Compulsory Purchase Reform in Scotland

Closes 19 Dec 2025

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Chapter 8 - Compensation - Loss payments

People who are subject to compulsory acquisition and are entitled to claim compensation are referred to as ‘claimants’. Claimants are entitled to four principal elements of compensation:

  • The value of the land to be acquired
  • Injurious affection payments for the reduction in value of other land retained by the claimant
  • Disturbance payments for losses which are unconnected to the value of the land, such as removal costs and professional fees
  • Loss payments recognising the inconvenience and disruption caused by compulsory purchase

The last part of chapter 8 of the consultation paper deals with loss payments. These are an additional payment recognising the distress and inconvenience caused to those who are displaced as a result of compulsory purchase. The 1973 Act provides for two types: Home Loss Payments (HLP) and Farm Loss Payments (FLP).

86. Should the minimum period of residence necessary to qualify for a HLP (currently one year) be increased?

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HLP are paid where a person is displaced from a dwelling, including owner-occupiers and tenants. They are not paid to non-resident landlords. The person must have occupied the dwelling, as their only or main residence, for one year ending with the date of displacement.

If so, what should the period be, and why?

87. How should the amount of HLP be calculated?

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For an owner-occupier, the amount of HLP is 10% of the market value of the interest acquired. This is subject to a maximum payment of £15,000 and a minimum payment of £1500. In any other case (e.g. tenants) a flat rate of £1500 applies.

Scottish Ministers have powers to alter the minimum, maximum and flat-rate amount through secondary legislation.

We are interested in views on how HLPs are calculated. It is not clear that linking the amount of HLP to the value of the property is the best way of reflecting the distress caused by compulsory displacement - although any approach will be arbitrary to some extent. We have identified three options: 

  • Option 1 – Retain the current approach: 10% of market value subject to minimum and maximum amounts for owner-occupiers and a flat rate for others.
  • Option 2 – Flat rate: all displaced occupiers are entitled to the same fixed amount, regardless of tenure or property value. 
  • Option 3 – Graded rate: link the amount to length of occupation. 

Paragraphs 8.106 to 8.108 in the consultation paper set out the potential advantages and drawbacks of these options.

88. If a person is displaced from an agricultural unit as a result of compulsory purchase, should they be eligible for a loss payment regardless of whether they continue farming elsewhere?

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Where a CPO contains land which is, or is part of, an agricultural unit, those occupying the unit are entitled to receive a FLP where:

  • they are an owner, a crofter, or a tenant with a lease of one year or more
  • they are displaced from the land as a result of the whole or a ‘sufficient part’ of their interest being compulsorily acquired, and
  • not more than three years after the date of displacement they begin to farm another agricultural unit elsewhere in Great Britain

For these purposes, a ‘sufficient part’ is defined as not less than 0.5 hectares, although Scottish Ministers may specify an alternative area through secondary legislation.

These qualifying criteria mean it is possible for a person to be displaced and not be eligible for a FLP. We propose to remove the requirement to begin farming in another location within three years. We are also interested in views on whether there should continue to be a minimum area of land acquired.

89. Should there continue to be a minimum area of land (currently 0.5 hectares) below which a FLP is not payable?

If yes, what should the minimum area be?

90. Do you agree that we should move away from the current profit-based approach to calculating FLP?

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The amount of FLP under the 1973 Act is equal to the average annual profit derived from the agricultural use of the land acquired. The calculation is based on profits for the previous three years, with various deductions and qualifications. We think this should be replaced with a simpler and fairer approach. This might be based on the market value of the land, the area of the land, or a flat rate.

As with HLP, any mechanism that involves placing a monetary value on non-financial losses will to some extent be arbitrary. We are interested in views on what method of calculation might be most appropriate in the context of agricultural land – and whether there are reasons for taking a different approach from HLP.

91. If a new approach to calculating FLP is taken forward, which option would you prefer?

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  • Option 1 – Market rate: base the amount of FLP on a proportion of the market value of the land acquired.
  • Option 2 – Flat rate: all those displaced get the same amount, perhaps subject to a minimum size threshold.
  • Option 3 – Area-based rate: base the amount on the area of land and buildings acquired (calculated at a fixed rate per hectare and per square metre respectively).
92. Should loss payments be extended to other non-residential interests displaced as a result of compulsory purchase?

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Agricultural landowners may encounter particular difficulties as a result of compulsory purchase, being more difficult to relocate and potentially dependent on a specific area of land. However, owners of other businesses may also experience stress and inconvenience when displaced as a result of compulsory purchase. We are interested in views on whether a more general loss payment for non-residential land should be introduced, instead of or in addition to FLP.