Part 1: Home loss payments
The Valuation Office Agency`s technical manual covering all aspects of compulsory purchase and compensation.
13.1 Entitlement to home loss payment
Section 29 Land Compensation Act 1973 (as amended) entitles a person to a Home Loss Payment (HLP) where that person is displaced from a dwelling in consequence of:
a) the compulsory acquisition of an interest in the dwelling
b) the making or acceptance of a housing order or undertaking in respect of the dwelling
c) where the land has been previously acquired by an authority possessing compulsory powers or appropriated by a local authority and is for the time being held by the authority for the purposes for which it was acquired or appropriated, the carrying out of any improvement to the dwelling or of redevelopment on the land
d) the carrying out of any improvement to the dwelling or of redevelopment on the land by a housing association which has previously acquired the land and, at the date of the displacement is either a private registered provider of social housing or a registered social landlord within the meaning of the Housing Act 1985 (see section 5(4) and (5) of that Act)
e) the making of an order for possession on ground 10 or 10A in Part II of Schedule 2 to the Housing Act 1985.
Where an authority possessing compulsory powers purchases by agreement the interest of any person in a dwelling, any other person who is displaced will be entitled to a HLP (provided he otherwise qualifies) as if the purchase were compulsory.
A person shall not be treated as displaced from a dwelling in consequence of the acquisition only of part of a garden or yard or of an outhouse or appurtenance belonging to or usually enjoyed with the dwelling.
13.2 Qualifying interests
The claimant must have been, for one year prior to displacement in occupation of the dwelling, or a substantial part of it, as the sole or main residence; and have been in occupation by virtue of one of the specified interests or rights.
Where the one-year qualifying period cannot be met, discretionary payments may be made provided the occupier’s interest and rights could be satisfied at the date of displacement.
Claimants unable to satisfy the one-year qualification because of previous qualifying displacements may qualify on the basis of the cumulative periods.
In the case of compulsory acquisition, occupation must not have been given up before the authority was authorised to acquire the interest.
The specified interests or rights are:
a) any interest in the dwelling
b) a right to occupy the dwelling
(i) as a statutory tenant within the meaning of the Rent (Agriculture) Act 1976 or the Rent Act 1977, or
(ii) under a contract to which section 19 of the Rent Act 1977 (restricted contracts) applies or would apply if the contract or dwelling were not excluded by section 19(3) to (5) or 144 of that Act
c) a right to occupy the dwelling under a contract of employment;
d) a right to occupy the dwelling under a licence where:
(i) it is a right to occupy as a protected occupier within the meaning of the Rent (Agriculture) Act 1976, or
(ii) Part IV of the Housing Act 1985 (secure tenancies) applies to the licence, or
(iii) the licence is an assured agricultural occupancy within the meaning of Part I of the Housing Act 1988, or
(iv) Chapter I of Part V of the Housing Act 1996 (introductory tenancies) applies to the licence.
The provisions do not apply therefore to other licensees, lodgers, squatters or trespassers.
13.3 Blight Notice
From 16 November 1990 Home Loss Payments are available to those whose property is acquired following service of a Blight Notice.
There is no provision for HLP to be paid in Discretionary Blight cases.
13.4 Caravan dwellers
By section 33 LCA 1973 a person residing in a caravan on a caravan site who is displaced from the site as a consequence of any of the actions listed in Paragraphs 13.1(a) to (c) above may be entitled to a HLP. The caravan dwellers must have been in occupation of a caravan site by using a caravan stationed on it as their only or main residence for not less than one year (five years prior to 16 November 1990) ending on the date of displacement and must have occupied the site by virtue of an interest or right to occupy the site. No HLP or discretionary payment will be made except where no suitable alternative site for stationing a caravan is available on reasonable terms.
The amount of HLP to such persons is the minimum (£6,100 from 1 October 2017).
A Home Loss Payment would not be payable to a person occupying a caravan stationed on land owned by another party (under the Mobile Homes Act 1983) because they would not be occupying by virtue of an interest or right specified in section 29(2) or (4) of the Act.
13.5 Discretionary payment
By section 32(7) LCA 1973 an authority possessing compulsory powers has a discretionary power to make a payment corresponding to an HLP to a person from whom an interest in a dwelling is being acquired by agreement.
Similar powers apply where by section 32(7B) LCA 1973 (inserted by section 9(4) Housing and Planning Act 1986) a landlord obtains possession of a secure tenancy by agreement in circumstances where it could have obtained a court possession order under Grounds 10 or 10A Part II Schedule 2 HA 1985.
Discretionary payments are calculated in the same way as HLPs had dispossession been the result of compulsory acquisition or a possession order.
