Part 2: Blight notices
The Valuation Office Agency`s technical manual covering all aspects of compulsory purchase and compensation.
15.26 General
Planning proposals may have an adverse effect on property so that an owner-occupier is unable to realise the market value that would have been obtainable had the owner’s land not been affected by the proposals because prospective purchasers either will not proceed with the purchase or, having learned of the planning proposals, will only offer a price ‘substantially lower than that for which it might reasonably have been expected to sell’. This is generally referred to as ‘planning blight’ and sections 149 to 171 Town and Country Planning Act 1990 are designed to relieve hardship by making it possible, subject to conditions, for owner-occupiers or mortgagees of certain properties to require the relevant authority to purchase their interests. Practice Note 15/2 sets out in detail the provisions and their interpretation.
15.27 Blight notices
A person whose interest qualifies for protection and who has fulfilled the other statutory requirements (see Practice Note 15/2) may serve on the appropriate authority (ie the government department, local authority or other body by which, in accordance with the planning proposals, the land is liable to be acquired), a notice in the prescribed form requiring it to purchase the interest. The notice is known as a ‘blight notice’ to distinguish it from a ‘purchase notice’, which may be served on refusal or conditional grant of planning permission and other planning orders.
15.28 Counter notice
An authority that does not wish to accept a blight notice may serve on the claimant within two months of the date of service of the blight notice, a counter notice in the prescribed form specifying the grounds upon which objection is made to the claim.
15.29 Reference to Upper Tribunal (Lands Chamber)
Upon receipt of the counter notice the claimant, if not satisfied, has a period of two months in which to refer the objection to the Upper Tribunal (Lands Chamber) for determination.
15.30 Counter notice not served
If a counter notice is not served, or if served is not upheld by the Upper Tribunal (Lands Chamber), the authority is deemed to have served Notice to Treat for the acquisition of the interest. The date of service of deemed Notice to Treat is either two months from the date of service of the blight notice or such other date as the Upper Tribunal may direct.
15.31 Withdrawal
The acquiring authority has no power to withdraw a deemed Notice to Treat. However, provided the authority has not entered on the land, the claimant may withdraw a blight notice at any time before the expiration of six weeks from the date of determination of the compensation by the Upper Tribunal (Lands Chamber). If the blight notice is withdrawn, any deemed Notice to Treat is also to be treated as withdrawn but no compensation is payable in respect of such a deemed withdrawal.
15.32 Discretionary purchases
There will be blight notices that the authority does not wish to oppose, although this could probably be done successfully. There will also be cases where an owner-occupier is aware that the blight notice procedure is not available but nonetheless asks the authority to purchase on hardship grounds. Authorities are encouraged to consider such cases sympathetically and, within their discretion, to use such powers as are available to acquire land in advance of requirements.
15.33 Validity of notice
To enable authorities to decide whether or not to serve a counter-notice, or to agree to purchase within their discretion, the valuer may advise whether the claimant has made reasonable endeavours to sell the interest which is alleged to be blighted and also as to whether or not the price that has been offered or could be expected to be obtained is substantially lower than that which could have been obtained had the proposals affecting the land not been made. It is essential that an inspection is carried out in those instances where the valuer intends giving to an authority advice that would be conducive to their serving a counter notice that might then have to be defended before the Upper Tribunal.
In view of the strict time limits, if it is impractical to make an inspection before giving such advice, valuers should note this in their reports stating the reason.
15.34 Interpretation of provisions by acquiring authority
It is the practice of some authorities to interpret the provisions strictly and pursue those interpretations before the Upper Tribunal (Lands Chamber), often with success. As such interpretation in each case is a matter for the authority the advice from the valuer should be restricted to valuation matters unless the valuer’s opinion is specifically sought.
15.35 Discussion with claimant
The valuer should not discuss the valuation aspects of the notice with the claimant without the prior concurrence of the authority and, in any case, the valuer should not give any indication to the claimant whether the authority is, or is not, likely to serve a counter notice.
15.36 Report
If the blight notice does not appear to embrace the whole of a claimant’s interest the authority should be advised accordingly so that the matter can be taken up with the claimant, but this should not affect the investigation of the case by the valuer and the issue of the report.
15.37 Counter notice: Authority’s request to valuer
The special arrangements that apply in Highways England cases may be of assistance as a guide in dealing with requests connected with other authorities’ consideration as to whether to serve a counter notice.
In view of the time limit of two months from the date of service of the blight notice for the service of a counter notice the valuer should ensure that there is no delay in complying with requests for assistance.
