Compulsory Purchase Order

John_Stiles

My mum currently lives in a flat in a block, which is due to be knocked down, and so there's a compulsory purchase order on her property.

She has been offered a certain amount of money for her flat by the housing association. She also says that they are offering to pay 25% of whichever property she purchases after moving (the housing assoc would own 25% of the property but they wouldn't charge her any rent. And if / when she sells, she would get 75% of what it sells for and the housing assoc would get 25%). Plus all related moving costs.

At first she thought that they would only pay the 25% on properties owned by the housing assoc, but later she said that that she was told (by someone at the housing assoc) that actually this applies to any property which she might want to buy.

She is now looking at lots of properties, but she is confused as to what exactly the deal is, so she doesn't know what is worth looking at and what isn't. She knows that they won't pay the 25% on concrete constructions, but maybe there are other properties that they won't pay 25% for.





And there are other questions too, such as :


If she wants to buy a freehold property, will the housing assoc own 25% of the freehold as well as the property itself?

Would she have total control over refurbishments and other changes to the property?

What is the limit to what the housing assoc will pay?

Can she buy the property in someone else's name? (ie me)

Is there a limit on size / number of bedrooms?

My mum has a certain amount in savings, which she could put towards buying a property. Will this make any difference to anything?

Are there any specific types of property (other than concrete construction) that they won't pay 25% for?

Is there anything else to know?



My mum will not be needing a mortgage.



I've been speaking to someone at the housing assoc to get some answers and I'm currently waiting to hear from them, but I'd like to know if there is any info on this which I can read, or if anyone knows anything about this. For example, are there certain rules which apply to all housing associations or does it vary wildly from one to another?

GDB2222

Have they made the CPO yet? If so, your mum is entitled to paid-for independent advice at the expense of the authority making the CPO. Get that advice, rather than asking here.

From what you said above, it looks like an housing association (which is probably not the body making the cpo) are making some pre-CPO offers to people. If your mum holds out for now, she is likely to get a better offer later. She is also entitled to a 10% disturbance allowance on the CPO offer, that's 10% extra on top of the value of her flat, but probably not on this offer from the housing association.

John_Stiles

GDB2222 wrote: »

Have they made the CPO yet? If so, your mum is entitled to paid-for independent advice at the expense of the authority making the CPO. Get that advice, rather than asking here.

From what you said above, it looks like an housing association (which is probably not the body making the cpo) are making some pre-CPO offers to people. If your mum holds out for now, she is likely to get a better offer later. She is also entitled to a 10% disturbance allowance on the CPO offer, that's 10% extra on top of the value of her flat, but probably not on this offer from the housing association.

The amount of money which she's been offered is the value of the flat plus 10%.

I don't know what you mean by have they made the CPO. What I know is that they are definitely going to knock down the block and that there are people from the housing assoc talking to residents about moving out.

GDB2222

John_Stiles wrote: »

The amount of money which she's been offered is the value of the flat plus 10%.

I don't know what you mean by have they made the CPO. What I know is that they are definitely going to knock down the block and that there are people from the housing assoc talking to residents about moving out.

I mean has she had a piece of paper through the door saying that her flat is being compulsorily purchased, rather than what the plans are? I am pretty sure from what you have said that she has not yet been CP'd.

What happens is that the housing association and the local authority (it's usually the local authority that make the CPO) try to hoover up the properties cheaply prior to the formal CPO. It sounds to me like you are at that stage. The HA are not on your mother's side. They are trying to save as much of their money as they can. I have no idea about the 25% deal, because that's got nothing to do with the CPO. That's their private offer, and they can make any terms they like for that.

Go and speak now to a local surveyor (not an estate agent), taking all the paperwork along with you.

John_Stiles

GDB2222 wrote: »

I mean has she had a piece of paper through the door saying that her flat is being compulsorily purchased, rather than what the plans are? I am pretty sure from what you have said that she has not yet been CP'd.

What happens is that the housing association and the local authority (it's usually the local authority that make the CPO) try to hoover up the properties cheaply prior to the formal CPO. It sounds to me like you are at that stage. The HA are not on your mother's side. They are trying to save as much of their money as they can. I have no idea about the 25% deal, because that's got nothing to do with the CPO. That's their private offer, and they can make any terms they like for that.

