Commercial practices can be defined as it is directly connected with the promotion, supply and sales of a service or a product to or from a consumer whether before, during or after a commercial transaction in relation to the goods. In various nations, there are some compulsory purchases and compensation guidance develops with the time. It explains the procedures that acquiring authorities that should be must go through to obtain powers to acquire commodities. With the help of this, it becomes easy to point out those areas where the owner of the product or service can affect (Compulsory Purchase Orders, 2017). The present study is based on commercial practices and to understand this terminology, a case study is taking into consideration.
As per the given scenario, it determines that a local authority wishes to provide a site to its joint owner of a small local shopping center in response to upgrades by other centers in neighboring boroughs. This work will be a part of a general modernization program. The acquisition of land could include a separate small site for highway improvements and accommodation works. Still, the property not already owned by the local authority and it has included several areas. Objectives that will be highlighted under the report are whether a Compulsory Purchase Order i.e. CPO is the best method to proceeds to acquire land or not, political issues that needed to mitigate and estimation of when the land will be available for the scheme.
1. Whether a CPO is the best way to proceed and whether the scheme could be delivered by acquiring the properties by agreement, or a combination of both
Compulsory Purchase Order or COP is a legal function in the UK as well as in Ireland which permits certain bodies that need to acquire a property or land to do so without the consent of its owner. This may be forcefully applied if a planned development is happening for the betterment of the public. As per the given case study, it has determined that local authority wishes to support and bring the development of a town center for public welfare (Compulsory purchase orders and time limits, 2017). It has required acquiring land so that a small local shopping center can be developed for communities’ convenience. This project has considered a part of a general modernization program.
The proposed acquisition could include some additional works such as highway improvements and construction of accommodation works. The accommodation work strategies have adopted by local authorities because of to mitigate potential compensation claims and deal with possible objections that could be raised because of adopting the COP method. There has a list of properties that have still not owned by the Local Authority. These are such as freehold pair of semidetached Victorian houses, an owner-occupied freehold shop with upperparts, in a terrace the remainder of which is already owned by the local authority, a vacant freehold yard of 2,000 sq. Ft and a narrow parcel of freehold land of 500 sq. ft, half of which will not be needed long term (Denyer-Green, 2013).
In the context of acquiring the properties as per the agreement, there are three options in front of the CEO of Local Authority. These are either go with CPO or adopt the scheme method or combine both concepts to acquire the proposed land for the development of the town. With the application of CPO, the CEO has able to assemble the land needed for the betterment of the local communities and has brought social and economic changes (Christophers, 2010). It has helped Local Authority to remove ownership of substandard properties from owners who have unable to sell them or not taking interest in selling their land. Along with this, it has assisted in acquire the property which has poorly and badly managed or poor condition housing for residential use that has marked as a risk for quality of life for the other people.
On the other hand, in the agreement, the CEO of Local Authority has planned to develop some accommodation facilities for those owners whose properties are coming under the acquire land for shopping center development. In addition, some amount or market value of the lands or properties or possession of building or shop can be given by Local Authority to the owners after starting of the modernization program (Shapely, 2013).
On the basis of the above discussion, it has suggested to CEO of Local Authority that they have to adopt a combination of CPO and agreement idea. With the help of this, he can acquire the properties of various owners for the recent plan. For example, by using CPO, Local authorities can provide accommodation to those owners whose lands, building or other properties come under the area of small shopping center site (Jones and Evans, 2013).
This strategy will reduce potential claims and other objections by the local communities of those areas at the time of acquiring of lands. With agreement idea, the CEO of Local Authority can come under the agreement with owners of buildings or lands to acquire the site. Under this method, the local government body can give possession of the shop or authority to become a shareholder in the shopping mall project. Therefore, the combination of CPO and agreement with owners, the scheme can be delivered by Local Authority by acquiring the properties (German, Schoneveld and Mwangi, 2013).
2. A single figure representing the likely total cost of acquisitions within the CPO area
As per the given case study, it has been determined that there are some properties which have still not owned by Local Authority and it has comprised:
- A freehold pair of semidetached Victorian houses.
- A vacant freehold yard of 2,000 sq. ft.
- A narrow parcel of freehold land of 500 sq. ft, half of which will not be needed long term.