13.6 Amount of home loss payment - England
The amount of HLP payable to an owner occupier having an owner’s interest as defined in section 7 of the Acquisition of Land Act 1981 (that is, freeholders or leaseholders having an unexpired term of more than three years) is 10% of the market value of the claimant’s interest in the dwelling subject to a minimum payment and a maximum payment. In the case of compulsory acquisition the market value will be the value of the interest assessed for that purpose. Where there is no compulsory acquisition (as for example with certain housing orders) the market value will be that which would be assessed if the property were being compulsorily acquired. Such value may be taken to include any development or ransom value present.
In all other cases the amount of Home Loss Payment is a specified amount (usually the minimum amount specified for claimants with an owner’s interest). The Secretary of State is empowered to vary, by order, this amount and the maximum and minimum amounts of payment for owner-occupiers.
Where more than one person qualifies for a HLP in respect of the same dwelling, the amount payable to each is to be the total HLP divided by the number of qualified persons.
Where the date of displacement falls between 16 November 1990 and 31 August 2003 the minimum and maximum amounts for claimants with an owner’s interest will be £1,500 and £15,000 respectively and £1,500 for all other qualifying interests.
Where the date of displacement falls between 1 September 2003 and 31 August 2004 the minimum and maximum amounts for claimants with an owner’s interest will be £3,100 and £31,000 respectively and £3,100 for all other qualifying interests.
Where the date of displacement falls between 1 September 2004 and 31 August 2005 the minimum and maximum amounts for claimants with an owner’s interest will be £3,400 and £34,000 respectively and £3,400 for all other qualifying interests.
Where the date of displacement falls between 1 September 2005 and 31 August 2006 the minimum and maximum amounts for claimants with an owner’s interest will be £3,800 and £38,000 respectively and £3,800 for all other qualifying interests.
Where the date of displacement falls between 1 September 2006 and 31 August 2007 the minimum and maximum amounts for claimants with an owner’s interest will be £4,000 and £40,000 respectively and £4,000 for all other qualifying interests.
Where the date of displacement falls between 1 September 2007 and 31 August 2008 the minimum and maximum amounts for claimants with an owner’s interest will be £4,400 and £44,000 respectively and £4,400 for all other qualifying interests.
Where the date of displacement falls between 1 September 2008 and 30 September 2014 the minimum and maximum amounts for claimants with an owner’s interest will be £4,700 and £47,000 respectively and £4,700 for all other qualifying interests.
Where the date of displacement falls between 1 October 2014 and 30 September 2015 the minimum and maximum amounts for claimants with an owner’s interest will be £4,900 and £49,000 respectively and £4,900 for all other qualifying interests.
Where the date of displacement falls on or after 1 October 2015 the minimum and maximum amounts for claimants with an owner’s interest will be £5,300 and £53,000 respectively and £5,300 for all other qualifying interests.
Where the date of displacement falls on or after 1 October 2016 the minimum and maximum amounts for claimants with an owner’s interest will be £5,800 and £58,000 respectively and £5,800 for all other qualifying interests.
Where the date of displacement falls on or after 1 October 2017 the minimum and maximum amounts for claimants with an owner’s interest will be £6,100 and £61,000 respectively and £6,100 for all other qualifying interests.
Where the date of displacement falls on or after 1 October 2018 the minimum and maximum amounts for claimants with an owner`s interest will be £6300 and £63,000 respectively and £6300 for all other qualifying interests.
Where the date of displacement falls on or after 1 October 2019 the minimum and maximum amounts for claimants with an owner’s interest will be £6400 and £64,000 respectively and £6400 for all other qualifying interests.
Where the date of displacement falls on or after 1 October 2020 the minimum and maximum amounts for claimants with an owner`s interest will be £6500 and £65,000 respectively and £6400 for all other qualifying interests.
Where the date of displacement falls on or after 1 October 2021 the minimum and maximum amounts for claimants with an owner`s interest will be £7,100 and £71,000 respectively and £7,100 for all other qualifying interests.
Where the date of displacement falls on or after 1 October 2022 the minimum and maximum amounts for claimants with an owner`s interest will be £7,800 and £78,000 respectively and £7,800 for all other qualifying interests in England.
Where the date of displacement falls on or after 1 October 2023 the minimum and maximum amounts for claimants with an owner’s interest will be £8,100 and £81,000 respectively and £8,100 for all other qualifying interests.
13.7 Amount of home loss payment - Wales
Where the date of displacement falls between 16 November 1990 and 31 August 2003 the minimum and maximum amounts for claimants with an owner’s interest will be £1,500 and £15,000 respectively and £1,500 for all other qualifying interests.
Where the date of displacement falls between 1 September 2003 and 31 August 2004 the minimum and maximum amounts for claimants with an owner’s interest will be £3,100 and £31,000 respectively and £3,100 for all other qualifying interests.
