UT Neutral citation number: [2010] UKUT 405 (LC)

LCA/287/2010

TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007

COMPENSATION – Compulsory acquisition of dwellinghouse following acceptance of a blight notice – valuation – comparables – Land Compensation Act 1961 section 5, rule (2) – total compensation £170,445

IN THE MATTER of a NOTICE OF REFERENCE

BETWEEN GEORGE ANTHONY DENTON-ASHLEY Claimant

and

LONDON BOROUGH OF LAMBETH Acquiring

  Authority

Re: 36 Treherne Court, Eythorne Road, London SW9 7RN

Before: P R Francis FRICS

Sitting at: 43-45 Bedford Square, London WC1B 3AS

on 26 October 2010

The claimant in person

Raj Gupta, a solicitor with Eversheds LLP, London EC2, for the acquiring authority

DECISION

Introduction

1.           This is a decision to determine the compensation payable to Mr George Denton-Ashley (the claimant) by London Borough of Lambeth (the council) following the deemed compulsory acquisition of a maisonette, 26 Treherne Court, Eythorne Road, London SW9 7RN (the subject property).  The claimant served a Blight Notice on the council on 21 January 2009 and the council served a counter-notice on 4 March 2009.  Following a reference by the claimant to this Tribunal on 9 March 2009 (BNO/139/2009), the council subsequently accepted that the property was blighted as a consequence of the London Borough of Lambeth (Myatts Field North Estate) Compulsory Purchase Order 2007 (the CPO), that had been confirmed by the Secretary of State for Communities and Local Government on 20 February 2008.  It withdrew the counter-notice and agreed to pay the claimant’s costs of that reference. The acquisition is thus pursuant to section 154(1)(b) of the Town and Country Planning Act 1990, and the parties agreed that the date of valuation shall be the date of this determination.   Notice of reference in respect of this matter was served on 6 January 2010.  

2.           The issue is the open market value of the maisonette under rule (2) of section 5 to the Land Compensation Act 1961. No assumptions require to be made other than that of planning permission for its continued use for residential purposes.

3.           The claimant is the owner of a long-leasehold interest in the subject property and appeared in person.  He produced a statement of case, a witness statement and details of the comparable transactions upon which he relied to support a valuation of £185,000. Mr Raj Gupta, a solicitor with Eversheds LLP appeared on behalf of the council and called Mr Jonathan Pearce BSc MRICS, an associate director of Lambert Smith Hampton based at their Oxford Street, London WC1 branch, who gave expert valuation evidence in support of his contention that the property is worth £150,000.

Facts

4.           The parties produced a brief statement of agreed facts from which, together with the evidence and my inspection of the subject property and the three comparables principally relied upon immediately following the hearing, I find the following facts. The subject property comprises an end-terrace maisonette with accommodation over three floors in a purpose built five-storey block built in about 1974 as part of the Myatts Field North Estate (the estate) to the north of Brixton and west of Camberwell in south London. The estate, which was built by the local authority, consists of 477 residential units, a health centre, community centre, some commercial units and areas of public open space. Housing and amenity space are poorly laid out, and with significant areas that are not overlooked and unsupervised, including stairwells, walkways and former underground garaging, the estate became a haven of crime and anti-social behaviour.  Two hundred of the properties have been subject to refurbishment, and the smallest of the “spine blocks” was remodelled under an Estate Action programme in the 1990s, but other proposed works on the estate were not completed due to lack of funds. However, some of the secondary stairways serving properties on the rest of the estate were sealed off, as were the underground garaging areas beneath the blocks.

5.           Following the introduction of the government’s Public/Private Finance Initiative (PFI) in 2003 which allowed local housing authorities to apply for PFI credits for new-build housing, and consultation with the residents and other stakeholders, the council proposed the demolition of 302 residential units (298 of which would be affected by the proposed CPO and over which the council holds the freehold reversionary interest, including the subject property), and replace them with 500 new units to be sold on the open market. The remaining units on the estate would be refurbished to meet the council’s “Decent Homes Plus” standard.  Following an outline planning application submitted in January 2007, the CPO, which was required to enable the scheme, was confirmed without alteration or a public inquiry in February 2008, and the council propose to enter a PFI contract for the works.

