Compulsory purchase OF PROPERTIES – comparative study of polish and UK’s Solutions

1. European Real Estate Society 19th Annual Conference 13th-16th June 2012 Compulsory purchase OF PROPERTIES – comparative study of polish and UK’s Solutions Prof. dr hab. inż. Sabina Źróbek, dr inż. Marek Walacik The University of Warmia and Mazury in Olsztyn, Poland Richard Grover Oxford Brookes University, UK

2. The central question • Poland and UK are both members of the European Union • Poland and UK are both members of the Council of Europe and signatories to European Convention on Human Rights • Very different past histories – UK as a liberal democracy; Poland as socialist state until 1990 • Have they now similar or harmonised systems of compulsory purchase? • Land policy in EU is a matter of national competence – cannot be if differences in protection of property rights influence free movement of capital

3. Timing of question • Poland is joint host to EURO 2012 – major investment in transport infrastructure and sporting facilities • UK host to 2012 Olympics - major investment in transport infrastructure and sporting facilities and commitment to regeneration legacy • These cannot be achieved without use of compulsory purchase

4. Euro 2012 & Olympics investments Roads Stadiums Railways Airports Legacy projects

5. A framework for compulsory purchase (FAO 2012) • Expropriation should only take place where required for a public purpose • Legitimate tenure rights should be respected through just compensation and a fair valuation of losses. • The planning and processes for expropriation should be transparent and participatory • Implementing agencies should have the necessary human, physical and financial resources.

6. A framework for compulsory purchase (FAO 2012) • Where properties acquired are no longer needed, the original right holders should have the opportunity to reacquire them. • All parties should endeavour to prevent corruption, • Evictions should be carried out in a manner consistent with human rights.

7. Structure for comparisons • The circumstances under which compulsory acquisition can take place,. • The degree of openness and transparency in the compulsory purchase process, • The persons with interests that enable them to lodge objections to the decision and to claim compensation. • The losses for which compensation can be claimed and how these are valued. • The efficiency of the compulsory acquisition process

8. Legal basis for land acquisition – statutory-based systems BASIC ACTS POLISHCONSTITUTION 21st article THE REAL ESTATE MANAGEMENT ACT UNCODIFIED CONSTITUTION DIFFERENT ACTS FOR DIFFERENT PUBLIC PURPOSES

9. Public purposes Facilities of watersupply, gas,electricity Boarderprotection Environmentalprotection PUBLIC PURPOSES The act of real estate management provides an open list of the major public purposes Culturalheritage Cementaries Roads and airports Others

10. Public purposes Social well-being PUBLIC PURPOSE Economic well-being Environmental well-being

11. Approval of compulsory purchase order Distinction between acquiring and confirming authority Distinction between acquiring and confirming authority Right of objectors to have objections heard in public by impartial body Right of objectors to have objections heard in public by impartial body Owners, perpetual usufruct holders Owners, occupiers, tenants can object

12. The ways of land acquisition PRIVATE & SGU LAND OR RIGHTS PRIVATE LAND OR RIGHTS - civil agreement - expropriation - virtue of the law • Private treaty • Notice to treat and compulsory acquisition PUBLIC OWNER PUBLIC OWNER

13. Expropriation compensation rules: WHEN/WHEREISTHECOMPENSATIONDETERMINED EXPROPRIATIONDECISION/ COMPENSATIONDECISION Interests fixed when notice to treat served Value at date of acquisition BASIS OF COMPENSATION MARKET VALUE / COSTVALUE (if no market) Market value If no market value, equivalent reinstatement EXCEPTIONS / Additional Compensation LOST PROFITS (FOREST STANDS, AREAS COVERED WITH TREES, PERENNIAL PLANTATIONS, ANNUAL CROPS) 5% - residential, 2500 Euro Disturbance costs Injurious affection Basic, occupier’s & home loss payments Professional fees

14. Market value – to what kind of land use? LAND USE CHANGE A B The kind of land use of the date ofexpropriation The kind of land use afterexpropriation Real estate value A > real estate value B Compensation = real estate value A (existing use value) Real estate value B > real estate value A Compensation = real estate value B (development value) Appeal to a general court if no agreement on compensation, advised by expert witness appointed by court

15. Market value • Market value in highest and best use • Includes planning and other consents not acted upon • Includes consents that would have been granted • Includes “hope” value • Setting off if compulsory acquisition increases value of other land not taken • Appeal to Upper Tribunal (Lands Chamber) if no agreement on compensation – specialist land and valuation court

16. Differences in compensation • Market value in Poland is not highest and best use but existing use or use for public purpose • No setting off in Poland – in UK this can disadvantage those losing property compared with their neighbours • UK claim actual disturbance costs and not fixed sum • Professional fee costs not recoverable in Poland • Poland uses cost method of valuation if no market value – UK equivalent reinstatement

17. Conclusions • Poland and UK have had different histories of use of compulsory purchase • Purposes and processes are now similar but UK less restricted in what public purpose is • Similar approaches to compensation but systems do not produce identical results in all circumstances • Harmonisation of systems rather than being identical