15.38 Where blight notice relates to whole but only part is required by authority
Where the proposals that give rise to the blight notice affect part only of the land it may be the policy of the authority to serve a counter notice specifying the part of the land that it proposes to purchase and objecting to the notice as regards the remainder of the land. If requested, the valuer may advise whether the claimant would be successful on appeal to the Upper Tribunal (Lands Chamber) in requiring the authority to purchase the interest in the whole of the land under the provisions of section 8 CPA 1965 or other similar provisions that are applicable (see Part I), or where, if the claimant were likely to be unsuccessful nevertheless it could be to the financial advantage of the authority to purchase the whole of the land.
Similarly, in the case of an agricultural unit, where an authority is required to purchase the claimant’s interest in the whole of the unit under the provisions of section 158 TCPA 1990, the valuer may advise whether or not an objection by the authority is likely to be upheld by the Upper Tribunal (see Practice Note 15/2).
Where the valuer considers that it is a borderline case, or a case where the claimant is unlikely to succeed although suffering considerable hardship, the valuer should make this clear in any advice given so that the authority is fully aware of the circumstances before making its decision on the service of a counter notice.
15.39 No effective valuation date
Acquiring authorities do not usually take entry on the land in blight notice cases until the date of legal completion of the acquisition of the property. The valuation date would thus become the date that terms of compensation are agreed or determined by the Upper Tribunal. However, in times of steeply rising prices claimants might delay agreement in the hope that a higher value for the property could be agreed.
It would not be possible for the valuer to impose a valuation date on the claimant since by virtue of section 2A CPA 1965 the deemed Notice to Treat would remain valid for a three year period after its date of service (ie a date two months after the service of the blight notice).
However, any deliberate delay by the claimant in agreeing terms of settlement might be relevant as to mitigation of loss eg where a claim in respect of a disturbance item had been increased due to the deliberate delay of the claimant.
15.40 Negotiations
Valuers may undertake negotiations for the acquisition of properties on behalf of acquiring authorities whether they are in the nature of obligatory or discretionary purchases.
15.41 General
Upon the acceptance of a blight notice the acquiring authority is deemed to have served a Notice to Treat on the claimant and the acquisition would proceed in the usual way.
Subject to the exception in Paragraph 15.44 below, compensation for the acquisition of an interest under a deemed Notice to Treat following the service of a blight notice should be assessed in accordance with the provisions of the LCA 1961 as amended by LCA 1973 including, where appropriate, compensation for severance and disturbance (see also Sections 3 and 4 of this Manual).
15.42 Disturbance
Disturbance may be payable in a blight case and the claimant’s entitlement to a disturbance claim would depend mainly upon the claimant’s motives for moving. If claimants want to move for reasons other than the scheme, eg because of a change of job and consequent relocation in another part of the country, they would have incurred the costs of moving in the absence of the compulsory acquisition. Such costs are therefore the consequence of the claimants’ desire to move because of a change of job and not a natural and reasonable consequence of the compulsory acquisition and are thus not reimbursable as disturbance.
The same considerations would apply to a claimant comprising a business. If the claimant were moving the business for reasons other than the scheme, the costs of moving would not be a consequence of the compulsory acquisition and would not be payable as disturbance compensation.
Similarly, the claimant’s removal to a distant location would not be a reasonable consequence of the acquisition but would suggest that there was an ulterior motive for serving the blight notice and the claimant would also have failed to mitigate his loss by moving an excessive distance. It would be in order for the claimant’s disturbance claim (eg removal costs etc) to be restricted to that which would have been reasonable in all the circumstances.
In the light of Campbell Douglas & Co Ltd v Hamilton DC [1983] 2 EGLR 183 the onus of proof as to the admissibility of a disturbance claim in such circumstances will rest with the acquiring authority.
Apart from the above considerations compensation for disturbance should be assessed according to the usual criteria. Any disturbance losses would need to be considered causatively not purely temporally. Losses incurred prior to the service of the blight notice might be compensatable if they were the result of the acquiring authority’s scheme. This concept was clarified by the House of Lords in Director of Building and Lands v Shun Fung Ironworks Ltd [1995] 1 EGLR 19.
