Being told a public body wants to buy your property compulsorily is unsettling, whether it is your home, business premises or a let investment, and the money you receive depends on rules most owners have never come across. This guide explains how compulsory purchase compensation works in England: what you can claim, how the figures are worked out, and where a valuation surveyor fits in.
The rules differ in Wales, Scotland and Northern Ireland, and some of the amounts below changed in 2026, so always check what applies to your own case.
The starting point: the equivalence principle
Government guidance describes the “equivalence principle” as the overriding rule of compulsory purchase compensation. If your interest in land is acquired, you should be paid neither less nor more than the value of your loss. There are limited exceptions, covered below.
The rules come from a mix of legislation, case law and practice, often called the “compensation code”, rather than a single document.
What compulsory purchase compensation is made up of
Where land is taken, compensation is one overall figure built up from several elements:
- Market value of the interest in the land that is taken.
- Disturbance: losses caused by having to leave the property, such as moving and relocation costs.
- Loss payments: statutory sums to recognise the distress and inconvenience of having to sell or move at a time not of your choosing.
- Severance and injurious affection: any loss in value of land you keep.
Market value and the “no scheme” principle
Your land is valued at what it might be expected to fetch if sold on the open market by a willing seller. Crucially, any increase or decrease in value caused by the acquiring authority’s scheme has to be ignored. This is known as the “no scheme” principle. So a scheme that has depressed local values should not reduce your compensation, and you cannot claim uplift that exists only because of it.
Development potential can count. The valuation can take account of existing planning permissions and the prospect of permission being granted in the “no scheme” world. Where there is disagreement about what might have been permitted, a Certificate of Appropriate Alternative Development can be sought from the local planning authority. For sites with development potential, a development appraisal can help show what that potential is worth.
There is an important exception. Some orders, such as certain schemes for affordable housing, can be confirmed with a direction that removes “hope value”, so the prospect of future planning permission is left out of the valuation. If your land is affected by an order with such a direction, get specialist advice early.
Disturbance compensation
Disturbance covers losses that are a natural and reasonable consequence of being displaced. These may include the costs of vacating and moving to a replacement property, legal and conveyancing costs, and other professional fees. For businesses, compensation is usually assessed on either a relocation basis or, where the business cannot reasonably move, a total extinguishment basis.
Two points catch people out:
- The burden of proof is on you. You need to show the losses you claim, so keep receipts, invoices, quotes and a record of time spent dealing with the acquisition.
- You have a duty to mitigate. You must take reasonable steps to reduce your losses. For example, government guidance suggests getting quotes from at least two removal firms.
To claim disturbance you normally need to be in physical occupation of the land, although there is a limited right for owners of investment property who are not in occupation.
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Summary
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Loss payments: home loss, basic loss and occupier’s loss
Home loss payment
If you are displaced from your home, you may be entitled to a home loss payment. Among other conditions, you must have lived there as your only or main residence for at least a year ending on the date you are displaced. In England, government guidance states that owners of a freehold, or of a lease with at least three years unexpired, receive 10% of the market value of their interest, subject to a minimum of £8,100 and a maximum of £81,000 (the amounts set for displacements on or after 1 October 2023, which can be revised). Other eligible claimants receive a flat £8,100.
Basic loss and occupier’s loss payments
Owners of land and buildings that are not their home may qualify for a basic loss payment if they have held their interest for at least a year. If they also occupied it, such as a business trading from its own premises, an occupier’s loss payment may be due too.
The Planning and Infrastructure Act 2025 rebalanced these payments in favour of occupiers. For land in England, the amended Land Compensation Act 1973 now provides:
- Basic loss payment: the lower of 2.5% of the value of the interest or £25,000.
- Occupier’s loss payment: the greatest of 7.5% of the value of the interest, a “land amount” or a “buildings amount”, capped at £75,000.
This reverses the previous position, under which basic loss was 7.5% (up to £75,000) and occupier’s loss was capped at £25,000. The new figures do not apply where notice of the compulsory acquisition was given before the change took effect on 18 February 2026, so which set applies depends on the timing of your case. The government expects the change to reduce basic loss payments to investor owners.
Loss payments, including home loss payments, can also be excluded if you have been served certain statutory enforcement notices, such as notices requiring repairs or improvements, and have not complied with them by the time the order is confirmed.
Getting paid: advance payments and interest
You do not always have to wait until everything is agreed. Once the compulsory acquisition has been authorised, you can ask in writing for an advance payment. The acquiring authority must pay 90% of the agreed compensation or, if it takes possession before compensation is agreed, 90% of its own estimate. It must decide within 28 days of your request whether it has enough information to make that estimate. The government publishes a model compensation claim form for this purpose.
Where the authority takes possession before compensation is paid, simple interest at a prescribed rate is generally payable from the date of entry or vesting until payment.
Professional fees and disputes
If an order is confirmed and implemented, government guidance states that reasonable professional fees for preparing and negotiating your compensation claim can generally be reclaimed from the acquiring authority. The costs of objecting to an order are normally your own, although you can seek an award of reasonable costs if your objection succeeds.
The acquiring authority will normally appoint a chartered surveyor to estimate market value. You are entitled to appoint your own surveyor to make an independent assessment and negotiate for you. RICS has a professional statement setting out the standards its members must follow when advising on compulsory purchase. If agreement cannot be reached, disputes over compensation can be referred to the Upper Tribunal (Lands Chamber), and authorities are encouraged to offer alternative dispute resolution such as mediation.
