Compulsory purchase orders in Scotland – can they help deliver new space for life in the new normal?

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Local provision of essential services has become more important than ever in the "new normal" of the global coronavirus outbreak. We may all need to live, work and play within a smaller locality for quite some time. We are also faced with a growing economic crisis and increasing levels of unemployment. In response, the Scottish and UK Governments have both signalled that they intend to use large infrastructure projects as a means of creating new jobs and stimulating the economy. 

Compulsory purchase can play a role in facilitating large infrastructure projects. It can also potentially help private developers unlock challenging urban sites, allowing them to be turned into important facilities for local communities.

Use of compulsory purchase

In recent years, the use of compulsory purchase in England and Wales as a means of delivering urban regeneration projects has increased, as local authorities and developers have partnered to bring life to forgotten or maligned corners of the urban landscape. Thus far, we have not seen the same rate of adoption in Scotland, with the compulsory purchase order (CPO) procedure predominantly being used for road, transport and other infrastructure projects. There are some notable exceptions, such as the regeneration of Glasgow's east end for the Commonwealth Games, but not many. 

Compulsory purchase could play a much greater role than it currently does in delivering development and regeneration in Scotland. Projects that would be in the public interest, but which might be difficult to achieve due to a proliferation of small landholdings, could become viable through the use of CPO. Compulsory purchase can remove the uncertainty of jigsaw site assembly, which could be very useful for private sector developers, who need certainty.

Anecdotally, the main reason for the low rate of CPOs in Scotland is concern within some acquiring authorities (those public bodies who hold CPO powers) that they lack the necessary expertise and resources to carry out CPOs. There is also a perception that CPO should be used as a last resort, only after lengthy negotiations with landowners have broken down. It is true that the legislation underpinning CPOs can be difficult to navigate, and practical experience of carrying out CPOs is not widespread within the Scottish legal profession. However, there is no legal requirement for CPO to be a last ditch option. 

Scottish Government guidance on CPOs

In an attempt to demystify the CPO process, the Scottish Government recently published a comprehensive set of guidance notes for acquiring authorities on the process to be followed when promoting a CPO. The guidance notes cover each stage of the CPO process, including:

  • the initial considerations that apply when an acquiring authority is considering making use of CPO powers;
  • the practical steps to be taken to initiate the process;
  • the procedures for notifying affected landowners; and
  • the rules applying to compensation.

While the intended audience is acquiring authorities, the guidance notes make useful reading for property developers and their solicitors, who may not previously have considered the option of harnessing CPO powers to unlock a development scheme.

Private organisations and back-to-back CPO schemes

Private organisations can potentially make use of CPO powers via a back-to-back arrangement with an acquiring authority. The acquiring authority uses CPO to acquire the land and then transfers title to a private developer to carry out the development. The private developer covers the acquiring authority's costs of promoting the CPO and of compensating landowners. The acquiring authority retains responsibility for ensuring that the project is delivered appropriately. An overarching agreement between the local authority and the private developer is likely to be required to regulate their respective interests and responsibilities.

CPOs are enabled by Acts of Parliament, but not all enabling Acts will permit a back-to-back scheme, so this should be checked. Where a back-to-back scheme is permitted, the procedures to be followed are generally the same as if the acquiring authority was delivering the scheme alone. The main distinction is the initial decision-making process, where there are additional considerations for the acquiring authority. For example, the authority must ensure that no procurement issues arise from the arrangement. 

There are defined "pre-actions" that should be followed by acquiring authorities preparing for a CPO. These, and the subsequent process, are covered in detail in the Scottish Government guidance. While these steps are important in ensuring that the proposed CPO complies with the minimum statutory requirements, they should in practice also help to mitigate any concerns of the local community. 

Community engagement

There is a significant emphasis in the required "pre-actions" on early and meaningful engagement with affected landowners and the local community, and for this to be demonstrated as part of the CPO application. Objections are often issued in response to a (real or perceived) vacuum of information. Good engagement will usually help reduce the number of objections to any proposed scheme, meaning the process can operate as quickly as possible. Strong engagement with the community at the outset is also likely to result in better engagement by the community with the eventual development, and a reduced chance of it being viewed as having been imposed on the community it is intended to serve. Restrictions on physical distancing are likely to make traditional means of engagement such as community meetings difficult for some time to come. However, there are technological solutions which can be used (as long as appropriate and inclusive) to facilitate engagement, even while public meetings are not possible. These could be combined with traditional engagement methods that are compatible with physical distancing, such as leaflet drops.

Final words

Regeneration can have a powerful, positive effect on communities and the individuals who live in them. It can also help us respond to modern societal pressures, such as reduced footfall to high streets and increased demand for flexible and blended work, living and recreational space. These pressures will inevitably increase in the coming months and years, as the economy reshapes and we seek new ways to use our urban centres. It makes sense to recycle and reinvent the real estate around us. A focus on 'place making' can create an environment that allows economic activity, while promoting sustainability and well-being for our wider community. It is worthwhile for developers to remember that CPO is part of the toolkit which can be deployed in taking on this challenge.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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