The House of Lords in Waters v Welsh Development Agency [2004] 2 EGLR 103 set out the criteria by which the extent of the acquiring authority’s scheme should be determined. The scheme should be circumscribed principally by the extent of the acquiring authority’s CPO and account taken of the disregards set out in section 6 of and the First Schedule to the LCA 1961. Only where the statutory disregards would not achieve the principal of fair compensation should regard be had to the wider scheme and the disregards encompassed by the Pointe Gourde rule. For CPOs authorised on or after 22 September 2017 section 6 of the LCA 1961 has been replaced and the First Schedule to the LCA 1961 omitted by section 32 of the Neighbourhood Planning Act 2017.
In many blight cases there would be no CPO yet published and in those cases the identification of the scheme would involve an examination of the acquiring authority’s policy documents and publicity for the proposed works in respect of which blight is claimed.
15.43 Total extinguishment of business goodwill
Where a claimant has served a blight notice solely as a reasonable and natural consequence of the scheme and is ultimately unable to relocate or dispose of the business goodwill, compensation on a total extinguishment basis might be payable.
Any difficulties in respect of claims for extinguishment of business goodwill in blight cases should be referred to the PS Professional Guidance Team.
15.44 Legal Costs
The claimant’s reasonable costs of conveyance to the acquiring authority are payable in accordance with section 23 CPA 1965. They are not a head of claim but a separate statutory entitlement.
However, the claimant’s incidental legal costs of purchasing a replacement property are a disturbance item and the admissibility of such costs would depend upon the claimant’s motives for moving (see Paragraph 15.42 above).
15.45 Surveyors’ fees
The Appeal Court decision in Lee v Minister of Transport [1965] RVR 427 held that surveyor’s fees for negotiating the compensation payable were not strictly ‘disturbance’ but were ‘any other matter’ within the second limb of Rule (6) section 5 LCA 1961. Surveyors’ fees for negotiating the compensation would normally be payable whether or not disturbance were payable.
15.46 Interest on bridging loans
For reasons set out in Practice Note 15/2 a claim for reimbursement of interest on a bridging loan in blight cases is not normally admissible unless there has been unreasonable delay in handling the case. The valuer should be particularly watchful for the possibility of a bridging loan interest liability and should give priority to cases where this is suspected. In the valuer’s report of terms provisionally agreed for the acquisition of the property the valuer should indicate if bridging loan interest is running so that the acquiring authority may be aware of the continuing liability.
If the question of unreasonable delay should arise either in respect of the period before the case reaches the valuer for negotiation or in the legal process of completion after the report has been issued the valuer should obtain the views of the acquiring authority before admitting a claim in respect of such delay. If this claim relates to alleged delay in the handling of the case in the valuer’s office, the approval of the PS Professional Guidance Team should be obtained before the claim is allowed.
15.47 Listed buildings
Where the land being acquired in pursuance of a blight notice is the subject of a compulsory purchase order made under the provisions of section 47 of the Planning (Listed Buildings and Conservation Areas) Act 1990 (which deals with the acquisition of buildings that have been listed as being of architectural or historic interest) and a direction for minimum compensation has been given under the provisions of section 50 of that Act, the compensation for the compulsory acquisition shall be assessed in accordance with that direction.
15.48 Agricultural land
Where, in the case of an agricultural unit:
- a) the claimant has invoked section 158 TCPA 1990 successfully, requiring the authority to purchase the whole unit on grounds of non-viability of the remainder (unaffected area) (see Practice Note 15/2) or
- b) the authority has served a counter notice objecting to the blight notice on the ground that it proposes to purchase a part only of the affected area as specified in the counter notice, but does not propose, unless compelled to do so by the blight provisions, to acquire any other part of the unit
the compensation payable for the unaffected area under (a) or so much of the affected area of the unit as is not specified in the counter notice should be assessed on the assumption set out in sections 5(2), (3) and (4) LCA 1973, that is on existing use value basis (see section 157(3) TCPA 1990.
15.49 General
Home Loss Payments, Basic Loss Payments and Occupiers Loss Payments would be payable in blight cases subject to the same criteria as in other compulsory acquisitions.
Section 29(5) LCA 1973, which restricted the payment of Home Loss Payments in blight acquisitions, was repealed as from 25 September 1991 by the Planning and Compensation Act 1991.
15.50 General
If the claimant raises the question of an advance payment and the authority has not taken possession of the land (or part of it) the valuer should advise the claimant to apply direct to the authority concerned. Where the authority has taken possession of the land the valuer should proceed in accordance with Section 16 Part 4 of this Manual.
15.51 Appropriate form to be used
Reports of completed negotiations should be made on the form appropriate to the authority concerned, suitably adapted.