Where the date of displacement falls between 1 September 2004 and 31 August 2005 the minimum and maximum amounts for claimants with an owner’s interest will be £3,400 and £34,000 respectively and £3,400 for all other qualifying interests.
Where the date of displacement falls between 1 September 2005 and 31 August 2006 the minimum and maximum amounts for claimants with an owner’s interest will be £3,800 and £38,000 respectively and £3,800 for all other qualifying interests.
Where the date of displacement falls between 1 September 2006 and 31 August 2007 the minimum and maximum amounts for claimants with an owner’s interest will be £4,000 and £40,000 respectively and £4,000 for all other qualifying interests.
Where the date of displacement falls between 1 September 2007 and 24 November 2008 the minimum and maximum amounts for claimants with an owner’s interest will be £4,400 and £44,000 respectively and £4,400 for all other qualifying interests.
Where the date of displacement falls on or after 25 November 2008 the minimum and maximum amounts for claimants with an owner’s interest will be £4,700 and £47,000 respectively and £4,700 for all other qualifying interests.
Where the date of displacement falls on or after 10 December 2015 the minimum and maximum amounts for claimants with an owner’s interest will be £5,300 and £53,000 respectively and £5,300 for all other qualifying interests.
Where the date of displacement falls on or after 5 December 2016 the minimum and maximum amounts for claimants with an owner’s interest will be £5,500 and £55,000 respectively and £5,500 for all other qualifying interests.
Where the date of displacement falls on or after 4 December 2017 the minimum and maximum amounts for claimants with an owner’s interest will be £5,750 and £57,500 respectively and £5,750 for all other qualifying interests.
13.8 Amount of home loss payment - Scotland
The minimum and maximum amounts for claimants with an owner’s interest will be £1,500 and £15,000 respectively and £1,500 for all other qualifying interests (section 28 Land Compensation (Scotland) Act 1973).
13.9 Timetable
Where a claimant is entitled to a HLP it must be made on or before the latest of:
a) the date of displacement;
b) the last day of the period of three months, from the making of the claim; or
c) in a case where payment is based on market value of the property the day this is agreed or determined.
13.10 Advance payments on account of HLP
Such advance payments may be made at any time and must be made if the market value of the property has not been agreed or determined by the date of displacement or three months after the claim is made whichever is the later. Valuers should deal with requests for advance payments within six weeks of receipt.
For a claimant with an owner’s interest the amount will be 10% of the agreed market value or of the valuer’s assessment of market value if not agreed, subject to the minimum and maxim limits, with provision for adjustment either by payment of the balance by the acquiring authority or recovery of overpayment from the claimant following agreement of the market value.
13.11 Status of home loss payment
A HLP is not a head of claim but a separate statutory entitlement and thus does not form part of the compensation payable for the acquisition of an interest in a dwelling. Since 16 November 1990 valuers have been required to inform the acquiring authority of the market value of the property so that the authority can make the appropriate calculation of the amount of the HLP.
13.12 Estimates
Acquiring authorities should be alerted at the estimate stage to the extent of their possible liability for HLPs. When sufficient information is available valuers should detail in their reports the interest of the occupier and the market value of the occupier’s interest in each dwelling to be acquired when the interest is that of an owner occupier (a greater interest than that of a tenant with three years of a lease unexpired). Where the valuer considers that there is likely to be a material sum involved, relative to the total of the estimate, there is no objection to adding the following statement after the Opinion of Value:
‘The authority will be likely to incur Home Loss Payments under Part III of the Land Compensation Act 1973 (as amended) which, on present information, could amount to a sum in the order of £….’.
In other cases, the report should state that any liability for HLPs has not been included in the estimate.
13.13 Market value of claimant’s interest
The market value of the claimant’s interest in the dwelling should if possible be agreed with the claimant or the claimant’s agent (that is apportioned from the compensation payable in respect of any other heads of claim). Where this element comprises part of premises that combine business and domestic uses the residential element would need to be apportioned.
The market value is represented by the value of the claimant’s interest under the compensation code, ie the value assessed under Section 5(2) LCA 1961.
13.14 Reports of completed negotiations
Valuers’ reports to acquiring authorities should include a paragraph to the effect that:
‘For the purposes of calculating the amount of home loss payment in accordance with section 30 of the Land Compensation Act 1973, the market value of the claimant’s interest in the dwelling has been agreed/is assessed in the sum of £….’.
13.15 Entitlement to payment
It is the acquiring authority’s responsibility to determine the entitlement of a claimant to a HLP. Any recommendations as to the quantum of payment made by the valuer would be subject to the proviso that the acquiring authority must satisfy itself as to the claimant’s entitlement to payment.