Five steps to consider if your land is the subject of a CPO

Farmers should be prepared to stand their ground in the face of some derisory compensation offers, writes Richard Collins

Payment: If a farmer has to totally discontinue their dairying enterprise, they will be entitled to substantial additional compensation
Payment: If a farmer has to totally discontinue their dairying enterprise, they will be entitled to substantial additional compensation

Richard Collins

The invitation to readers to let me know about their compulsory purchase order (CPO) experiences has generated some interesting responses, not least that of Henry, who is a medium-sized intensive dairy farmer in the west of Ireland.

Henry is about to lose six acres of his cow grazing platform from the centre of his holding, which will also result in the separation of a large area of the remainder of his grazing platform from his residence and milking parlour. What is interesting about this case is that the loss of six acres is likely to be the least of his problems. In the absence of a site inspection and a detailed assessment, I can only give some outline advice at this stage.

What initial steps should Henry take?

He should assess the individual impacts of the acquisition using the following headings of claim.

* Value of land acquired

* Severance devaluation

* Injurious affection devaluation

* Temporary disturbance during works

Get the latest news from the Farming Independent team 3 times a week.

* Permanent disturbance into the future (special value to owner).

An indication of how this might work out is as follows:

Value of land acquired

If the land is well located and of good quality but having no development potential, this portion of the compensation is likely to be at least €15,000 to €16,000 per acre at present prices. The guiding influence on this price will be what similar agricultural land is realising in the area.

The council valuer is likely to be magnanimous with this figure to impress Henry because it is likely to be a relatively small portion of the total compensation. An extra €1,000 per acre will be insignificant in the overall context.

Severance

Severance devaluation is defined as the reduction in value of the retained part of the holding because of the loss of the land acquired. It is likely to be the largest single element of compensation in this case. It will depend on several factors, particularly the accommodation works (if any) offered by the council.

Henry will need to be prepared for a meaningless offer pulled from the clouds. Devaluation is a percentage of the value of the entire holding. There is a very strong entitlement to a full sized underpass, but such structures are now very difficult to obtain and, if not on offer, the compensation should reflect a substantial percentage devaluation of the value of the entire retained holding. Even with an underpass, there will be a significant devaluation of the holding. What Henry must watch out for is the likelihood that the council valuer will attempt to limit the devaluation to a strip of land adjoining the boundary of the separated land. If he has to totally discontinue his dairying enterprise, he will be entitled to substantial additional compensation under the heading of disturbance ("value to owner").

Injurious affection

Injurious affection is defined as the impact and reduction in value of the retained property, including the dwelling house and farmyard, because of the works and the presence into the future of the new road, and traffic. This is a separate and additional impact to severance. Injurious affection devaluation is also a percentage of the value of the entire retained holding. If the road scheme seriously impacts on the overall appearance and privacy of the property, compared with the existing situation, and if accesses to the retained property are changed, there will be an entitlement to significant compensation for this. Another major impact could be impeded drainage, despite worthless commitments that this would not happen.

Henry needs to be very careful.

Temporary disturbance

Henry will be likely to have many sleepless nights. Considerable time will be lost dealing with roads engineers and others. A timeframe of three years is normally indicated by the council. If Henry is innocent enough to believe this, he is likely to be in for some surprise. A more realistic period of five to seven years - and in extreme cases, 10 years - is a distinct possibility. He is entitled to compensation, under the heading of temporary disturbance, for all time wasted and additional costs of operating his farm for the entire period until the new road is open to traffic. He is the manager of a substantial business. He should be prepared for a derisory compensation offer from the council valuer at a rate more like the minimum wage rather than the manager of a complex business. A useful question that might be put to the road project manager is what his/her own hourly rate is and agree to this as an absolute minimum.

Permanent disturbance

The entitlement to compensation under this heading could be strongly resisted by the council valuer. In fact, Henry could well be faced with denial that there is any entitlement to compensation under this heading. If he is so confronted, he should make immediate application for assessment. Disturbance should always be assessed by an experienced agricultural expert (agronomist) and Henry should insist that the council complies with this standard.

Because of the nature of this CPO, it is likely to result in a substantial reduction, if not the termination of the entire dairying enterprise. To minimise the losses, the acquired land will need to be replaced. It is unlikely that this will be readily available in close proximity. He will be entitled to all his costs (other than the price of the replacement land) and outlay. His most significant cost is likely to be the additional permanent costs of travelling on a daily basis to and from, and operating, both the rearranged retained and the replacement land.

Summary

Notwithstanding the limited information, I am satisfied that Henry is likely to have a struggle on his hands if he is to achieve the compensation to which he is entitled, which should be a substantial multiplier of the value of the land acquired.

Richard Collins is a consultant with FBA Consultants, based in Fermoy, Co Cork. He is the co-author with Noel O'Brien of A Practical Guide to Compulsory Purchase in Ireland. Ph: 025 31244

Indo Farming


For Stories Like This and More
Download the Free Farming Independent App