6.           Access to the subject property is at first floor level via a pedestrian walkway, and the accommodation, which extends to 819 sq ft (gross internal area), comprises hall, modern kitchen, living room, 3 bedrooms, bathroom, separate shower room/wc and an external paved patio to the front of 274 sq ft. It was agreed that the property was in fair to average order. The claimant, who has occupied the property as a tenant since 1997, acquired the balance of a 125 year lease which commenced on 4 October 1999 in June 2004 under the Right to Buy provisions of the Housing Act 1985.

Claimant’s case

7.           Mr Denton-Ashley said that when he bought his property the discounted price was £54,000, and understood that its open market value at that time was assessed at £93,000.  He said he had undertaken extensive research throughout the locality, and in his statement of case produced details of 7 ex-local authority comparables within 1.04 miles of his property, but although he said at the hearing that he was not entirely discounting those that were not on the same estate, it was agreed that three properties on the estate were the most comparable: 20 Carlton Court, 54 Crawshay Court and 8 Fairbairn Green. 

8.           20 Carlton Court is within 65 metres of the subject property.  It contains similar accommodation was subject to improvement works by the council in the 1990s.  This included removing the original deck over the underground parking areas beneath the properties in this block, providing in its place a direct access road and a private garage beneath each one. Access was therefore direct and the claimant acknowledged that it was better than to his own property.  He also accepted that it had been modernised and refurbished, is of better appearance and is in a part of the estate unaffected by the CPO.  However, Mr Denton-Ashley said that he thought the fact his property had a small enclosed patio area to the front was significantly better than a tiny upper level balcony which was all 20 Carlton Court had, as these were designed as family properties. That accounted for the whole of the £5,000 additional value he had assessed for his own house over the price for which Carlton Court was sold on 17 May 2010 at £179,950.  

9.           54 Crawshay Court (Mr Pearce’s original comparable) was sold in June 2007 for £145,000. Mr Denton-Ashley said that there were factors relating to his own house that made it better than this comparable.  It was closer to the shops and to the doctors’ surgery but in other respects he said there was little to choose in terms of location.  He said he did not know the circumstances under which it was sold, but in his view the price achieved was “seriously low.”

10.        8 Fairbairn Green is at the far end of the same block as the subject property and whilst it has similar accommodation, is, according to the selling agent, uninhabitable and in need of extensive refurbishment.  The price at which it had gone under offer reflected that fact. Mr Denton–Ashley said he accepted the fact it had a front garden and ground floor access was an advantage, but not to the tune of 10% as suggested by Mr Pearce.  There were only 5 steps up from ground level to the walkway access serving his property, and the fact that it had a patio meant the differences were only very marginal.  There were no other differences, apart from condition, that warranted value adjustments and in terms of condition and Mr Pearce’s adjustment of 5% was not enough. 

Acquiring Authority’s case

11.        Mr Pearce is a chartered surveyor who qualified in 1972 and has been involved with residential property in Lambeth throughout his professional career.  Prior to entering private practice in 1996, he was employed by the Borough Valuers department of the London Borough of Lambeth.  He is currently responsible for the Lambeth contract within Lambert Smith Hampton, supervises valuations under the Right to Buy legislation, and undertakes general acquisition and disposal work. He said that there was very little relevant comparable evidence on the Myatts Field North estate, only 4 three bedroom and one 2 bedroom property having been re-sold since being acquired under the legislation and all but one of those sales (54 Crawshay Court) were more than 8 years ago.

12.        54 Crawshay Court is a three bedroom first, second and third floor maisonette located in a smaller block than the subject property on the south-west corner of the estate. At 801 sq ft it is slightly smaller, but it does also have a patio.  It sold in June 2007 for £145,000 and, taking into account adjustments for time sourced from an average of the Nationwide Building Society, Lloyds and Acadametrics indices, he assessed the value now to be £140,700.  This was the only relevant comparable which he said could be relied upon when he undertook his initial assessment of the value of 36 Treherne Court at £140,000, but he had since become aware of another property, 8 Fairbairn Green, which had been on the market for £154,950 and had gone under offer in September 2010 at £150,000.

