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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 authorities the right to purchase a property in the future for a specific purpose. 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?

Will the price be given to the landowner at the time the order is issued or will they wait until the time the property is about to be demolished.

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.

Some people have done well and have been very happy with the amount of money they have got from the government, where as 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.

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