Compulsory Purchase Reform Compensation Workshop minutes: March 2025

SG officials provided an overview of the background paper, which was provided in advance of the workshop, and outlined the main compensation entitlements and procedures – drawing comparisons with equivalent rules in England and Wales. The paper highlighted that the overarching policy basis of compensation is ‘equivalence’ and that four principle ‘heads of claim’ stem from this: 1) market value of the land, 2) disturbance, 3) injurious affection and 4) loss payments. The paper focussed on the market value of land and how this is assessed in the context of a compulsory (i.e. non-market) transaction. Attendees were asked if the background paper accurately reflected the current rules: it was agreed that it did.

SG officials posed several questions to prompt discussion: Is equivalence the reality on the ground - what does the evidence suggest? Do the current rules act as a barrier to use of CPO? Is ‘equivalence’ still the right policy basis for CPO compensation?

​Several participants highlighted that compensation negotiations can be very protracted. It was noted that entrenched positions can often develop during the first stages of negotiations, especially when parties become firmly fixed in their objectives, which can set a negative tone for the rest of the process. Such entrenchment can lead to objections being lodged to the merits of a CPO in order to preserve a party’s position. It was noted that while there are multiple opportunities to object during the CPO process, these do not relate to compensation. People therefore object on other grounds, although their real concern is the compensation they may receive.

Given that objections to CPOs can be motivated by compensation, there was a suggestion of allowing these objections as part of the CPO confirmation process. Others disagreed with this suggestion – expressing concern that this could increase the number of objections that are received, leading to costs and delay earlier in the process.

It was pointed out that where CPO notices are received unexpectedly – and without any accompanying dialogue or engagement from the acquiring authority – this can cause significant stress and anxiety for affected landowners. Fear of the unknown may lead to early entrenchment and discourage parties from submitting claims or engaging in the process at all. It was noted that many affected landowners lack the funds to engage fully, which can affect their ability to assert their rights and protect their interests.

It was pointed out that the legislation actually requires those whose interests are affected to make a claim for compensation rather than the acquiring authority being required to make an offer i.e. landowners often have to initiate actions to assert their statutory rights.

A participant estimated that landowners typically recover only about 60% of their costs, suggesting that in practice equivalence is not the reality for claimants. SG officials asked whether this was more down to challenges recovering disturbance costs, rather than compensation not reflecting market value. The participant agreed with that suggestion. 

It was noted that in many cases, the priority for acquiring authorities is getting the land, with compensation being left to the end – which may not lead to proactive or prompt engagement. A suggestion was made that, to streamline the process, acquiring authorities should be required to approach landowners with compensation offers prior to initiating the process of taking title (General Vesting Declaration or Notice to Treat).

The need for a cultural shift within acquiring authorities was highlighted, including prioritising the affected parties' interests and adopting best practices from the outset, and maintaining this throughout, to facilitate better engagement and compensation discussions. There was an acceptance that acquiring authority practice varies in this regard: some are proactive, agreeing on compensation early, while others could improve their engagement strategies.

Resource and skills limitations within acquiring authorities were also identified as a potential factor affecting the scope and quality of engagement with stakeholders. It was suggested that these constraints can be a significant barrier for smaller councils in effectively managing land acquisition and development projects. 

It was noted that there is an inherent challenge to negotiations that relate to property valuation – particularly given the sometimes extended timescales involved with compulsory purchase – given that values can be a ‘moving target’ i.e. they change over time. Particularly with larger schemes, matters relevant to valuation (e.g. planning assumptions, local development plan policies) can evolve over the lifetime of the project. This can make valuation more complex and challenging, including where Certificates of Appropriate Alternative Development (CAADs) are used.

It was noted that there can be frustration from claimants when they are asked to justify their claims for enhanced or development value, noting the costs that can be involved in developing this justification. Where such evidence is prepared very late in the process as part of preparation for a Lands Tribunal for Scotland hearing, this limits the opportunity for parties to scrutinise the evidence and potentially reach earlier settlement. One participant noted that claimants would need to spend money to prepare their land for development in the open market, either through direct cost or deduction of value at purchase.

There was a discussion around the complexities that can arise when heritable creditors are involved. It was suggested that the role of creditors within the process, the ranking of claims and distribution of settlement payments to competing interests in land could be made clearer in legislation and/or guidance.

With reference back to the strategic questions, officials asked the group whether compensation legislation was barrier to the use of compulsory purchase powers. Several workshop participants relayed their experiences as regards an apparent unwillingness to use CPO powers. One reason given was the complexity of the process – or at least the perceived complexity – and the resources required to progress a CPO, rather than the compensation rules per se. In the context of smaller-scale projects, a couple of participants suggested that the perceived complexity of the process may be regarded as disproportionate to the benefits. One participant suggested that Compulsory Sales Orders could play a role in such cases.

Linked to this, there was a suggestion that the public interest justification for smaller-scale projects may be regarded as more difficult to make than for larger infrastructure projects where the needs-case may have been established in various strategic documents. In response to this, it was suggested that this is perhaps more an issue of perception than reality since neither the legislation/guidance differentiate on this basis: what is required to meet the public interest will depend on the circumstances of the case, which provides space for the acquiring an authority to take an approach which is proportionate to the scale/nature of the project. Nevertheless, the ‘one-size-fits-all’ character of the CPO process was seen as a potential issue by some participants.

