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Aylesbury Estate CPO – The Secretary of State Consents to Judgment

  • United Kingdom
  • Real estate planning

31-05-2017

In September 2016 Communities secretary Sajid Javid decided not to confirm a compulsory purchase order (CPO) which underpinned regeneration proposals for the Aylesbury Estate in the London Borough of Southwark (Southwark). The CPO sought to acquire the last remaining leasehold interests in the Estate and pave the way for the implementation of a scheme to deliver 800 new homes.

At the time of the CPO inquiry (which took place between April and October 2015), Southwark’s policy required the leaseholders who chose to purchase a property through one of the available rehousing options to contribute all but £16,000 of any savings or investments they may have had towards the purchase. In rejecting the case for CPO the Secretary of State accepted his inspector’s view that this approach would give rise to a considerable negative impact for the leaseholders as either their standard of living would be adversely affected or they would be obliged to leave the area, which would inevitably impact on community ties.

The decision not to confirm the CPO was challenged by Southwark on the basis that the Secretary of State’s decision failed to take into account the change in Southwark’s policy which was announced in December 2015 (and notified to the Secretary of State),  which permitted leaseholders buying alternative properties to retain "all of their savings to do with as they wish". In response the Secretary of State has consented to judgment in the case which means that his September decision has been quashed and a new public inquiry should now be arranged.

The outcome of the CPO process in Autumn 2016 led to some debate over whether it would be more difficult in future for acquiring authorities to demonstrate that the public benefits associated with regeneration schemes such as these should outweigh the inevitable impact on the human rights of those who are affected. One school of thought was that the decision suggested that it was not enough for authorities to base compensation offers on the open market value of actual properties as set out in the compensation code (the code) and it could be necessary in future to make an enhanced offer to address the impact on individuals. Others highlighted the fact that there is already a degree of flexibility associated with the operation of the code, for example authorities can factor in the cost of going through a CPO inquiry process when deciding on an appropriate offer of compensation.

So what light does the capitulation of the Secretary of State in the High Court shed on this debate? The short answer is, none at all, as consent to judgment was predicated on the relatively narrow ground that the Secretary of State had failed to give sufficient reasons for his decision in the light of the change in policy. So it will be interesting to see how a successor Secretary of State approaches the issue following the reconvened inquiry (no doubt presided over by a different inspector) and whether he or she thinks that what is on offer is enough to tip the balance in favour of confirmation. What this episode goes to show however is that each CPO decision is very much judged on its merits and acquiring authorities and their development partners should pay close attention to residential relocation strategies and keep them under review to ensure they continue to be fit for purpose.

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