A local authority wants to substantially upgrade the main access to an industrial estate for public purposes. A Compulsory Purchase Order (CPO) is being served to an industrial unit sited at the entrance to the estate where part of its land will be acquired. A tenant occupied the industrial unit seven years ago on a 15-year full repairing and insuring lease with five-year upward-only rent reviews. The current rent is £120,000 per annum. The (no scheme world) market rent for the whole industrial unit is estimated to be £150,000 per annum. The market rent for the retained part of land after severance is £90,000 per annum. Injurious affection caused by carrying out of the CPO will reduce the market rent of the retained land to £80,000 per annum, but it is estimated that its market rent will rise to £100,000 per annum once the CPO works are complete.

(a) Assess the compensation on the landlord and tenant’s interests affected by the CPO.

(b) Compare and contrast the concepts of severance and injurious affection and discuss why these are important in the process of making appropriate valuation consideration for CPO.

(c) Discuss any other heads of claim under which the landlord and tenant might be eligible for compensation.