13.        8 Fairbairn Green is closer to the claimant’s house, also being in the centre of the estate, and has similar accommodation although it is again slightly smaller at 786 sq ft.  However, Mr Pearce said that it had the distinct advantage of ground floor access via a front garden and a more open outlook. These factors would, in his view, add 10% to the value, but that would be partly countered by the fact that it was clearly in worse condition, being uninhabited and boarded up.  In his view, therefore, the subject property should be valued at 5% less than Fairbairn Green, making it £142,500. Although it was accepted that this was not a completed sale, Mr Pearce said that he considered Fairbairn Green to be a better comparable than Crawshay Court because no time adjustments had to be made.

14.        With the permission of the tribunal, Mr Pearce produced a short supplementary report that dealt with 20 Carlton Court, a transaction he had previously been unaware of, despite the computer searches he had undertaken.  He pointed out that it had been subject to modernisation and refurbishment as part of the earlier council scheme, was in a far better location on the estate (although he acknowledged that it was only 65 metres from the subject property) and had the advantage of its own garage which, in his view, added £10,000 to the value on its own. He said that there should be a 10% deduction to reflect the subject property’s poorer location and condition which would produce a comparable figure of £153,000.  There were distinct advantages, in terms of security and potential crime, of being on the edge of the estate rather than the centre. Taken alongside the other two comparables upon which he relied, Mr Pearce said he was prepared to adjust his valuation of the subject property to £150,000.

15.        As to the other comparables upon which the claimant had relied, Mr Pearce said too many adjustments were required to reflect the fact that they were not on the same estate, and were all in areas where there would be other factors that affected the market. He accepted that reliance on market indices for time adjustments was very general, but was convinced that there had been a fall in values since 2007 when the sale of Crawshay Court was agreed. 

Conclusions

16.        It was agreed that 20 Carlton Court was the best comparable, as it was located very close to the subject property, was very similar in terms of accommodation and layout, and it was sold most recently.  However I cannot agree with Mr Denton-Ashley’s view that there were elements of his own property which warranted a slightly higher value. Carlton Court is located on the part of the estate that was the subject of significant improvement works and remodelling in the 1990s.  Those works included the removal of the deck over the former underground gar park, and the provision of individual garages beneath each of the properties.  Windows were replaced with double glazed uPVC units and, being on the edge of the estate rather than in the centre of it, the properties have good, open access and are close to a pleasant open green area. The price achieved on the recent sale will have reflected these facts and in my view the subject property, located as it is in the middle of the estate and likely to be affected by the disadvantages outlined by Mr Pearce, must be subject to a discount from that value.  It is true that the subject property has an enclosed patio to the front and 20 Carlton Court only has a small upper balcony, but I cannot see this adding anything materially to the value. All in all, it is inconceivable to my mind that Carlton Court could be worth less than 36 Treherne Court.

17.        The other two comparables on the estate are, in my judgment, much more in tune with the subject property in terms of appearance and layout. However, 54 Crawshay Court was, due to its configuration, less imposing than the subject property and appeared from an external inspection to be in worse condition and is not an end-terrace unit.  Its sale is also more historic than 8 Fairbairn Green which, in my judgment, is a good comparable in terms of location and appearance.  Again it appeared to be in much worse condition, and in this regard I accept the claimant’s argument that a 5% adjustment is insufficient for that.  In my view 10% is more appropriate. However, I also think a 10% adjustment for the better ground floor access, as suggested by Mr Pearce, is rather too high.  I adopt 7.5% which on the basis of this comparable alone puts the subject property at £153,750.  This conclusion is supported by Mr Pearce’s adjustments to the most recent completed transaction, 20 Carlton Court, which produced a figure of £153,000 and which I accept.  There is, for the reasons I have given, clearly a difference in value between 20 Carlton Court and the subject property and based upon a figure of £153,750 this difference is just over £21,000 which in my judgment is an appropriate margin.  I am therefore satisfied that the value of the subject property, as at the date of this decision is fairly represented in the sum of £153,750, and I determine accordingly.  

18.        It was agreed that, in addition, the claimant is entitled to a home loss payment of 10% of the assessed value (£15,375) together with a disturbance payment of £1,320 making a total of £170,445. 

19.        Although the provisions of section 4 of the Land Compensation Act 1961 are not precluded from applying when a reference is heard under rule 28, the Simplified Procedure, it is in general a no-costs regime, and I infer that in agreeing to it the parties intended that no order for costs should be made. I therefore make no order as to costs. 

DATED 17 November 2010

P R Francis FRICS