Compulsory purchase reform in Scotland: consultation

10. Compulsory Sale and Lease Orders

Compulsory Sale Orders

10.1 In recent years a number of stakeholders have expressed an interest in the idea of compulsory sale orders (CSO). The concept was proposed by the Scottish Land Commission in 2018, following recommendations from the Land Reform Review Group established in 2012.

10.2 The rationale for CSOs is that they would empower local authorities to require the sale of long-term vacant or derelict land and buildings, particularly in urban areas where such properties negatively impact communities. As set out in chapter 3 of this consultation document (‘Enabling Powers’), local authority CPO powers can already be used to bring vacant and derelict properties back into active use. However, the perceived benefits of CSOs are that they would be more straightforward, quicker and cheaper for local authorities, in part because they would not have to outlay capital to purchase the properties.

10.3 We are interested in exploring whether those suggested benefits are likely to be realised in practice, especially noting the proposed changes to the CPO process set out in this consultation.

10.4 At the outset, it is critical to recognise that a compulsory sale, like a compulsory purchase, results in a person having to sell their property against their will. This interferes with the property rights of those affected and thereby engages protections under the ECHR, just as compulsory purchase does (see chapter 2). Any new CSO process would therefore need to be subject to appropriate safeguards to ensure use of compulsory sale powers is justified and proportionate – and compensation would need to be fair.

10.5 It is also important to note that it is already possible for local authorities to compulsorily acquire land they are not intending to develop themselves though back-to-back CPOs (see paragraphs 3.16 to 3.19 of this consultation). Through such arrangements, the authority’s costs can be indemnified by a third party. This is relevant given the suggestion that CSO would be cheaper.

10.6 In the Programme for Government 2023 to 2024, the Scottish Government committed to continue to consider the justification for, and practical operation of, CSOs. Accordingly, in 2024 we commissioned the Scottish Empty Homes Partnership (SEHP) to look at the practicalities of compulsory sale powers, specifically in the context of long-term empty homes, and any practical benefits they would offer beyond existing CPOs. The final report is now available on the SEHP website.

10.7 The SEHP report concluded that:

• CSO could sit alongside CPO as a tool to bring empty homes back to use
• a new CSO mechanism would likely involve similar procedures to the current CPO process
• process costs would be similar to those of CPO but the local authority would not have an income bearing asset that could be used to offset these at the end of the process
• local authorities would need sufficient legal, administrative and financial resources to make use of any CSO powers
• for a CSO process to be effective it is important that it is part of a strategic joined-up approach to empty homes work

10.8 The report indicates that a CSO process would require the same or similar processes and resources in order to be delivered effectively, and so if these are already barriers to the use of CPO, they could also be barriers to use of a potential CSO mechanism.

10.9 As noted, the SEHP report indicates that the procedural steps involved in preparing a CSO are likely to be at least equivalent to those associated with a CPO. In that sense, provisions along the lines of those set out in chapters 4, 5 and 6 of this consultation would need to apply to the preparation of a CSO. In other words, a statutory CSO process, like the current CPO process, would need to include steps such as identifying and engaging with affected owners, seeking to secure the sale by agreement, preparing a justification for using compulsory powers, notifying affected parties, considering objections, decision-taking, rights of challenge etc.

10.10 Such procedural checks and balances would be necessary to ensure use of compulsory sale powers is proportionate, recognising that they would interfere with the property owner’s rights. Provision would also need to be made to transfer legal title – see chapter 7 of this consultation.

Question 106: Should local authorities be able to instruct the sale of a property without permission from the property owner? Please explain your reasons.

Question 107: In what circumstances might compulsory sale be justified, and what benefits or drawbacks might there be?

Question 108: If a CSO process was introduced, would the procedures involved in preparing a CSO need to be equivalent to those that apply to a CPO? If not, how should those procedures differ?

10.11 The SEHP report acknowledges a wide range of issues that would be relevant when considering the practical operation of a compulsory sale process. An important issue is how to control the use of a property once a new owner has bought it. As set out in chapter 6 of this consultation, the proposed use is relevant to the public interest in a CPO being confirmed. Another issue is what the role of the local authority is during the CSO process. For example can the authority be considered “the seller” for property which they do not own? If not who is the seller in cases where the current owner cannot be traced or is unwilling to put the property up for sale? There is also a question of how long the property should remain on the market, and what should happen if it does not sell. We assume the property cannot remain on the market indefinitely, as that would only prolong the situation which led to the CSO. We would welcome views on these issues.

Question 109: What governance or regulatory frameworks would need to be introduced to ensure that any future CSO process is used fairly and effectively?

Question 110: What measures could be taken to control the use of the property by the new owner?

Question 111: How long should a property subject to a CSO remain on the market?

Question 112: What should happen if the property does not sell?

Compulsory Lease Orders

10.12 Some calls for the introduction of CSO also mention Compulsory Lease Orders (CLO) and we are keen to understand whether and how these could add benefit to the compulsory purchase process. Similar considerations as those that currently apply to CPO, and potentially to CSO, would apply in terms of ensuing compatibility with the ECHR, controlling the use of the property by a new leaseholder and ensuing compensation paid to the current owner remains fair.

10.13 While the SEHP report mentioned in this chapter did not cover CLOs, we consider that the procedural requirements are likely to be more onerous than those for CPO – and potentially CSO – as there would be an ongoing duty on the local authority to monitor and manage that lease. These duties would not be expected to apply once ownership had changed through a CPO or, depending on the requirements of any future CSO process, once a sale was concluded through that process.

10.14 We are particularly keen to understand whether an owner of a property that is subject to a CLO would be treated as a landlord, and could be expected to fulfil the same duties and obligations that would apply to a landlord who chooses to voluntarily lease or rent their property.

Question 113: Should local authorities be able to instruct the lease of a property without permission from the property owner? Please explain your reasons.

Question 114: In what circumstances might compulsory lease be justified, and what benefits or drawbacks might there be?

Question 115: If a CLO process was introduced, would the procedures involved in preparing a CLO need to be more onerous than those that apply to a CPO? Please explain your views.

Question 116: If you think there are any other measures or issues that we should be aware of as part of our consideration of CLOs, please tell us more about these.

Question 117: Do you think that the introduction of either Compulsory Sale Orders or Compulsory Lease Orders in Scotland would add any benefits beyond a reformed CPO process, as a tool for tackling long-term vacant or derelict properties? Please provide details.