England and Wales Lands Tribunal

[2000] EWLands ACQ_59_1999 (03 March 2000)

ACQ/59/1999

LANDS TRIBUNAL ACT 1949

COMPULSORY PURCHASE – Compensation – dwelling house in dilapidated condition – comparable transactions – cost of works of repair – Housing Act 1985 s.17 and Acquisition of Land Act 1981 Parts II and III to Sched.2 – compensation £30,000.

IN THE MATTER of A NOTICE OF REFERENCE

BETWEEN ROBERT IAN COUPAR Claimant

and

LONDON BOROUGH OF NEWHAM Acquiring

Authority

Re: 12 Ridley Road, Forest Gate, London, E7.

Before: P R Francis FRICS

Sitting at: 48/49 Chancery Lane, London, WC2A 1JR.

on

25 February 2000

The claimant did not appear and was not represented.

Ian Colville of counsel, instructed by Gifty Edila, Head of Legal Services for the London Borough of Newham, for the acquiring authority.


 


DECISION

1. This is a decision to determine the amount of compensation payable by the London Borough of Newham ("the acquiring authority") to Mr. Robert Ian Couper ("the claimant"), the reputed owner of the freehold interest in 12 Ridley Road, Forest Gate, London, E7 ("the subject property") in respect of the compulsory acquisition thereof under the Newham (12 Ridley Road, E7) Compulsory Purchase Order 1998 ("the CPO").
2. At the hearing, Mr. Ian Colville of counsel called Mr. David Beament FRICS, Executive Property Adviser, London Borough of Newham, who gave valuation evidence for the acquiring authority. I was advised that Mr. Couper had not responded to any communications from the acquiring authority, or to the advertisements placed in the local newspaper in connection with this reference, and his whereabouts were unknown.
3. From the evidence presented to the hearing, I find the following facts:

3.1 The subject property comprises a late Victorian (c.1900) two-storey mid-terraced two-bedroom house located in the Manor Park area of Forest Gate, close to the City Cemetery and about 1 mile from each of Wanstead and Forest Gate tube stations. The property is constructed of brick under slate covered roofs, and has a gross external floor area of about 74.87 sq.m. (806 sq.ft.). It is vacant, and having been unoccupied for a number of years, is in extremely poor and dilapidated condition.

3.2 In exercise of its powers under s17 of the Housing Act 1985, the acquiring authority made the Newham (12 Ridley Road, E7) Compulsory Purchase Order 1998 on 20 May 1998, this being confirmed by the Secretary of State for the Environment, Transport and the Regions on 29 June 1998.

3.3 Notice of confirmation of the publishing of the Order was first published in accordance with s15 of the Acquisition of Land Act 1981 on 16 July 1998, and following a subsequent notice given on 10 September 1998, a General Vesting Declaration was made on 13 November 1998, and possession was taken on 15 December 1998 (the valuation date).

3.4 A Public Notice seeking information on the whereabouts of the claimant, in connection with this reference, was published in the Stratford Express on 21 August 1999, but no response was received.

4. Mr. Beamont is a chartered surveyor, and at the time of preparing his valuation (for which the groundwork and research had been undertaken by a colleague – Percy Sinfield ARICS) was Group Valuer, Valuation and Estates, for the acquiring authority. The report was dated 3 February 1998 and valued the property at £25,000, however, due to the rise in property values during 1998, he had revised his figure to £30,000 at the valuation date of 15 December 1998.His valuation had been based upon research into open market values of properties in good repair, and upon the results of a feasibility study, commissioned due to the fact that the property was falling into a state of considerable disrepair, in October 1997, to determine the extent and cost of necessary repairs.
5. Thomas and Cavalli, Chartered Building Surveyors, had found extensive structural decay, and it was considered necessary to demolish and rebuild the back addition, renew the timber ground floor and part of the first floors, provide for a new damp proof course and extensive re-plastering, re-covering to the roofs, renewal of all rainwater goods, internal and external joinery, gas and electrical services and drains. New kitchen and bathroom fittings were allowed for together with complete internal and external redecoration. The budget cost, to fully and effectively repair the property to a condition that would offer a further 30 year life, was estimated at £50,400 excluding VAT and fees. Mr. Beamont said that he had referred to the BCIS building cost tables, and had assessed that this figure would have increased by 4.3 per cent to £52,567 by the valuation date.
6. As to open market values, Mr. Beamont produced a schedule of comparables which gave details of seven properties in the vicinity that had been valued by the District Valuer in connection with the Council's Right to Buy scheme, following appeals by the tenants, and a further four that had been valued and not appealed. All of these related to three bedroom properties as, he said, evidence of comparable two-bedroom houses at around the relevant date had been impossible to find. He had therefore allowed an arbitrary reduction, in respect of the subject property, from the range of values of between £69,000 and £76,000 for the comparables, to a range of £65,000 to £70,000 for the subject two bedroom property, assuming it to be in good condition.
7. The properties upon which Mr. Beamont had relied were:

