We live in an era of infrastructure projects that can dwarf the mightiest of rural estates. Plans to develop nuclear reactors and high-speed rail links, or improve the National Grid and the road network, will change the character of an estate forever.

Benefits vs controversy

Of course, there is clearly a bigger picture. Improved services benefit the public, and attracting foreign investment is admirable. However, these projects can be damaging to the environment and are often controversial. The real financial benefit is to the energy, utility and transport businesses and the real cost is to those on whose land it is built.

These companies and the government go to great lengths to justify costs to the consumer, but there is rarely a mention of the afflicted landowner. After all, many of those who have to host major infrastructure on their land will not benefit directly from it. Going head-to-head with an enormous company over the acquisition of land, or negotiating ownership rights, can seem daunting.

Landowner implications

But it’s important for landowners not to be bullied, even though the acquiring company will almost always carry the status of statutory undertakers and enjoy the full suite of compulsory purchase powers. Indeed, for the landowner, the precise application of these rules will almost certainly result in a weaker commercial outcome, a slow process and an inability to significantly influence the physical impact of a major infrastructure project.

The most limiting aspect for a landowner through prevailing legislation is the ‘Pointe Gourde’ principle established through case law, but subsequently covered in the Land Compensation Act of 1961. The impact is that land taken for some projects, however financially attractive for the acquirer, has to be valued in the ‘no-scheme world’. Essentially, this often means existing-use value, i.e. farmland or agricultural value. Given that some of these projects are located at the UK’s geographical extremes, that might not amount to much. The complex detail in the assessment of land can be picked apart by specialists, and the landowner is left with a bleak picture, imposed by an acquiring authority flexing economic and political muscle.

At the negotiation table

The balance could not be more unjust. Finding ways to ensure landowners are not sitting ducks to the Pointe Gourde principle is how we can help to influence a more palatable long-term physical outcome. The key is to find ways of ensuring that negotiations take place outside the compulsory purchase order (CPO) arena. Often, negotiations begin before CPO powers for a scheme are in place, which can be beneficial for all parties as it is a time when financial or political objectives have not yet overtaken things.

Before sitting across the negotiating table, landowners should get advice from civil engineers and other specialists who understand the ‘scheme world’ the acquirer is interested in. This way, they can assess the true value of the land to a specific project. Fundamentally, they need to understand whether the acquirer really needs the land or interest in land, and what the specific financial consequences to them are if they don’t have it. In essence, this is a shift from valuing a piece of ‘farmland’ to it being a unique component that can secure deliverability of a project by a certain time.

Knowledge is power

This last word is vital, as we now become interested in valuing time rather than land to secure the best outcome. We then start to get a sense of the land’s true worth to a scheme and, through complex financial modelling, we can value time in terms of the cost to the acquirer of failing to deliver the project on schedule. This is a complicated process, but Strutt & Parker has a team of professionals who will trawl through documents, spreadsheets and contracts – and, importantly, structure the negotiating strategy for the landowner. Ultimately, it becomes dependent on courage, knowledge and an aspiration not to be bulldozed by corporate might that is used to working on a global platform. It’s rarely possible to stop a major infrastructure project, but it pays to seek the right advice.