SMM173 Individual Coursework Submission Assessment Answer

Question B:

Compulsory Purchase Order (CPO) bestowed the County Council of Cansas with the authority to acquire property; therefore, they are obliged to provide compensation to Ms. Clarence for the loss of her property rights. The Land Compensation Act of 1961 and The Land Compensation Act of 1973 have laid down the foundation to determine the various heads of claim that the compensation will be based on. Additionally, these Acts expound intricately regarding the methodology to evaluate the market value of the land taken, disturbance caused, payment loss occurrence, injurious affection, as well as other relevant fees and interests that should be considered in the heads of claim. Based on the legal framework provided by the LCA 1961/1973, a comprehensive and supported compulsory purchase heads of claim for Estelle Clarence has been prepared (Catney & Henneberry, 2019).

Value of Land Taken:

A comparable valuation technique has been constructed to determine the value of land that is required for the road, consisting of 0.75 acres. The valuation methodology is based on comparable properties and adheres to the market value rule defined in section 2 of LCA 1961. The valuation model has been divided into three distinct segments, which are Value of Land, , Value associated with the Equestrian Facilities, along with House Value comprising stables, barn, as well as exercise arena. The value of the land has been assessed by referencing the sale price of Minerva Farm (sold in November 2022) and Land at Crathes House (sold in February 2022). An estimation of the price per acre has been computed by dividing the sale price by the acreage and adjusted based on their own assumptions.

The valuation exercise involved referencing the sale price of Minerva Farm and Land at Crathes House, which were sold for £17,000/acre and £21,400/acre, respectively. Minerva farm was sold for 17 acres of unstocked land with water supply used for grazing, similar to Ms Clarence's land but larger. Adjustments were made to the price per acre, upwards by 7%, as the price per acre decreases when more land is sold. The land at Crathes House was sold at a higher price of £21,400/acre for 50 acres of unstocked high-quality arable land, which is different from the land at the Old Farmer's House. A slight adjustment was made to the price, downwards by 3%, as arable land is subject to seeding and production. Minerva's Farm was given a weight of 0.8, while Land at the Old Farmer's House received a weight of 0.2 as it is less comparable. The value of Ms Clarence's land was calculated by multiplying each adjusted price per acre by its weight, resulting in a value of £18,703.60/acre. The value of the land taken, which spans 0.75 acres, was computed to be £14,027.70.

The valuation process for Ms Clarence's House was conducted in a manner similar to that of the land valuation. The Lorne Villa Property value was referenced, and the value of the 0.5 acres land was deducted at the adjusted price of £18,703.60/acre. The resulting value of Ms Clarence's House was determined to be £860,972.30. The property was deemed similar in style and modernised, thereby requiring no further adjustments to be made.

In order to derive the value of the equestrian facility, which was required for other sections of the heads of claim, the values of Sinner's Yard and Sutherland Equestrian were adjusted accordingly. Following the adjustments, the value of the equestrian facilities located at the Old Farmer's House was determined to be £404,556.39.

The entire estate has been appraised at a valuation of £1,489,971.89.

Injurious Affection:

 By Section 7 of the Compulsory Purchase Act of 1965, the injurious affection suffered by Ms Clarence's estate was calculated. The valuation was based on various factors, including the impact of the CPO on the 0.75 acres severed part, which resulted in a 70% loss of value. The remaining land, comprising 11.25 acres, experienced a 5% reduction in value due to air and noise pollution, risk of construction, and vibrations. Similarly, the house and equestrian facility encountered a 5% and 14% decrease in value, respectively, due to the aforementioned factors. As there was no betterment, Ms Clarence has been found eligible for compensation for the injurious affection and material detriment of 70% of the overall decline in the estate's value (Kuma et al. 2019).

Disturbance:

The calculation of the disturbance compensation was conducted by applying the Rule 6, Section 5(6) of the LCA 1961 and Rule 6 of the LCA 1963, utilizing a profit method. The relocation of the horses which Ms. Clarence regularly houses in her stables has caused a loss of business, making her eligible to claim for disturbance compensation. It was hypothesized that the value of the stables is equivalent to one-third of the value of the equestrian facility. The cost of relocating each horse weekly was estimated to be £150/horse, and the reconstruction cost for a single-horse box was determined to be £30/sq ft, taking into account that each horse box has a dimension of 12x14sqft. The expenses were calculated at 10% of the cost of rebuilding the stables, while operating costs were set at £150 per horse. Assuming the business of Ms. Clarence is significantly profitable, a multiplier of 8x was applied to determine a market value of £85,376 for the stables. The total disturbance claim amounted to £117,056, comprising the market value, the reconstruction cost for a stable accommodating eight horses, and eight weeks' rent for eight horses.

Loss of payment:

According to Section 33A(1) of LCA 1973, Ms. Clarence, being the freehold property owner for over 20 years, is entitled to receive a basic loss payment, which amounts to 7.5% of the market value of the property acquired by the authorities. Furthermore, as per Section 33B(1) of LCA 1973, the property occupier is eligible to receive a compensation payment of 2.5% of the value of the land taken or a minimum of £2500 under a CPO.

Fees & Interests:

According to Section 11-23 of the CPA 1965 and the Case law of London County Council v Tobin (1959) 1 AII ER 649, Ms Clarence is entitled to receive compensation for the professional fees and interests that she has incurred. To this end, the fees for the surveyors, legal teams, and travel have been calculated and found to amount to a total of £9,100. Additionally, 10% of the value of all claims, which comes to £26,869.09, has been multiplied by 50 basis points, after which the BoE interest rate has been deducted. This calculation results in a total of £9,603.79 in interests and fees that Ms Clarence is eligible to receive as compensation (Denyer-Green, 2013).

