Press release: 29 September 2016
The threat of Compulsory Purchase Orders (CPOs) has become one of the biggest perils to ex-local authority leaseholders in London. Louie Burns, Managing Director of leasehold enfranchisement specialists Leasehold Solutions, argues that the human cost of CPOs amounts to a form of ‘social cleansing’ which will force the poor and ethnic minorities out of the capital.
“The political thinking around CPOs has shifted dramatically and swiftly during 2016. In this year’s London mayoral electoral race, Conservative candidate Zac Goldsmith and newly elected Mayor Sadiq Khan agreed that CPOs should be used to acquire brownfield sites for the construction of 50,000 new homes that were promised to be built per year in the capital.
“The upshot is that all council estates have now been classified as ‘Brownfield Estates’ and have become eligible targets for CPOs. Communities Secretary Sajid Javid’s recent decision to deny permission for a CPO on the Aylesbury estate in south London – on the grounds that it would breach the residents’ human rights – represents a victory for leaseholders. However, there are nearly 40 other ex-council estates in London that are currently fighting CPOs, and many others have already been forcibly bought.
“This strategy amounts to a form of social cleansing in London; by definition, ex-council estates are likely to be over-representative of poor and ethnic minorities. Using CPOs to forcibly acquire these estates unfairly disadvantages the already marginalised groups in our society, who will not benefit from the regeneration that follows because they will no longer be able to afford to live in the area.
“The official reason for the use of CPOs is that local authorities want to turn run-down ‘sink’ estates into new homes for their social tenants and leaseholders. The real reason though is mostly about money.
“Firstly, the councils will get money from developers who wants to construct new luxury flats to a mostly investor market. Secondly, as a result of regeneration the area will become more desirable to live in, allowing the local authority to raise residents’ council tax.
“The primary concern for flat owners is the amount of money they will be offered by councils, compared to what the property is actually worth on the open market. Councils have a legal obligation to ensure that a flat owner is in ‘a no better or worse financial situation’ after a CPO.
“However, in practice councils tend to make their first offer of compensation lower than the market value to shock flat owners and set their expectations. For example, data obtained by campaigners at the Aylesbury estate via a Freedom of Information request found that Southwark council paid £147,500 for a four-bedroom maisonette. Considering that the estate is just two miles from Westminster and a flat on the nearby Camberwell Fields development was valued at £459,000, the price offered by the council was clearly far too low.
“This is hugely unfair to flat owners who are not being given a fair market price for their flats. There is then a real human cost to receiving such unfair compensation. Many leaseholders will be unlikely to be able to buy a like-for-like property on the new development and will be too old to get a mortgage to buy another flat in the area they have grown up in. They will be faced with either using their capital for rent until it is used up or moving many miles away to be able to buy cheaper properties.
“Those young enough to get a mortgage will be in a similar position of not being able to afford to live in the area they currently do, with their friends and extended families, and will instead be forced to move to cheaper areas. This causes real issues for families and communities, and it is widely documented that people in these situations suffer from depression or mental health issues due to losing the support of their friends and families.
“If leaseholders are unhappy with the valuation offered they can take their case to the Upper Tribunal (Lands Chamber) but the cost of valuers, solicitors and barristers is very daunting to leaseholders. Also the councils, who get all their fees paid for by the tax payer, are almost certain to appeal if they don’t get the desired decision, thus wiping out a huge portion of the compensation received by a leaseholder, win or lose.
What can flat owners do to stop a CPO on their estate?
“Firstly, residents can submit a Freedom of Information request to the local authority to see if their block is being considered as a possible CPO target. There can be lots of rumours around the fact but it is simple to find out the truth. If flat owners’ properties are targeted for a CPO they shouldn’t despair! The council has to jump through a lot of hoops to get the permission required to forcibly take possession of their homes.
“Secondly, those flat owners that act as a group to fight the proposal will stand the best possible chance of opposing the CPO. Residents should research what other estates have done to successfully fight CPOs, as well as contacting their MP to explain the true human cost of the process.”