Owners of land and property waiting for compulsory purchase compensation are set to see a reduction in their compensation payment following last week’s cut in interest rates, the CLA has warned.
The CLA, which represents landowners, farmers and rural businesses, has asked Chancellor Philip Hammond to intervene so that the interest rate cut to 0.25%, announced by the Bank of England last week, will not unfairly penalise people affected by late payment of compulsory purchase compensation.
The nature of compulsory purchase means that in almost all cases a significant portion of the compensation is paid late.
Under current legislation, these late payments attract an interest rate of 0.5% below the Bank of England base rate. There is no floor and so the interest rate effectively becomes negative.
'Serious disruption'
CLA President Ross Murray said: "Owners of land and property affected by compulsory purchase have already suffered serious disruption to their businesses and their lives.
"Now those waiting for late compensation payments face the patently absurd and unfair prospect that the amount of compensation due reduces over time.
"The later the payment is made by the acquiring authority, the less compensation becomes due."
The CLA President has asked the Treasury to ensure new legislation to increase interest rates on late payments to well above the Bank of England base rate is in force before the next review on 30 September.
He said: "Earlier this year Ministers committed to fair rates of interest, but the changes have yet to be implemented.
"The base rate cut reinforces the urgency in effecting this important change."