Go and speak now to a local surveyor (not an estate agent), taking all the paperwork along with you.

Do you mean that there's a period of time in which the housing assoc makes offers which are not as good as what she'll eventually get, and then at some point a final offer is made by the council?

GDB2222

John_Stiles wrote: »

Do you mean that there's a period of time in which the housing assoc makes offers which are not as good as what she'll eventually get, and then at some point a final offer is made by the council?

Yes, that's exactly what I meant, but ofc I don't know exactly what offers you are getting. There's no incentive for the housing association to offer you more now than they know they can buy for under compulsory purchase later on. So, the chances are that they are making low offers right now.

John_Stiles

GDB2222 wrote: »

Yes, that's exactly what I meant, but ofc I don't know exactly what offers you are getting. There's no incentive for the housing association to offer you more now than they know they can buy for under compulsory purchase later on. So, the chances are that they are making low offers right now.

So basically she has 2 options. Go with whatever they're offering now, or wait who knows how long for the final offer. And that's apart from the fact that we don't know what the whole of the current offer is (although I am trying to get hold of someone from the housing assoc to find out).

I know it's a long shot to ask, but do you think that the final offer is likely to be much better than the current one, or only marginally better? In other words is it generally worth waiting in these situations?

GDB2222

John_Stiles wrote: »

So basically she has 2 options. Go with whatever they're offering now, or wait who knows how long for the final offer. And that's apart from the fact that we don't know what the whole of the current offer is (although I am trying to get hold of someone from the housing assoc to find out).

I know it's a long shot to ask, but do you think that the final offer is likely to be much better than the current one, or only marginally better? In other words is it generally worth waiting in these situations?

Well, the last leaseholder in a block of flats has a certain amount of leverage. OTOH, your mother could end up living alone in a block which has been emptied of other tenants. Like I said, you need a surveyor to advise you on the offer, and once it gets to the CPO stage his fees will be paid by the LA/HA. Even if she has to pay a few hundred herself, it's just one of those expenditures that you simply have to make in life. My guess is that the surveyor will make thousands, if not tens of thousands, for your mother.

I had a flat taken over in these circumstances. 3 days before they finally made teh CPO they offered me £90k. As soon as they made the CPO they had an obligation to make a fair offer and it went up to £93k. We settled for £115k eventually.

John_Stiles

I called the housing association today and spoke to someone who says that although they don't fully know what the deal is, that they would try to answer my questions.

One of the things that I asked was if my mum could buy a flat but put it in my name. She said absolutely not. She said that my mum could leave the house to me in her will, but after she's gone I either have to buy the remaining 25%, or the property would have to be sold, and the housing assoc get 25% and I get 75% from the sale.

I know that I won't be able to buy the remaining 25%. Is there any way around this?

sonastin

In terms of the offer now / final offer option, you have to weigh up how definite it is that the work is going to go ahead. There are areas around where I used to live where there on-again-off-again projects and rumours of CPO and development work for years. Those who got out early got to move on with their lives. Those who held out for more cash had to live with the uncertainty of whether or not the scheme would actually get underway. And they couldn't sell up and move on during the "off again" periods beause the threat of CPO killed the market.

guppy

Get professional advice from a Chartered Surveyor specialising in this area - the RICS website has a directory. Get a good one, the fees should be payable by the HA.

First of all, you want to obtain the best possible price for the property (the market value is a matter of opinion). Then you will want to make sure you are entitled to all other payments (10% home loss payment, moving costs, surveyors fees, legal fees, stamp duty etc.)

Even if the CPO hasn't come in to effect yet, the purchaser's offer should reflect the above. A decent surveyor should be able to negotiate a good (though not excessive) price. Usually the purchaser will be keen to acquire the property without a protracted dispute.

Finally, I may be wrong, but I wasn't aware Housing Associations were able to obtain CPO powers, so it may be the Council that ultimately has to seek the CPO if not all the owners choose to sell up.