Government proposal backs calls for fairer compensation for landowners

Landowners hit by compulsory purchase of their land for infrastructure projects should receive 'fairer interest' when their compensation payments are late, according to a government consultation.

Farm groups have been campaigning for a series of reforms to make the compulsory purchase system fairer for the rural businesses and individuals that are affected.

A new penal interest rate of 8% above base rate for late payments – in line with standard Government practice – has been proposed by the Department for Communities and Local Government and HM Treasury in today’s consultation. The current rate of interest on late payments for acquiring authorities (such as HS2 Ltd) is 0.5% below base rate.

CLA Chief Surveyor Andrew Shirley said: “Rural businesses that lose land to compulsory purchase and do not receive timely compensation need to borrow in order to relocate or reinvest in their business. It is right and fair that these businesses should receive fair interest on the late payments that are owed to them.

“The Government had previously proposed introducing an interest rate of 2% above base rate on late payments. While an improvement on the current very unfair rate of 0.5% below base, this would have still been well below standard Government practices. The CLA has been pressing for a fairer rate of 8% above base.

“We are delighted that Government has listened to our reasoning and agrees that 8% is a fairer rate. Our focus now is to make sure that the proposal translates into reality for farms and other rural businesses affected by compulsory purchase.”

While the CLA has welcomed this aspect of the consultation, it has raised concerns elsewhere. Andrew Shirley said: “Government has missed another opportunity to set the wheels in motion for a Duty of Care on acquiring authorities to treat those losing land or property are fairly, and to make sure that compulsory purchase is only used when other fairer avenues have been proven unviable. The CLA will continue to press for these important reforms.”