Compensation payments

Home loss payments compensate for the upheaval and personal upset caused as a result of a compulsory removal of occupiers (including home owners and tenants) from their homes.

In order to qualify for a home loss payment, an occupier must satisfy all of the following tests:

• S/he must have lived in the house for a certain period of time [1] (from 16 November 1990, one year) ending with the date of removal.

• The move must be a permanent one.

• The occupier must be one of a number of types of occupier. These include a contractual tenant, a statutory tenant, an employee in a tied house, a spouse with occupancy rights, [2] and a person with 'any interest in the dwelling'.

Home loss payments can be paid where the displacement is caused by:

• compulsory acquisition of the property by a body with compulsory purchase powers

• demolition, improvement or closing order under the Housing (Scotland) Act 1987

• improvement to or redevelopment of the land by an authority with compulsory purchase powers

• improvement or redevelopment by a housing association

• demolition of a dangerous building

• for Scottish secure tenants only, where a landlord has a court order for recovery of possession and suitable alternative accommodation is available to the tenant.

If the displacement is the result of compulsory purchase, the applicant is not entitled to a home loss payment if s/he leaves the property prior to the date on which the authority is authorised to acquire it.

Home loss payments are only payable when the displacement is compulsory. In some cases a voluntary displacement will count as compulsory if a tenant has not actually been forced to move but moved voluntarily because s/he believed displacement was inevitable, In Follows v Peabody Trust [3] although the landlord had not yet secured funding for redevelopment following a demolition order, 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 was therefore not voluntary.

The displacement must be of a permanent nature. However, it has been held that there may be cases of permanent displacement where a person returns to a dwelling and where the works are so extensive as to cause the dwelling to lose its original identity [4] for example, although 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, it was still held reasonable for the local authority to decide that the tenant was occupying substantially the same home.

To be entitled to a home loss payment, an applicant must have an 'interest in the dwelling'. This means that tenants and owner-occupiers are entitled to a payment but others may also have an entitlement. These include:

• those with a right to occupy the dwelling as a statutory tenant, or by virtue of a 'Part VII contract'

• those with a right to occupy as statutory assured tenant within the meaning of the Housing (Scotland) Act 1988

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

• persons with subsisting occupancy rights in the dwelling of a spouse under the Matrimonial Homes (Family Protection) (Scotland) Act 1981. As long as her/his occupancy rights continue and her/his spouse is not also living in the house, s/he will be able to claim a home loss payment on the basis of her/his occupancy rights. S/he will not, however, be able to claim an owner's interest for this purpose. Although occupancy rights under the 1981 Act may be granted by the court to the non-entitled partner of a cohabiting couple, the specific reference to 'spouses' in the Matrimonial Homes (Family Protection) (Scotland) Act 1973 would appear to exclude cohabitees from consideration for compensation

• in limited circumstances, successors to a property; if someone was entitled to receive a home loss payment but died without claiming it, their successor can claim the payment. The successor has to be over 18 and have lived in the house themselves, as their only or main residence, for at least a year before the date of removal. They must also be entitled to benefit from the deceased's estate in terms of the will or succession laws.

From 16 November 1990, owners are entitled to receive 10 percent of the market value of their home, with a minimum payment of £1,500 and a maximum payment of £15,000. Owners who dispute the valuation can go to the Lands Tribunal. Other applicants will receive a flat rate of £1,500. [5]

It should be noted that where the tenant of a local authority is in rent arrears, the arrears may be offset against the home loss payment.

Claims for home loss payments must be made in writing to the local authority, housing association or other body responsible for the compulsory move, accompanied by whatever information is required by that authority. Often there is a standard claim form. Applicants must make claims within five years of the removal date.

Payment should be made by the date of removal or within three months of making the claim, or, for owner-occupiers, the date when the valuation of the house is agreed, or whichever date is the latest.

The paying authority may make a discretionary payment to an applicant if s/he fails to meet all the criteria. For example, if the applicant has not lived at the property for more than a year then the authority may still make a payment. It should be noted that such payments are very rare.

A caravan dweller can also apply for a home loss payment on similar terms to those above if s/he is displaced from a site and there is no suitable alternative site available to her/him on reasonable terms on which to station the caravan.

Disturbance payments are made to compensate an occupier for reasonable expenses in removing her/him from the house from which s/he is displaced. Those 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, except for a move caused by an eviction order.

• In order to qualify for a disturbance payment, an occupier must have been in lawful possession of the house at the relevant date, and the move from it must be a permanent one.

Disturbance payments can be paid where the displacement is 'in consequence of':

• compulsory acquisition of the property by a body with compulsory purchase powers

• demolition, improvement or closing order under the Housing (Scotland) Act 1987

• improvement to or redevelopment of the land by an authority with compulsory purchase powers

• improvement or redevelopment by a housing association

• demolition of a dangerous building.

To qualify for a disturbance payment, an occupier must have been in lawful possession of the house at the relevant date. The relevant date will be:

• the date of publication of the compulsory purchase order or the date the order was drafted

• the date the local authority makes the demolition, improvement or closing order

• the date the occupier is required to leave if the building is to be demolished under the Building (Scotland) Act 1959

• the date of the agreement to move, if the building is to be improved or redeveloped.

If the displacement is the result of compulsory purchase, the applicant is probably not entitled to a disturbance payment if s/he is entitled to compensation under another provision.

Disturbance payments cover the 'reasonable expenses' of moving of the entitled person. People who are displaced from properties that have been adapted for disabled people are entitled to the comparable cost of those modifications.

The meaning of 'reasonable expenses' was looked at in the case of Glasgow Corporation v Anderson. [6] There it was held that reasonable expenses were those which were reasonably incurred due to the move, in addition to the cost of the removal itself. Thus there is not a closed list of items that can be claimed, but those commonly allowed include:

• removal expenses

• redecoration expenses (which should be to a similar standard as the old, which may mean that the payment will not meet the applicant's actual costs)

• reconnection charges

• redirection of mail

• carpeting (either uplifting and refitting, or replacement).

Some local authorities have flat rate payments, make payments in kind or carry out work for the applicant. Calculation of the amount payable can be complex, given that the applicant will not get 'new for old'. Advisers should advise clients not to buy new items before checking entitlement and that all receipts should be kept.

There is no formal time limit when making a claim for a disturbance payment, but in terms of the Prescription and Limitation (Scotland) Act 1973 it is probably five years. It is important to check with the local authority whether it has instituted a form-filling procedure, but in any event a claim in writing should be made as soon as possible after making the expenditure.

If there is a dispute with the local authority over a home loss or disturbance payment then which court the applicant goes to depends on what the dispute is about. If the dispute is about the amount of the payment, the applicant goes to the Lands Tribunal. If the dispute is about entitlement to a home loss or disturbance payment, the applicant goes to the sheriff court. In the case of the limited option of judicially reviewing the refusal of a discretionary payment, the applicant would go to the Court of Session. Legal Aid may be available for these actions.