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The LRC’s recommendations concern the procedures for the acquisition of land and those that relate to the payment of compensation to landowners. These procedures are governed by long standing legislation such as the Lands Clauses Consolidation Act 1845 and the Acquisition of Land (Assessment of Compensation) Act 1919.
This blog will focus on the LRC’s proposed amendments to the current CPO and compensation framework.
Vesting Procedure
The current CPO system involves the issuing of a notice to treat by the acquiring authority. A notice to treat is a formal commitment by an acquiring authority to proceed with the acquisition of particular land.
However, the LRC recommends that a vesting procedure be adopted. This procedure can be used under the current framework, but only in very limited circumstances. For example, it can be used in respect of derelict sites, protected structures and open spaces, as well as in cases of delay in conveying title where the notice to treat procedure has been used. The LRC recommends that the vesting procedure be the default procedure to follow when land is being compulsory acquired. The LRC point to the numerous advantages of this system. For instance, it permits the acquiring authority to obtain an unencumbered title to the land since it operates not by conveying the existing title, but rather by vesting in the acquiring authority any relevant land to which the vesting order relates in fee simple free from encumbrances. The LRC also state that this procedure allows title to the land to pass to the acquiring authority prior to compensation being determined. This in turn allows the authority to go into full possession of the land in a reasonably short period of time after the issuing of the compulsory purchase order. Under this procedure, the acquiring authority will have 12 months from the date that the compulsory purchase order becomes operative to decide whether it wishes to proceed with the acquisition. This 12 month period is shorter than the current 18 month – 3 year period under the notice to treat procedure. In its report, the LRC state its reasoning for shortening the time period. It states that once land becomes the subject of a CPO, “it effectively sterilises the use of that land for the owner. The owner cannot easily sell or let the land during that period”.
Advance Payment
Under the current framework, no compensation is payable to the owner of the land at the time they lose possession. It is only payable once the level of compensation is determined. Importantly however, the current framework provides that interest is chargeable on the compensation sum from the date the acquiring authority takes possession of the land.
The LRC recommends that an acquiring authority should make an advance payment of no less than 90% of the authority’s estimate of the owner’s compensatory entitlement at, or near, the time the owner loses title to their land. This approach would benefit landowners as they would receive a sum of money before they lose possession of their land. The LRC states that this would allow landowners to mitigate the effects of the loss of their land. This approach would also benefit acquiring authorities as a significant portion of the compensation ultimately payable will be paid at an early stage when the authority acquires ownership of the land. This will significantly reduce the level of interest for which acquiring authorities are liable under the current system, where interest is paid on the compensation from the date it enters into possession until the date it makes the compensation payment.
Whilst this vesting procedure has been adopted in other jurisdictions, the notice to treat procedure is still relevant in Ireland. It will be interesting to see whether the Oireachtas will adopt the recommendations of the LRC in the near future.
Written by: Craig Byrne and Breen Purcell