Right to Buy (Valuations accepted)

105 Dames Road, E13. c.1900 3 bed mid-terrace house. 105sq.m. £76,000 10/2/99

132 Wellington Road, E7. c.1975 3 bed end-terrace house. 81sq.m. £73,000 28/1/99

47 South Esk Road, E7. c.1900 3 bed mid-terrace house. 88sq.m. £75,000 20/1/99

38 Ismalia Road,E7. c.1870 3 bed mid-terrace house. 82sq.m. £73,000 4/1/99

Right to Buy (Valuations assessed on appeal)

24 Ham Park Road, E.15. c.1900 3 bed mid-terrace house. 120sq.m. £69,000 31/7/98

2 Tennyson Avenue, E.12. c.1900 3 bed end-terrace house. 106sq.m. £75,000 5/8/98

2 Wilmer Lea Close, E15. c.1960 3 bed mid- terrace house. 86sq.m. £75,000 25/8/98

90 Henniker Road, E15. c.1990 3 bed mid-terrace house. 82sq.m. £76,000 25/9/98

46 Leigh Road,E6. c.1935 3 bed mid-terrace house. 74sq.m. £71,500 27/11/98

4 Ranelagh Road, E6. c.1980 3 bed mid-terrace house. 72sq.m. £69,000 11/12/98

70 Tower Hamlets Road,E7. c.1975 3 bed mid-terrace house. 102sq.m. £75,000 1/2/99

All of these properties have gas-fired central heating.

8. Mr. Beamont said that deducting the estimated cost of repairs from an assumed good-condition value would give less than site value, but appreciated that, in reality, a purchaser will always pay more for the opportunity to carry out the works himself, to provide a home. No developers profit would need to be taken into account in such instances where the purchaser would be likely to be a private individual, and the fact that when the works were completed the total cost would be more than the ultimate value was something which did not deter buyers, especially in times of rising values. For these reasons he had assessed the open market value, at 15 December 1998, to be £30,000 in its unrepaired condition.
9. Whilst Mr. Beamont had not been able to provide any details of actual open market transactions, he produced sales particulars of a three bedroom, mid-terrace house in Ridley Road of a similar type to the subject property, that was being offered for sale in July 1998 at an asking price of £85,500, by A.J.Scotts, Estate Agents. He said that at the time, estate agents were "talking the market up" with high asking prices being quoted, and he did not think, in the light of all the other information he had gained from the District Valuer's office, this price was representative of open market value.
10. In response to a question from me as to why no evidence of actual open market sales was adduced, Mr Beamont said that despite the Council's best efforts, local agents had been unco-operative. This was because the Council was regularly seeking information in respect of a local market survey that it prepared, and agents, seeing no benefit from it, were unwilling to assist when comparables were being sought. Mr. Beamont said that he had tried to establish whether the Scott's property had been sold, but had been unable to do so.
11. It is unfortunate that no evidence is available of a sale of a house similar to the subject property, although the evidence relating to the agreed right to buy valuations, and those determined on appeal by the District Valuer is helpful in establishing a range of values appropriate at the time. Whilst I treat Mr. Beamont's assertions relating to the asking price for the three bedroom house in Ridley Road with some scepticism, especially considering the buoyant property market at the time, I am conscious of the fact that the estimated repair costs make no allowance for VAT, fees, or indeed interest on borrowed capital to fund the works. Thus, if Mr Mr.Beamont's assessment of the value of the subject property, in good condition, is a little pessimistic, that is counterbalanced by the additional costs that could be incurred by the purchaser in undertaking the repairs and modernisation.
12. It could be argued that a purchaser who chose to undertake a significant amount of the works himself might be able to achieve large savings against the estimates prepared by Thomas and Cavalli, and may therefore be prepared to pay more to buy the house in its current condition. However, the extent of works required, as submitted in evidence, especially when considering that the two-storey back addition needs to be completely rebuilt, is such that even if the value in good repair was, say, £75,000, and the costs of the works could be trimmed to, say, £40,000, a purchase price at the valuation date of £30,000 would still leave little incentive in terms of potential profit.
13. In the absence of any evidence from the claimant, therefore, I accept Mr. Beamont's valuation. The amount of compensation payable for the freehold interest in the subject property is determined at £30,000. The claimant's proper legal costs of transfer, if any, are to be paid in addition.
14. I make no order for costs.

DATED: 3 March 2000

(Signed) P R Francis FRICS