Hinckley Point – implications for landowners

The announcement by the new government that it has decided to proceed with the construction of the Hinckley Point C nuclear power plant will have major implications for landowners close to the Somerset site. Does this indicate a green light for new plants at Bradwell and Sizewell and will the government also press ahead with HS2?

Huge infrastructure projects can significantly blight adjoining land and settlements. If landowners are not prepared to co-operate, it is often necessary to resort to compulsory purchase.

The government is keen to reform the process of compulsory purchase to make it quicker and cheaper. The Housing and Planning Act 2016 (HPA) has introduced new powers to enter land for the purpose of surveys, including excavating trial pits, digging boreholes and erecting monitoring equipment.

The HPA also gave developers of nationally significant infrastructure projects, such as HS2, the ability to apply for related housing development as part of the scheme. Although these new powers may well be curbed by the recently introduced Neighbourhood Planning and Infrastructure Bill, they could have serious implications for landowners if the acquiring authority is able to buy land at existing use value, thereby denying the landowner any uplift from future development.

The level of compensation is usually the key issue if land is acquired by compulsory purchase. The three main items of compensation to be agreed are the value of the land actually acquired, the amount for the landowner’s personal and business disturbance and the value assessed for the harm caused to the landowner’s remaining land, including, for example, loss of value for fields separated from the farm by new roads or railways.

Where land is compulsorily acquired, compensation is paid for its open market value but ignoring any effect on value of the proposed infrastructure scheme. For farmland, that is likely to be agricultural value only.

Compulsory purchase can also produce unexpected tax issues. The disposal of land or buildings to an acquiring authority will invariably trigger a capital gain, for which tax will be payable. Some landowners will be able to roll over the gain into replacement land assuming there is suitable land available to buy within the locality.

For a developer or local authority, compulsory purchase is usually a last resort when arm’s length negotiation has failed. For a landowner, early advice on the practical and legal implications is crucial.

Katy Moss is a solicitor in the Property department at Barker Gotelee Solicitors in Suffolk.

Property Solicitors – for more information on our range of legal services, please call the team on 01473 611211 or email bg@barkergotelee.co.uk

This article first appeared in EADT 5th October 2016