Could the compulsory purchase of vacant properties be the answer to the housing crisis? (Part 2)

Recent Developments

As noted in Part 1 of this series, under the yet to be enacted provisions of the Land Development Agency Act 2021 (“the LDA Act”), it is envisaged that local authorities will use CPO powers to purchase up to 2,500 vacant properties by 2026 for use as social housing and sale back to the public market.

Objections

While there are different procedures based on the type of CPO involved, the process below generally applies.

Once a CPO notice has been served, an affected party is entitled to object, enter negotiations, and where necessary involve an arbitrator.  Successful objections are usually those which have been made on planning or legal grounds.  It is not currently known what objections will be considered valid where a vacant property is the subject of an LDA Act CPO.

Where an objection is received, a public local enquiry is held, at which, affected parties can formally put their views forward.  However, if no objections are raised, An Bord Pleanála can confirm, amend, or reject the CPO without the requirement for a public enquiry.  Any decision by An Bord Pleanála will be subject to an objection period. Once the objection period passes, the CPO will become operative.  A CPO will remain operative for a three-year period. Once lapsed, a new notice must issue.

Compensation

Where a property is the subject of a CPO, the owner is entitled to compensation in the form of consideration for value.  Once the CPO is Operative the relevant State Authority involved may serve a Notice to Treat on the affected parties and will then commence negotiations as to the assessment of compensation due.

Assessments for compensation fall under a non-exhaustive list of headings which can include the following:

• Value of land
• Diminution in value of retained lands
• Costs arising from acquisition
• Disturbance caused
• Loss of profits caused

A basic requirement is that the owner is entitled to the market value of the property, taking into consideration both the land being required, the knock-on affect to the value of the retained land, and leaving the owner in a similar position as to before the process was commenced.

Where no agreement can be made the matter must be referred to the arbitrator.

Notice of Entry

It is important to note that compensation need not be agreed prior to the CPO being actioned and the Authority can serve a Notice of Entry prior to any money having been exchanged.

Potential Tax Liability for the Property Owner

A sale of land which results in a gain for the landowner will still be subject to CGT at a rate of 33%.  If a notice is received, appropriate tax advice should also be taken.

How we can help

If you have any queries or concerns, or would like to discuss the above in further detail, please feel free to contact Rachel Nangle in our Commercial Real Estate Department (rnangle@bhsm.ie / +353 (0)1 440 8342).

This article is for general information purposes.  Legal advice must be obtained for individual circumstances.  Whilst every effort has been made to ensure the accuracy of this article, no liability is accepted by the author for any inaccuracies.