CPO guide for leaseholders (DRAFT)

TIP 1: Make your demands clear from the outset

Before a Compulsory Purchase Order (CPO) is initiated, the landlord will have needed to set out what its offer is to leaseholders - either in a ‘Landlord Offer’as part of a ballot process, or in an approved policy document if the landlord is a local authority.

You will have the opportunity to challenge and influence the details of the landlord offer prior to and throughout the CPO process. It will be the main consideration when it comes to challenging a CPO so it’s important that you set out clearly the terms of the rehousing package you want to be offered.

The Government’s Estate Regeneration National Guidance documents proposes a ‘Home Swap’ option (see page 9) where leaseholders are offered full ownership of a new home on the redeveloped estate and any difference in value is disregarded, provided that the leaseholder doesn’t sell up before 7 years after moving in.

This is the most equitable of options available for leaseholders as they are able to remain as part of the community within the redeveloped estate while not being disadvantaged i.e. they are put back in a position of owning 100% of their home not just part of it.

At least two housing associations in London offer this home swap model - Poplar HARCA in Tower Hamlets (see more info here) and Clarion housing association (see more info here).

Most other landlords will offer what is usually called a ‘shared equity’ or ‘equity loan’ scheme for leaseholders. But these schemes can differ from one another significantly and there are a number of problems associated with them.

Some require leaseholders to sink their personal savings into the scheme or take out a mortgage. Some have high minimum thresholds which have the same effect i.e. requiring the leaseholder to be able to afford at least 50% or sometimes as much as 80% minimum equity.

Some schemes don’t allow the equity share to be passed on to descendants and some require the leaseholder to pay the landlord’s share of any major works charges. A further complication is that the leaseholder is obliged to accept the landlord’s valuation of their current home and that of the replacement home.

So it’s important to read the small print and ensure that any shared equity scheme includes the following guarantees as a minimum:

  1. The required minimum equity share is not higher than 25%.
  2. The leaseholder is not means tested or obliged to sink savings or re-mortgage.
  3. The equity share agreement can be inherited by a spouse or descendant.
  4. Any future Major Works charges are apportioned to the percentage share owned.
  5. The Council/Landlord instructs the District Valuer Service to conduct its valuations and agrees to pay leaseholders to instruct an independent surveyor to conduction their own valuations of their existing homes and the replacement home offered under shared equity.
  6. Any disagreement about the valuation of the existing homes or the proposed replacements is referred to a suitably qualified mediation service at the full cost of the Council/Landlord, while leaseholders reserve their statutory right to challenge the valuation at Tribunal should the mediation be unsuccessful.

Ultimately, the ‘home-swap’ option avoids all of these complications because it is a simple swap - a replacement home for the one that is being demolished.

The government’s Compulsory Purchase Code sets out an overriding principle - the principle of equivalence:

You should use this to lobby your landlord and argue that you own 100% of your home now and that you should be entitled to a ‘home swap’ which will allow you to own 100% of a new home on the estate.

TIP 2: Get organised and get armed!

Go knocking on doors and get organised with other leaseholders on the estate. You can find out which other properties on the estate are leaseholders using the Land Registry. Form a group, set up a Website/Facebook page and start lobbying your landlord for the home swap option. If your landlord is a local authority get in touch with and lobby your local ward councillors.

Get hold of the financial figures behind the redevelopment scheme, which show how much profit the landlord stands to make. According to the Mayor’s new policy, viability assessments must be made public for every planning application.

By obtaining these financial figures, leaseholders on the Aylesbury estate in Southwark were able to show that the housing association redeveloping the estate was set to earn over £163m profit from the scheme.

They used this to argue that some of this profit should be used to give them a better deal and the argument was very compelling.

It’s best to start out as early as possible in the CPO process with making your demands heard. Ideally prior to any ballot and drafting of any landlord offer but failing this there will be other opportunities. If your landlord is a local authority there will be a number of Council meetings convened to discuss any given estate demolition. The Council will need to draft a leaseholder policy and later on will need to approve a resolution to commence CPO proceedings, as well as reside over any planning applications. Attend these meetings and make representations setting out how the home-swap option is not just best practice used in other schemes but also included in the government’s estate regeneration guidance.

TIP 3: Navigating the CPO process

If your lobbying fails you will have one last attempt to secure a better offer - when it comes to the Compulsory Purchase Order.

Once the local authority has agreed to commence CPO proceedings, you will receive a formal notice giving you at least 28 days to object. The notice will give you details of where to send your objection letter. It is very important that you send the objection letter before the deadline. At this point you should instruct a solicitor to draft the letter. It will look something like this with a brief summary outlining the grounds of objection.

Once the letter is received by the government’s planning casework unit, a Public Inquiry will be triggered but this could be anything from 6 months to a year away.

In the meantime you will need to seek legal help in drawing up your detailed statement of objection, which will be presented to the Public Inquiry. You could try crowdfunding or approach the Bar Pro Bono Unit.

The statement of objection is not limited to the human rights or equalities implications of the rehousing offer but can also include other considerations, because a CPO order has to satisfy a number of tests.

The first of these is the well-being test; the local authority must demonstrate that the scheme underlying the CPO will result in an improvement in the Environmental, Social and Financial well-being of the local area. A case could be made that refurbishment would lead to better outcomes in each of these three areas - as evidence has shown.

The second is that the scheme underlying the CPO must be approved in accordance with any planning policies governing it. Very often concessions are made in meeting planning policy objectives, for example on the Mayor’s affordable housing requirements, space standards, zero carbon policies etc.

You can read some of these arguments in the Aylesbury estate leaseholders’ Statement of Case to their Public Inquiry in 2018.