England and Wales Lands Tribunal

 


Fairhold Ltd v St Helens Metropolitan Borough Council [2005] UKLands ACQ_5_2004 (01 August 2005)

ACQ/5/2004

LANDS TRIBUNAL ACT 1949

COMPENSATION – compulsory purchase – houses in disrepair – owner of intermediate long leasehold interest not responding to CPO - value – comparable transactions – Land Compensation Act 1961 Part 1 - compensation awarded £2

IN THE MATTER of a NOTICE OF REFERENCE

BETWEEN FAIRHOLD LIMITED Claimant

and

ST HELENS METROPOLITAN BOROUGH COUNCIL Acquiring

Authority

Re: 167-179 Crow Lane West,

Newton-le-Willows, Merseyside

Tribunal Member: P R Francis FRICS

Determination without an oral hearing under rule 27 of the Lands Tribunal Rules 1996

DECISION

1. This is a reference for the determination of the compensation to be paid by St Helens Metropolitan Borough Council ("the acquiring authority" or "the council") to Fairhold Limited ("the claimant") for the ground leasehold interests in 167–179 (odds) Crow Lane West, Newton-le-Willows, Merseyside ("the subject properties"). The notice of reference was made by the council on 18 December 2003 due to its failure to elicit any response from the claimant in connection with the CPO proceedings.
2. The determination is made without an oral hearing under the provisions of rule 27 of the Lands Tribunal Rules 1996, and in so doing I rely upon the proof of evidence of David James Scott MRICS, a former Estates Officer with the council produced on 4 August 2004, together with the supporting appendices and documentation and a supplementary report dated 20 July 2005 of Paul Martin Brown MRICS, a principal surveyor at the council. From that evidence, I find the following facts.
3. The subject properties comprised 6 adjoining houses in a longer terrace of properties lying on the south side of Crow Lane West, a residential area close to Earlestown town centre, and were in the Earlestown Renewal Area. They were in a state of considerable disrepair and had suffered from structural settlement. Following an inspection by the council under the provisions of Schedule 9 of the Local Government and Housing Act 1989 and in accordance with the Department of the Environment Circular 17/96, it was concluded that the properties were irredeemably unfit for human habitation, and had come to the end of their useful life. The properties were located in a Clearance Area, and the council considered the site to be suitable for redevelopment for housing purposes. In that regard it resolved to make made the St Helens (Crow Lane West, Newton-le-Willows) Compulsory Purchase Order 2000 which was confirmed by the Secretary of state for the Environment on 21 August 2000.
4. Notice to Treat was served on 17 April 2001 and Notice of Entry was served on 18 April 2001, with possession taken shortly thereafter. The council has subsequently acquired the freehold reversionary interest and the sub-leasehold interests in the subject property. The claimant has an intermediate ground-leasehold interest for a term of 999 years from March 1877 with provision to collect ground rents from the underlessees of the six properties totalling £8.25 per annum.
5. Mr Scott produced details relating to the acquisition of the freehold reversionary interest in the properties. The rental income received by the freeholder from the claimant was £8.08 per annum and the value agreed with the freeholder was £90, which equates to a YP of 11.1. The transfer was effected on 30 October 2001. As a comparable, Mr Scott referred to the acquisition of the freehold reversionary interest in 50 and 52 Haydock Street, Newton-le-Willows in April 2001 under the St Helens (Haydock Street, Newton-le-Willows) Compulsory Purchase Order 1999. In that case an annual rental income of £4.34 was capitalised at a YP of 11.5 to give a value of £50.
6. Mr Scott said that as the freehold reversionary interest, and the residue of the ground leasehold interest can be equated, the valuation of the latter became £8.25 x 11.1 = £91.57.

Conclusion

7. Whilst I accept Mr Scott's evidence as to the valuation basis, I noted that he had failed to allow for the fact that the claimant paid £8.08 per annum to the freeholder, thus producing a profit rent of only 0.17p per annum. I thus sought comments from the council, and as Mr Scott is no longer in their employ, I received a supplementary report from Mr Brown confirming that that was, indeed, the case. The valuation was therefore amended to 0.17 x 11.1 YP = £1.89.
8. I am satisfied that this revised valuation correctly reflects the minimal value of the claimant's interest in the subject properties and therefore determine that the compensation that shall be payable to Fairhold Limited shall be £2. The claimant's costs of legal transfer, if any, in accordance with Schedule 2, para (4) of the Compulsory Purchase Act 1965, are to be paid in addition.

Dated 1 August 2005

(Signed) P R Francis FRICS