It was noted that perceptions about the difficulty of building a strong enough public interest test may reflect experience from use of community right to buy powers, where several proposals have been knocked back by the Scottish Government. In response to this, it was noted that the approval rate for CPOs (the vast majority of which are small-scale) is around 95%.

A participant highlighted the potential disconnect between legislative priorities and public expectations, suggesting that reforms may not always address the practical concerns of communities. This may lead to communities seeking to take on unsuitable sites due to a lack of local authority action. It was noted that politicians are likely to reflect the interests of communities on these issues.

Concern was expressed about the current compensation rules potentially ‘rewarding’ owners who let buildings/land fall into disrepair and may have unrealistic expectations as regards valuation – and ‘hope value’ specifically. In that context, practitioner participants agreed that unrealistic landowner expectations may increase costs not because compensation would reflect those unrealistic expectations – but because they might result in CPO having to be used, and the associated costs in terms of time and resource. In other words, even where the market value of the land is very low (and therefore so is compensation) the procedural costs of promoting a CPO may be an issue. A participant noted that underlying planning assumptions for brownfield sites may generate more value than properties mismanaged by landowners, affecting valuation and public interest considerations.

It was suggested by one participant that local authorities may avoid taking on problematic buildings, preferring to find developers to manage such projects and leading to lack of proactive engagement where they cannot.

Glasgow City Council’s proactive approach to addressing vacant properties was briefly discussed, which was attributed to the authority’s well-established procedures and guidelines as well having the necessary resources and experienced officials. Participants acknowledged the value of Scottish Government's 2018 guidance for acquiring authorities although there was a suggestion that additional centralised resource may help encourage less-experienced authorities to be more proactive.

Agenda item 4 – reforming the compensation rules

SG officials posed several questions to prompt discussion: What would participants like the CPO compensation rules to achieve, in an ideal world? How could reform help to deliver these outcomes? What are the potential impacts and risks?  Officials also welcomed suggestions as to how the issues mentioned during previous agenda item could be resolved.

One participant underlined that the current rules are not fair, that equivalence is not the reality experienced by claimants (principally due to difficulty recouping disturbance costs) and that ‘Rule 1’ (1) was problematic and requires to be addressed. This was on the basis that the compulsory nature of the process can lead to significant stress for claimants and adversely affect their mental health – the suggestion was that this needs to be acknowledged, contrary to Rule 1.

Another participant suggested that one potential means of achieving this could be to retain the equivalence principle but reform loss payments, which after all are supposed to provide compensation for non-financial losses such as hardship and inconvenience. It was suggested that loss payments could be expanded, being applied to a wider range of circumstances/land types. On home loss payments specifically, there was a suggestion that the current minimum and maximum amounts that apply in Scotland require to be reviewed, noting that they are significantly lower than elsewhere in the UK.

On the issue of compensation negotiations becoming entrenched and how this could be addressed, it was suggested that that reforms should aim to make the process more transparent – and incentivise earlier engagement. One participant suggested that more generous compensation entitlement would help to engender goodwill, avoid entrenchment and lead to swifter settlement of claims. It was suggested that compensation costs in many cases represent a small proportion of overall project budgets – and as such, increasing compensation entitlement by (say) 10% or 20% would have limited effect on scheme viability. To the extent that this leads to earlier settlement and avoids lengthy (and expensive) disputes, there could be overall savings to the public purse. However, it was noted that this could run counter to subsidy control rules, and Parliament might not support efforts to increase compensation for landowners. As regards future Parliamentary handling, it was pointed out that clear and robust evidence would be required to justify compensation changes – and that measures which demonstrably support the interests of the general population, rather than just large landowners/developers, are more likely to find support in the Parliament.

In addition to the total amount of compensation, the group discussed the timing of compensation payments. In particular, there was discussion around the importance of advance payments, the role they can play in overcoming hardship and in engendering positive relationships between acquiring authorities and claimants. In this context, several participants flagged that there are often delays in making advance payments and that there is currently no effective sanction in such cases. It was felt that this needs to be addressed and a brief discussion of options followed.

Mention was made of provisions (not in force yet) in England and Wales where a penal rate of interest applies where advance payments are not paid in accordance with statutory timescales. One participant observed that having an appeal to the LTS would not work and that there needs to be a sanction or requirement at the point at which payment is late, not a long and costly process with a result that is too late.

It was noted that making advance payments (which must be 90% of the acquiring authority’s estimate of the value of the property) can be challenging where the total amount of compensation is in dispute. However, several participants challenged this by suggesting that the acquiring authority would in most cases have an estimate of likely compensation costs – which should assist with making advance payments, even if the final amount is not yet settled. Linked to this, several participants suggested that acquiring authorities should be required to disclose their initial valuations to landowners in the interests of transparency and building trust. It was noted that transparency would enable the claimant (or their representative) to interrogate the authority’s basis of valuation, which could speed up negotiations and avoid some matters having to be settled by the Tribunal. It may also flush out discrepancies between, for example, assumptions in desktop surveys and the reality on the ground.