Compensation for people displaced from their home

A person may be entitled to home loss payment if they are displaced from a dwelling on any land as a result of the:[1]

• compulsory purchase of the property

• making of a housing order in respect of the dwelling (that is prohibition order under Part 1 of the Housing Act 2004 or a demolition order)

• redevelopment of land or improvement of any dwelling on land previously acquired or appropriated by an authority possessing compulsory purchase powers and currently held by such an authority

• redevelopment or improvement by a registered social landlord

• making of an order for possession because the landlord (in the case of a secure tenancy) intends to demolish or redevelop the dwelling or carry out extensive work, or the area is to be sold and redeveloped[2]

A person does not qualify for a home loss payment unless they were in occupation of the dwelling as their only or main residence throughout a one-year period ending on the date of displacement, and that occupation must be as a result of an interest or right in the property.[3]

Interests that qualify are:

• any interest in the dwelling

• a right to occupy the dwellings as statutory tenant or under a restricted contract

• a right to occupy the dwelling under a contract of employment

• a right to occupy the dwelling under a licence where either it is a right to occupy as a protected occupier, or the statutory provisions relating to secure tenancies apply to the licence, or the licence is an assured agricultural occupancy, or where the statutory provisions relating to introductory tenancies apply to the licence

Where a spouse or civil partner has a statutory right of occupation under the Family Law Act 1996, they can claim home loss payment where the other spouse is entitled to it but is no longer resident in the home.[4]

A person occupying at the date of displacement, and who has at that time a qualifying interest in the property, is entitled to add to the period of occupation any time when they were occupying the dwelling as their only or main residence but without a qualifying interest.

Alternatively, if the applicant has been resident with a legal interest for less than a year, any period preceding this occupation during which some other person occupied the dwelling as their only or main residence with a qualifying interest can be added. For example, a spouse or civil partner who has succeeded to the statutory tenancy of a deceased spouse or civil partner, or a child who has succeeded to the tenancy of a parent is entitled, but a trespasser is not.[5]

In the case of compulsory purchase, if the person leaves the dwelling prior to the date that the authority is authorised to acquire it, they lose the entitlement to home loss payment.[6]

In a case where a compulsory purchase order was made against a property, the claimant moved out to act as a live-in carer to her ill mother. Her challenge to the order, and her application for home loss payment was dismissed on appeal because, on the facts, she had not moved out 'in consequence of' the compulsory acquisition of the property.[7]

Home loss payment is only payable where a displacement is compulsory.

Where tenants were told they would have to move because of improvements and that formal requirement was not withdrawn before displacement, the tenants would be entitled to home loss payment, even if, by the time of displacement, the improvement works were no longer going to proceed. A subsequent change of mind by the authority would not affect entitlement.[8]

A voluntary displacement counts as compulsory if a tenant has not actually been forced to move but moved voluntarily because it was believed displacement was inevitable.

In one case where a landlord had not yet secured funding for redevelopment following a demolition order and the tenant moved out in the belief that displacement was inevitable, the court found that the tenant's removal was in consequence of the intended development and therefore was not voluntary.[9] It was important to establish a causal link between the displacement and one of the grounds under which home loss payment may be made, and the test was whether the removal is 'in consequence' of redevelopment.

The displacement must be of a permanent nature.[10] There may be cases of permanent displacement where a person returns to a dwelling but the works are so extensive that they cause the dwelling to lose its original identity. An example of this was where the property had been reduced from three bedrooms to one, the separate bathroom and lavatory had been merged into one room, the address and entrance had been changed and the total floor area of the flat had been reduced.[11]

Where a person entitled to a payment dies before making a claim, any person who lived in the dwelling as an only or main residence for at least one year before the date of displacement can make the claim in the deceased person's place.[12]

Claims must be made within six years of the date of displacement.[13]

Claims should be submitted to the acquiring authority in writing, but there is no prescribed form.[14] Claims must be accompanied by whatever information is necessarily required by the authority.[15]

Payment must be made within three months following the date of the claim, on the date of displacement, or on the date the market value has been agreed or finally determined, whichever is later.[16] If the claimant has an owner's interest, the authority may make the payment in advance.

A home loss payment is designed to compensate people for the distress and inconvenience of having to move home at a time not of their choosing.

Owners are entitled to receive 10 per cent of the market value of their home, up to a prescribed maximum amount. Other applicants (including local authority and private tenants) are entitled to a prescribed flat rate payment.

The prescribed amounts are revised from time to time and depend on: [17]

• when the person is displaced from their home

• whether the displacement occurred in England or Wales.

