they are paying in advance, 90% of the promised amount have to be paid in this due
course.
The authority must notify the occupants and owners party in advance if case any
reduction or increase in payable amount. Consistent supervision must be done in order to
operate their process of uninterrupted relocation for avoiding unnecessary legal hazards.
While the Asset inventory survey is going on contractors are hired to visit all the resident and
building owners to record the amounts of their assets. At first, as stated in Akujuru, and
Ruddock (2015), compensation must be calculated at the replacement value for any owned
structure or development.

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The compensation shall be calculated after first acquiring the notice of acquisition
officially within a period of fourteen days. The acquiring authority shall have to hand over a
letter in writing, an offer letter that is, to the person who is interested in giving up the land. A
copy of the land valuation certificate shall have to be included in the offer letter. This is
imperative as the land valuation certificate is what the offer is being based on, by the
acquiring authority. Home owners are entitled to a fair market value as a part of the
proceedings, something that is especially true in the case of both large and small scale
infrastructure projects. It is important to remember that those who engage in valuation
calculations are quite conservative in their approach to assessing land value and do not value
land or compensation in the same way that investors do. What is really likely to affect the
compensation that is calculated is the changes that take place to the council planning rules as
well as to zoning , which in turn will allow for better industrial and commercial work. As
mentioned before he compensation will also be based on the market value of the property that
is being acquired . It must also be remembered that the people from whom the land or
property is being acquired from will have the right to claim losses that are incurred as a part
of the compulsory acquisition process such as the cost of mortgage re-finance fees, stamp
duty, accounting expenses, legal expenses and valuation expenses related to land acquisition.
Conclusion
Thus it can be concluded that, the compulsory acquisition of land is a process that can
only be carried out by first serving a legal notice to the people or persons from whom land or
property is being acquired from. The compensation that is doled out as a part of the
compulsory land acquisition process is calculated based on the market value of the property,
ensuring that property owners are being compensated in equal fashion. A number of crucial
steps have to be carried out in order to implement the process of compulsory acquisition of
land or property in a smooth, efficient, and most importantly, in a legally sound manner. The

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legal notice service will have to include mention of the purpose of acquisition, with the
persons or people from whom the property or land is being acquired being fully within their
legal rights to know all about the essential aspects of this process.

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References
Ghatak, M., Mitra, S., Mookherjee, D. and Nath, A., 2013. Land Acquisition and
Compensation. Economic & Political Weekly, 48(21), p.33.
Hu, Y., Hooimeijer, P., Bolt, G. and Sun, D., 2015. Uneven compensation and relocation for
displaced residents: The case of Nanjing. Habitat International, 47, pp.83-92.
Denyer-Green, B., 2013. Compulsory purchase and compensation. Estates Gazette.
Ty, P.H., Van Westen, A.C.M. and Zoomers, A., 2013. Compensation and resettlement
policies after compulsory land acquisition for hydropower development in Vietnam: policy
and practice. Land, 2(4), pp.678-704.
Kamal, S., Grodzińska-Jurczak, M. and Brown, G., 2015. Conservation on private land: a
review of global strategies with a proposed classification system. Journal of Environmental
Planning and Management, 58(4), pp.576-597.
Mittal, J. and Kashyap, A., 2015. Real estate market led land development strategies for
regional economic corridors–A tale of two mega projects. Habitat International, 47, pp.205-
217.
Hien, P.T., 2015. Striking the right balance between the public and private interests in
compulsory acquisition of land in VietNam.
Akujuru, V.A. and Ruddock, L., 2015. Dichotomising compulsory land acquisition and land
contamination valuations. International Journal of Disaster Resilience in the Built
Environment, 6(3), pp.268-288.
Hou, J.W., 2018. Rural reform and the welfare impact on urban workers: An analytical
approach. In Urbanization and social welfare in China (pp. 121-152). Routledge.

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Porter, L., 2014. Possessory politics and the conceit of procedure: Exposing the cost of rights
under conditions of dispossession. Planning Theory, 13(4), pp.387-406.’
Grover, R., 2014. Compulsory purchase. Journal of Property Investment & Finance, 32(5),
pp.518-529.