Question C:

In order to provide an answer to question C), a head of claim must be constructed that includes a costed valuation. The same methodology as utilized in question B will be followed to achieve this goal.

Scenario A: purchase of the entire small holding:

Value of the land taken:

Employing the comparable valuation technique, as outlined in Question B, and adhering to the market value rule of Section 5 of The Land Compensation Act 1961, the value of the land and Ms Clarence’s house was determined. Comparable adjustments were made to the values of Minerva Farm and Land at Crathes House, resulting in a land value of £18,703.60 per acre, totalling £210,514.50 for the 11.25 acres sold (after deducting the 0.75 acres utilized for road construction). Lorne Villa Property was utilized to estimate the value of Ms Clarence’s House, which was assessed at £860,972.30. However, for the market value of the equestrian facilities, higher percentages were used to decrease the values of Sutherland equestrian facilities and Sinner’s yards equestrian facilities, as the headcount of horses decreased by two following the construction of an additional stable. As a result, the value of the equestrian facilities (including stables, barn, and exercise arena) was determined to be £360,694.10. The cumulative value of the Estate claimed was estimated to be £1,432,081.90.

Disturbance:

Through the application of the same methodology employed in Question B, and utilizing the identical multiplier for the profit method, a market value of £155,520 has been derived for the loss of business related to three horses. Furthermore, the analysis accounted for additional factors such as storage, transport set-up and furniture, as well as refurbishment costs for the new property to enable Ms Clarence to continue her business or at the very least provide her with stable boxes and an exercise arena for her five horses. The cumulative value of the disturbance claim is estimated at £236,620.

Injurious Affection:

Given Ms Clarence's intention to sell the entire property, the calculations indicate that no injurious affection, severance, or material detriment would arise.

Loss of Payment:

The loss of payment claim methodology corresponds with the previous response, whereby Ms Clarence is entitled to Basic Loss Payment as the proprietor, in addition to Home Loss payment that amounts to 10% of the market value. However, it is noteworthy that as of October 1st, 2022, the Home Loss Payment is restricted to a maximum of £78,000 as per The Home Loss Payment (Prescribed). Furthermore, Ms Clarence is eligible for the occupier payment, which is capped at £25,000.

Fee and interests:

Similar to the approach adopted in question B, the fees and interests were computed in the same manner, resulting in total fees of £9,300 and interest fees of £3,339.38. However, neither VAT nor capital gains tax were taken into consideration. Based on the foregoing, if Ms Clarence decides to vend the property as a whole, her claim should amount to £1,784,341.

Scenario B: purchase of the small holding less the house and 0.5 acres of surrounding land:

In the event that the Cansas City Council opts to procure the smallholding, excluding the house and 0.5 acres of surrounding land, the previous methodology should be adhered to. This entails developing comprehensively supported heads of claim, which are inextricably linked to a costed valuation (KC, 2014).

Value of the land taken:

In accordance with the same legal framework as the other scenario and question B, the value of the land was computed by considering CCC's proposal to acquire the holding, excluding the house and 0.5 acres of land. To obtain a just value of the land under consideration, the value of the remaining land (10.75 acres) was obtained by multiplying 10.75 (11.25 – 0.5 acres) by £18,474.40. Thereafter, the value of the land taken was determined by adding the value of the equestrian facility, which amounts to £366,067.69, to the value of the remaining land, which amounts to £198,599.90. Consequently, Ms Clarence is left with a house valued at £861,144.20 and 0.5 acres valued at £9,237.20 (Kuma et al. 2019).

Injurious Affection:

The severance claim was evaluated in a manner similar to that in question B, whereby it was postulated that Ms Clarence's property would experience a 14% reduction in value due to air and noise pollution, as well as vibrations associated with the construction. Consequently, the severance claim amounts to £121,853.40.

Disturbance:

Ms Clarence is deemed eligible for compensation under Rule 6 of Section 5 of the Land Compensation Act of 1961 as the compulsory purchase order would result in the complete loss of her business. A profit method akin to scenario a) was employed, utilizing the same values, to estimate compensation. It was assumed that Ms Clarence would need to relocate her horses, incurring a weekly rent in the process.

Loss of payment:

Contrary to scenario B, Ms Clarence is not entitled to a home loss payment. However, she is eligible for Basic loss payment and occupier payment. Given that the value of the land being taken is £564,667.49, Ms Clarence is entitled to a compensation for loss of payment amounting to £56,466.75.

Interest and fees:

Ms. Clarence is entitled to make a claim for interest and fees, akin to scenario a). The fees amount to a total of £9,100, while the interest incurred is £1,765.14.

Section 150 of the Town and Country Planning Act of 1990 provides a provision for Ms Clarence to issue a Blight Notice to Cansas County Council in the event that she wishes to sell the entire property. This notice serves as a means for the local planning authority to evaluate whether there are grounds for them to acquire the property. Furthermore, according to section 9 of the Land Compensation Act of 1961, if a compulsory purchase order (CPO) is made in relation to a portion of a property, the owner of said property cannot be compelled to sell solely that portion if they are willing and capable of selling the entire property. Therefore, Ms Clarence is eligible to sell the entirety of her property, which may prove to be more financially advantageous for her.

References:

Catney, P., & Henneberry, J. (2019). Change in the political economy of land value capture in England. Town Planning Review, 90(4), 339-358.

Denyer-Green, B. (2013). Compulsory purchase and compensation. Taylor & Francis.

KC, M. B. (2014). The law of compulsory purchase and compensation. Bloomsbury Publishing.

Kuma, S. S., Fabunmi, F. O., & Kemiki, O. A. (2019). Examining the effectiveness and challenges of compulsory land acquisition process in Abuja, Nigeria. FUTY Journal of the Environment, 13(2), 1-13.

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