How a valuation surveyor can help
An experienced compulsory purchase surveyor can value your interest on the correct “no scheme” basis, identify every head of claim, prepare advance payment requests and the full claim, and negotiate with the acquiring authority’s valuer, supporting a referral to the Upper Tribunal if needed.
Where a lease is involved, for example a business tenant facing displacement or a landlord whose investment is being acquired, the lease terms and any security of tenure can affect what is claimable, so lease advice may also be relevant.
Frequently asked questions
Do I have to accept the acquiring authority’s first offer?
No. You can negotiate, and you can appoint your own surveyor to check whether the offer reflects the full value of your loss. If agreement cannot be reached, the dispute can go to the Upper Tribunal (Lands Chamber).
Is compensation based on today’s value?
Market value is assessed at the relevant valuation date. This is usually the date the authority takes possession or the vesting date, or the date the Upper Tribunal determines compensation if that is earlier.
Get advice on your compulsory purchase claim
If your property is affected by a proposed or confirmed compulsory purchase order, involve a valuation surveyor early. Use the online quote calculator on our compulsory purchase page to tell us about your property and get a quote from an experienced surveyor.
5. Developer’s profit (return for risk)
Profit is not an optional extra; it is the return required for taking development risk. It is commonly expressed as a percentage of GDV or of total cost. Typical cited ranges often sit around 15–20% of GDV for many private residential or mixed-use schemes, with higher requirements for riskier or more complex projects and sometimes lower for simpler, pre-sold or lower-risk work — but there is no single “correct” rate.
Lenders test whether the profit margin is adequate for the risks they are underwriting. Squeeze profit to inflate land value and the scheme becomes fragile: a modest cost rise or sales slip can wipe out the buffer. Conversely, an inflated profit on a low-risk build-to-rent or pre-let commercial scheme may simply mean the land bid is uncompetitive.
6. Residual land value and benchmark land value
After GDV, costs, finance and profit, the residual method produces a residual land value — what a rational developer could pay for the site. That figure should be sense-checked against market evidence for comparable land, and against existing use value where relevant.
In planning viability work, residual results are often compared with benchmark land value (BLV), typically based on existing use value plus a premium, rather than treating an aspirational asking price as a fixed cost. Lenders and valuers alike push back when an appraisal “solves” for an unrealistic land price by compressing profit or ignoring policy costs. Getting this right is central to any serious development appraisal in London or other high-value markets where land expectations run hot.
7. Planning obligations: Section 106 and CIL
Section 106 contributions, Community Infrastructure Levy (CIL), affordable housing requirements and other policy costs can be material. An appraisal should reflect the adopted local plan position, any site-specific heads of terms and how affordable units are valued (for example transfer values to a registered provider rather than open-market GDV).
Lenders check these lines because planning risk converts directly into cash. Understating affordable housing or CIL flatters residual value; overstating without evidence can kill a deal that would otherwise work after negotiation. Policy inputs should be dated and sourced, and sensitivity to alternative planning scenarios is often wise.
8. Programme, cashflow and sensitivity analysis
A static residual snapshot is not enough for funding. Lenders want a timeline: planning lead-in, construction period, sales or letting curve, and when revenue actually arrives. Cashflow drives peak debt, interest and whether the scheme can service itself through the build.
Sensitivity (and sometimes scenario) analysis then stress-tests the critical variables — GDV, build cost, programme delay, interest rates and sales rates. Showing what happens if values fall 5–10% or costs rise by a similar margin is often more persuasive than a single “base case” spreadsheet. Exit assumptions should also be clear: sale of completed assets, refinance, or hold as an investment, with exit values supported by comparables rather than hope.
How lenders use the appraisal alongside formal valuation
A development appraisal informs viability and land pricing; a bank may still instruct a formal valuation for lending purposes. Where that valuation is required to RICS Red Book standards, the valuer’s report and the appraisal should tell a consistent story on GDV, costs and risk — see our guide to Red Book valuation for how lender valuations are framed.
Location still matters. Build costs, sales evidence, CIL rates and affordable housing policy vary sharply between markets, so inputs that work for a development appraisal in Manchester will not simply copy across to another city without fresh evidence.
Frequently asked questions
Is a development appraisal the same as a Red Book valuation?
Not necessarily. An appraisal is a viability and residual pricing tool. A Red Book valuation is a formal opinion of value prepared to RICS Valuation – Global Standards for a stated purpose (often secured lending). They often draw on similar evidence, but they are not automatically the same product.
Who typically prepares the figures?
A valuation surveyor usually leads the residual appraisal and GDV evidence, often working with a cost consultant, planning adviser and the developer’s own team. Lenders may also run their own in-house or panel checks.
When should you commission one?
Before buying land, submitting a viability case, raising development finance, or renegotiating planning obligations. Early, evidence-based numbers save more than they cost when a scheme is marginal.
Next steps
If you are acquiring a site, refinancing a scheme or need a lender-ready view of viability, start with a clear brief: use mix, planning status, cost information and target programme. You can request a quote for a professional scheme viability appraisal through UK Valuation Surveyors and compare options for your location and scheme type.
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