Valuations for statutory compensation
Compulsory purchase…… Where a property is affected by a compulsory purchase order, for road, rail, aerodrome or inner-city redevelopment, the Chartered Valuation Surveyor needs to ensure that evidence gathered reflects the ‘no scheme world’ and is not tainted by ‘blight’. Otherwise compensation negotiated would be reduced because local market values may well have taken into account a ‘possible scheme’ long before the actual scheme is confirmed by government. For home owners and businesses compensation due will include ‘disturbance’ (costs flowing from the compulsory purchase order).
A valuation for statutory compensation is a valuation to assess how much would be due to a land or property owner who is to be dispossessed of their land or property due to a compulsory purchase order, or a valuation to assess the impact of a road, aerodrome, rail or other public infrastructure development nearby to their property, ie, the worsenment in terms of noise, vibration, pollution etc.. that would lead to its value rising less in the future than if the infrastructure scheme had not gone ahead, the technical term for this is ‘dimunition in value’ or ‘injurious affection’.
This area of valuation expertise covers 2 scenarios:
- Compulsory purchase – properties or land being bought up to make way for development
- Injurious affection – properties adversely affected (usually by infrastructure projects)
Compulsory purchase valuations… assess the compensation that should be payable to the landowner when a property or land is to be bought up ‘compulsory purchased’ to make way for infrastructure schemes such as road widening or high speed rail links, town centre improvements or perhaps demolition and regeneration of a housing estate. Sometimes this is the whole property, sometimes a piece of garden. There are special provisions to claim hardship if the proposed acquisition of part of the land of a property would render the property materially different and unattractive for the owner to continue to own or live in.
Compulsory purchase refers to the process whereby the acquiring authority is granted a compulsory purchase order which is approved by the government. Compulsory purchase powers then enable the acquiring authority to put together a larger parcel of land by buying up smaller properties to enable a bigger scheme to go ahead.
For residential property acquisitions…. the Chartered Valuation Surveyor’s job is to assess.
- the value of the property in a ‘no scheme world’, and
- a 10% enhancement known as a ‘home loss payment’ which applies where the property to be acquired is the land owners home,
- reasonable ‘disturbance costs’ – these are the costs of the acquisition being forced upon the current landowner. This heading will cover all the usual solicitors’ fees, valuation fees, removal costs, costs of modifying curtains and carpets for new premises, mail redirection costs. The Ringley Valuer will work very closely with you to predict all extra costs that are ‘reasonably foreseeable’ as a result of the imposed move.
For commercial compulsory purchase situations…. the Chartered Valuation Surveyor’s job is to assess
- the value of the interest held in the property by each party in a ‘no scheme world’, which can be the occupational lessee’s interest and the freeholders,
- likely loss of goodwill – compensation for the fact that when a business moves to a new location this may hit profits in the short term if some customers loose touch, and
- reasonable ‘disturbance costs’ – these are the costs of the acquisition being forced. This heading will cover all the usual solicitors’ fees, valuation fees, removal costs, costs of modifying display equipment, re-printing business stationery etc… The Ringley Valuer’s role will work very closely with you to predict all extra costs that are ‘reasonably foreseeable’ as a result of the imposed move.
Injurious affection …. for properties adversely affected by infrastructure works (road/rail/aerodrome schemes)
Here the Chartered Valuation Surveyor’s job is to assess the diminution in value (amount by which a property is now worth less because of the ‘works’. For example, if you have a house in a country overlooking fields where you can hear the birds and this is worth £x, should the HS2 high speed rail link be built at the bottom of your garden then it is likely that the property will be forever worth less due to the works.
For any compensation to be payable it has to be established that one of more physical factors exists, these include: noise, vibration, fumes and artificial lighting.
Usually the party carrying out the works will try to offer mitigation factors to reduce the amount of compensation that they might have to pay out, examples can be planting trees or physical high level fences to block out noise, using ‘quiet tarmac’ on roads to reduce noise, creating new banks and hills to shield properties.
The Valuer has to consider the impact of the scheme less the mitigation measures against the value of the property in the ‘no scheme world’. The difference in values is the diminution in value that the Valuer negotiates for the landowner.
Schemes that Ringley have been involved in:
Ringley have assisted hundreds of clients affected by the M20, A249, M25, M40 and A406 road widening and new road projects.
Involvement in inner city redevelopment has included the Marquess Estate in Islington N1 as well as around Greenwich and the Blackwall tunnel.