UT Neutral citation number: [2013] UKUT 506 (LC)

UTLC Case Number: ACQ/146/2012

TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007

COMPENSATION – compulsory purchase – house in state of disrepair – agreed value as refurbished - cost of refurbishment – comparison with other fire damaged or vandalised properties - compensation determined at £30,500

IN THE MATTER OF A NOTICE OF REFERENCE

BETWEEN PAUL ROBERT HUTCHINGS Claimants

DAVID STEPHEN STEELE

and

NUNEATON AND BEDWORTH Acquiring Authority

BOROUGH COUNCIL

  Re: 26 Springhill Road,

 Camp Hill,

 Nuneaton,

 CV10 9HW

Determination on the basis of Written Representations

By

P D McCrea FRICS

DECISION

Introduction

1.           This is a decision to determine the amount of compensation payable to Paul Robert Hutchings and David Stephen Steele (the claimants) arising from the compulsory acquisition by Nuneaton and Bedworth Borough Council (the acquiring authority) of the freehold interest in the dwelling house known as 26 Springhill Road, Camp Hill, Nuneaton, CV10 9HW (the subject property).  The subject property was acquired pursuant to the Nuneaton and Bedworth Borough Council (Camp Hill Phase 3 – Rowan Road, Spring Hill Road and Ludford Road) Compulsory Purchase Order 2008 (No1) (the CPO).  The CPO was made on 5 September 2008 and confirmed by the Secretary of State for Communities and Local Government on 4 September 2009.  On 16 November 2009 the acquiring authority made a General Vesting Declaration, under which the freehold interest in the subject property was vested in the acquiring authority on 18 December 2009, the valuation date.

2.           The acquiring authority submitted the notice of reference on 1 August 2012 following a failure to agree compensation.  The parties have agreed to deal with the reference by way of written representations.  Waldrons Solicitors represent Mr R G Butcher – the Trustee in Bankruptcy of Mr Hutchings - and have made written representations but not adduced expert evidence.  No evidence or representations have been made by or on behalf of Mr Steele.  Mrs Wendy Davies-White, principal solicitor of the acquiring authority, made representations on its behalf, and submitted expert evidence from Mr Ian Wilson MRICS.  Mr Wilson has been employed as land and property manager with the acquiring authority since July 2011, following 36 years with the Valuation Office Agency.  Whilst at the VOA, Mr Wilson carried out the valuation of the subject property on behalf of the acquiring authority.

3.            The claimants initially claimed £73,000 as compensation. This has since been reduced to £34,500. The acquiring authority valued the property at £25,000 to reflect its condition at the valuation date.

4.     From the evidence I find the following facts. The subject property was situated on the Camp Hill housing estate, a large residential estate on a sloping site on the north eastern fringe of Nuneaton some 1.5 miles from the town centre.

5.     Camp Hill is a ward of high deprivation, being in the top ten most deprived wards in the country and the most deprived in Warwickshire. To address the problems of the area a regeneration scheme was instigated to replace the poorest of the housing stock on the large residential estate which comprises the majority of the ward with new dwellings.

6.     The subject property, which has since been demolished, comprised a two storey inner terraced house built in the early 1950s by Wimpey of in-situ cast concrete “no fines” construction under a pitched tiled roof.  The accommodation comprised a hall, living room, kitchen, side lobby/store, two double bedrooms, a single bedroom and bathroom.  There were relatively large sloping gardens with additional frontage to Rowan Road at the rear, including a single garage.  The subject property was similar in style, construction and accommodation to the majority of properties in the vicinity.

7.     The subject property was damaged by fire on 4 October 2009. At the valuation date it required complete refurbishment including a new roof, new windows and doors, new floors, stairs, heating, kitchen and bathroom, new services and complete redecoration.

8.     The principal dispute between the parties relates to the costs required to repair and refurbish the property following the fire damage.  Both parties have deducted the cost of such work from the agreed headline value, assuming good order, of £83,000.  The claimants’ suggested deduction is £48,500, and that of the acquiring authority is £58,000.

9.     Two further issues were raised.  First, the acquiring authority requested that a total of £14,052.71 comprising outstanding council tax, the cost of making the property safe and legal fees in enforcing possession be set-off against the compensation payable. Secondly, there is an issue as to whether half of the compensation determined should be paid to the Trustee in Bankruptcy of Mr Hutchings.  In my judgement the Tribunal does not have jurisdiction to determine either of the additional issues.

10.  Mr Wilson’s original assessment of the market value at the valuation date, in assumed good condition, was in the order of £80,000, subsequently revised to £83,000.

