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What does Compulsory Purchase Order Mean?

By: Carlton Johnson

This article will explain what a compulsory purchase order is and it will also explain why it is important that property investors and developers are aware of it.

A compulsory purchase (CPO) order is given by authorities to allow them to purchase a property in the future.

This gives the local authority the right to be able to purchase your property or land in the future. If you take a look at the area where the order is placed you will usually see that there is some sort of development taking place. The development could be that the road is being widened or they are doing some other sort of work in the area. However sometimes CPO's can appear haphazard and lacking any plans as regards to where they are located.

If we look at a location like Burnley as an example. There were properties in Burnley a few years ago that were under a compulsory purchase order, but the decision appeared to be random. Half of the properties on a given street were under orders while others in the street were not.

If your property is under a compulsory property order you will typically be given the fair market price for your property. The government does not wish to put any property owner in a worse position as the result of a CPO.

The government has determined that this power is only given to local authorities when it is necessary to make improvements to the land for things like, urban regeneration. This is the method the government must use to gain the land that is necessary for these improvements. They shall only be used as part of a plan for redevelopment or to regenerate the area.

There are some problems with these orders, however. You may be getting the fair market value of the property, but when is the value determined?

Is the valuation taken from the time the CPO is issued or is it put on hold until it is almost time for demolition.

There is a vital difference between these two timings. If they decide to take the valuation from just before the property will be demolished then this valuation could be considerably less than it was at the time the property first became subject to a compulsory purchase order. Your property will not have as much of a value in an area that is barren and undergoing major renovation.

This is why it would be wise to get in writing from the local authorities what they plan to pay you and when. If possible, it would also be prudent to get written assurances that this figure will not change in a negative way in the future.

There have been people who have done quite well with the amount of money the government has given them for their property, while others have not. If would be wise to do all you can to make sure you are one of the people who are happy with the amount of payment you receive.

Article Source: http://www.newagelivingarticles.com

To learn more about how to make money from property in the UK and to receive a deal analysing spreadsheet that is currently on offer for free, visit the www.investment-property-guru.com website for more details. As well as more tips and advice.

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