In this context, a single figure that can represent the likely total cost of acquisitions within the CPO area is as follows:
A freehold pair of semidetached Victorian houses
£197,168*2 = £394336
A vacant freehold yard of 2,000 sq. ft
A narrow parcel of freehold land of 500 sq. ft, half of which will not be needed long term
As per the above table, the valuation of lands that will cover under CPO has based on assumptions. Under the acquisition of area for shopping mall, three sites have covered in CPO. These are pair of semidetached Victorian houses, vacant freehold yard of 2,000 sq. ft and narrow parcel of freehold land of 500 sq. ft. On the basis of by seen the valuation of land prices in the UK property industry, it has assumed that the market value of pair of semidetached Victorian houses will be £394336, vacant freehold yard of 2,000 sq. ft area has contained £20,0000 market value and narrow parcel of freehold land of 500 sq. ft has £50,000 valuation. By considering these values, from the calculation, the total costs of acquisitions within the CPO area will £644,336.
3. For financial planning purposes, the most likely phasing of the funding required
Financial planning has an important part of the movement to implement the various strategies in the favor and benefit of the public. With the help of this, it becomes easy to determine financial position and condition of the country, build the case for action, develop a mix of strategies, build trust with citizens and give a new development to the nation (Why is Regular Long-Term Financial Planning Important? 2017). In the case of Local Authority which wants to acquire land for constructing a shopping center. To avoid the compensation claim and objection of the people, it has decided to make an agreement with the owners of the land to acquire the place to carry out the project.
In the case of the total cost of acquisitions within the CPO area, it has contained a huge amount that Local Authority has to be paid to the owners. In this context, to grant funding for the whole financial planning process of the project, the CEO of Local Authority can arrange funds from different sources. By taking a loan from central government, Regionally Distributed Central Government Funding, Local Government Funding, Lottery Funding, Grant-Making Trusts, grant by companies, income generated from taxes and other sources, raising money from the public by issuing shares, etc (Sources of funding, 2017)
4. Political issues that may need to be given consideration for mitigation and briefing of the Council’s press office
As per the given case study, it has been clear that the Local Authority wants to support and development of a town center. For this, a small local shopping center has developed in response to upgrades by other centers in neighboring areas. This project has come under a general modernization program that has contained some additional work activities (Wolford, Borras, and et.al., 2013). These are highway improvements and accommodation works, car parking developments, etc. To acquire the different lands for the following project, the Local Authority has adopted CPO and agreement concepts to deal with mitigate potential compensation claims and deal with possible objections.
During this process, it may be possible that some political issues occur. In this context, it may be possible that other government parties rise they're voiced against Local Authority. They have influenced the people to do not sell or give possession of their lands and building to the government. The reason for doing this kind of activity by other political parties is to take personal advantages (Tsikata and Yaro, 2011). On the other hand, it may be possible that the national government change CPO regulations. If this political issue happens then it may be possible it makes the process of land acquisition from this procedure. These are the two major political issues that may need to be given consideration for mitigation and briefing of the Council’s press office by CEO of Local Authority.
5. An estimate of when the land will be available for the scheme
By considering the various political issues and potential compensation claims as well deal with possible objections, it has determined by the CEO of Local Authority that the land for construction of the shopping mall will be available for the scheme after 10 months. The reason for such long duration is the process of CPO has contained various stages (Olofsson, Foody and et.al., 2014). Along with this, the entire procedure will take time to clear compensation claims and solve the issues that rose by owners of the land.
Along with this, to find the current and right valuation of areas will take a long time. To grant the funds for giving owners of building, houses and lands, CEO of Local Authority may take sufficient time to deal clear and complete all formalities. On the other hand, to get possession of various sites will also take time. So, to complete all these works, it may be possible that the land will available for the scheme after 10 months (McCarthy, Vel, and Afiff, 2012).
From the above research, it can be concluded that the Compulsory Purchase Order has forced sales of a property to the council by the Secretary of State. It has an essential tool to use as a means of assembling land with the aim of delivering social and economic changes in the community. This has contributed to urbanization and the revitalization of societies. Under this method, the council has removed the ownership of the person from properties who has unwilling or unable to sell his property or has not able to effectively manage them.
As per the given case study, it has determined that the Local Authority has planned to develop the town by constructing the shopping mall and other additional construction work. CEO has adopted CPO and agreement so that the scheme can be delivered by acquiring the properties. For grant funding for the following project, Local Authority has taken funds from different sources. At the time of acquiring the land for the plan, some political issues have faced by the CEO. The site for the scheme has available after 10 months of completion of all kind of work.
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- Denyer-Green, B., 2013. Compulsory purchase and compensation. Taylor & Francis.
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