11.   In terms of sales of comparable properties on the estate, Mr Wilson gave details of the prices paid for eleven three-bedroom Wimpey “no fines” houses, some on the open market and some compulsorily acquired.  The sales took place between February 2009 and January 2013 and Mr Wilson commented that the range of £32,500 to £93,000 was dependent on the condition of the property.

12.  Mr Wilson drew particular attention to 297 Queen Elizabeth Road, which, although in the CPO area, was purchased privately in November 2009 at auction for £32,500.  It was in shell condition, but had no structural damage.  The property was refurbished by the purchaser and then acquired by the acquiring authority for £70,000 in June 2011.  Mr Wilson accepted that the original purchase price may have been influenced by the CPO.  He also referred to 87 Edinburgh Road, which was not in the CPO area.  This was sold by the acquiring authority in July 2012 for £40,000 in a severely vandalised state requiring complete internal refurbishment although having no structural damage apart from a few missing floorboards.  It was refurbished and put back on the market, achieving something between £70,000 and £80,000 in January 2013.  Mr Wilson accepted that this evidence was post-valuation date but said that prices had risen by less than 1% in the West Midlands between the fourth quarter of 2009 and the fourth quarter of 2012.

13.  From this range of evidence, Mr Wilson’s view of the market value of the subject property in reasonable condition was £83,000 at the valuation date.

14.  He then relied upon the VOA’s National Asset and Buildings Team (NAB) to provide evidence as to the cost of refurbishment work.  NAB’s cost totalled £58,249.50 but say £58,000.  This included £3,920.06 in respect of roofing work.

15.  Accordingly Mr Wilson’s valuation was £83,000 less £58,000 giving £25,000 to reflect the condition of the subject property at the date of valuation.

16.  He supported this by reference to two other fire-damaged properties that the authority had acquired.  The first was 9 Ludford Road, which Mr Wilson said was generally in good order before the fire.  His pre-fire valuation was £76,500 in July 2010, but following the fire the property was purchased for £35,000 in October 2010. Mr Wilson inspected the property following the fire and considered that the repair works required were not as extensive as those required at the subject property and there was little or no damage to the roof.

17.  The second fire-damaged property was 32 Ludford Road, which Mr Wilson said was in basic order before the fire and valued by him at £67,500 in May 2010.  The property was acquired, following the fire, at £26,000, in July 2010, at which point he said it required similar repair work to that at the subject property.

18.  The claimants agreed a headline value, in refurbished condition, of £83,000.  However they did not agree with some of the acquiring authority’s refurbishment costs.  They considered the amounts attributed to replacement doors and windows, timber floors landing and staircase, new internal doors and professional fees to be excessive. 

19.  The claimants contended that the cost of works should amount to £48,561, but say £48,500, therefore leaving a value reflecting the fire damage of £34,500.

20.  Whilst some of the comparable evidence supporting Mr Wilson’s assessment of the pre-fire damaged value of the property is post-valuation date, I accept that values are unlikely to have risen to any great extent in this area between the valuation date and January 2013. 

21.  The claimants accept the acquiring authority’s figure of £83,000 on a refurbished basis.

22.  In terms of refurbishment costs, the acquiring authority submits a total refurbishment cost of £58,000. The cost evidence submitted comprised a single print out of an Excel spreadsheet with no further information attached.  The NAB’s source or date of the information is not stated, nor the qualifications or indeed identity of the author.  The acquiring authority accepts that it is unlikely that an internal inspection would have been carried out by NAB owing to the unsafe condition of the property.

23.  I find the costings submitted to be of limited assistance. It is more likely than not, in my judgement, that the costs submitted would represent refurbishment to a higher standard than the notional purchaser would realistically undertake, or subsequently recoup by way of an increase in value.

24.  In my judgement a comparison of the subject property with the transactions of the other fire-damaged or vandalised properties as submitted by Mr Wilson is a more reliable method of valuation.  Such a comparison can never be entirely rigorous when the condition of the properties concerned is, at best, described generally.  However I prefer this as a valuation method to what is effectively a truncated residual valuation, since it is based upon actual transactions.

25.  These transactions can be summarised as:

26.  As indicated above, there is little evidence of movement of values generally and I have therefore made no adjustment for time.  The average value across the four transactions is £33,375, but I accept that with the exception of 32 Ludford Road, the other properties were less dilapidated than the subject property.  If I deduct £4,000 from each of those three properties for roofing work, broadly in line with the NAB, the average across the four properties considered together is £30,375.  I therefore conclude that the market value of the subject property at the valuation date was £30,375, but say £30,500.

27.  I determine the compensation payable for the freehold interest in 26 Springhill Road, Camp Hill, Nuneaton in the sum of £30,500. 

28.  The acquiring authority offered to make a home loss payment in the minimum sum of £4,700 and I determine that such a payment should be made.

29.  I make no order as to costs.