Owners who dispute the valuation and amount of home loss payment can be referred to the Upper Tribunal (Lands Chamber)[18] but any dispute as to entitlement will be resolved by the courts, for example through judicial review. There is no statutory mode of appeal.[19]

Although section 29 of the Land Compensation Act 1973 is silent on the right of a landlord to set-off arrears from a home loss payment, it has been held that if there was a connection between the parties' claims, an equitable set-off could be made and there would be no injustice in allowing a landlord to set-off, for example, rent arrears from the tenant's home loss payment.[20] It is unclear whether the same would apply to a tenant of a registered social landlord, where the registered social landlord is providing the home loss payment.

If an occupier has lived in the property for less than one year but has a legal interest and occupies the property as their only or main residence at the date of displacement, they may be entitled to a discretionary payment, not exceeding the amount of the mandatory payment.[21]

A caravan dweller can also apply for a home loss payment, on similar terms to those above, if they are displaced from a site.

They are only entitled to a payment if there is no suitable alternative site available on which to station the caravan.[22]

The High Court held that although a similar requirement did not apply to those displaced from bricks and mortar accommodation, the difference in treatment was objectively and reasonably justified and was not discriminatory under article 14 of the European Convention on Human Rights.[23]

Disturbance payments are made to compensate a residential occupier for reasonable expenses in moving from the house or land. People who do not qualify for a home loss payment, for example because they do not satisfy the residence requirement, may be entitled to a disturbance payment.

The situations in which a disturbance payment can be made are broadly the same as those for home loss payments. The main difference is that any acquisition of land by an authority with compulsory purchase powers is sufficient; the acquisition itself need not be compulsory.[24] Qualification is cumulative and occupiers may be entitled to both home loss payments and disturbance payments.

Provisions on the permanence of the displacement are the same as for home loss payments. Any acquisition by an authority possessing compulsory purchase powers suffices for entitlement; the acquisition itself does not need to be compulsory. The provisions use the term 'house or building' not dwelling, which is the term for home loss payments.

Disturbance payments can be paid to someone who is in lawful possession of the land. Lawful possession does not include lodgers or those with merely a licence to occupy.

Eligibility for disturbance payments is also affected by the reason for the displacement. Where the displacement is due to acquisition by a local authority possessing compulsory purchase powers, disturbance payments are only payable where the applicant is not entitled to compensation through any other Act. This does not include home loss payments, which are payable at the same time.

Where displacement is due to a housing order, resolution or undertaking, no disturbance payment can be made if compensation is payable under section 584A of the Housing Act 1985. This compensation is available to owners of property subject to a Closing or Demolition Order so this exception will only apply to owner-occupiers.

Even if there is no entitlement, local authorities have discretion to make a payment by way of compensation for disturbance.[25]

Disturbance payments cover reasonable expenses incurred by the entitled person during moving.[26] People who are displaced from properties that have been adapted for disabled people are entitled to the comparable cost of those modifications.[27]

The meaning of reasonable expenses has been examined in the courts. It has been held that they refer to expenses that relate strictly to the move, and expenses reasonably incurred as a direct and natural consequence of the displacement.[28] Redecoration expenses, re-connection charges and redirection of mail are likely to be allowed.[29] Claiming for carpeting because carpets from a former dwelling do not fit may also be allowed (although not in Nolan, where rose bushes lost during the removal were allowed).[30]

Some local authorities only allow payments for soft furnishings such as carpets, but exclude 'hard' items such as fixed beds or fitted wardrobes that cannot be moved to the new home. This is possibly because in Nolan new kitchen cupboards that had to be bought because those in the former dwelling could not be removed were not allowed. Each case must be treated on its own merits.[31]

Disputes concerning the amount of disturbance payment can be heard by the Upper Tribunal (Lands Chamber).[32] It cannot determine whether there is an entitlement to a payment in the first place.[33]

In a case where an applicant failed to mitigate losses by refusing to accept a ground-floor local authority flat and moved into temporary accommodation when the authority had made a Closing Order on the landlord, there was no entitlement to compensation for losses while they were in the temporary accommodation.[34]

A person might be entitled to rehousing by a local authority if they are displaced from residential accommodation by either:[35]

• a prohibition order

• a demolition order

• compulsory purchase

• redevelopments or improvements after the land was compulsory purchased

The local authority only has a rehousing duty if suitable alternative residential accommodation on reasonable terms is not available to the displaced person.

Find out more about rehousing when someone is displaced because of poor conditions.