Part 3: Affected land purchased by agreement
The Valuation Office Agency`s technical manual covering all aspects of compulsory purchase and compensation.
Land affected by construction or use of highways or public roads
15.61 Acquisitions by agreement
In addition to discretionary purchases of blighted land in advance of requirements (see Paragraph 15.32), section 246(2) Highways Act 1980 (HA 1980) gives highway authorities power to acquire land the enjoyment of which is seriously affected by
- the carrying out of works by the authority for the construction or improvement of a highway or
- the subsequent use of a highway that the authority has constructed or improved
The power is limited to acquisitions by agreement and the interest of the vendor must be one that falls within section 149(2) and (3) TCPA 1990 ie interests that qualify for protection under the blight provisions (see Practice Note 2 of this Section).
A similar power of acquisition by agreement in respect of land the enjoyment of which is seriously affected by the carrying out of works for the construction or alteration of or the use of ‘public works’ is given to the responsible authority, ie the person managing the works, by section 26(2) LCA 1973.
Section 246(2A) HA 1980 and section 26(2A) LCA 1973 (both inserted by section 62 Planning and Compensation Act 1991) create new powers for authorities to acquire by agreement land the enjoyment of which stands to be seriously affected by the carrying out or the use of public works.
Authorities have hither to been empowered (under section 26 of the Land Compensation Act 1973 and section 246 of the Highways Act 1980) to make such acquisitions only during the construction stage of a public works project and for an initial year after the scheme has come into use. (After the works have been in use for a year claims may be made under Part 1 of the 1973 Act for compensation for depreciation in the value of land caused by noise and certain other effects of the works.) The new provision creates an additional power for authorities to acquire land which will in their opinion be seriously affected by the construction or use of a public development scheme, but which will not be required for the scheme. The power may be used from the same point in time at which the statutory blight provisions apply in relation to land on which the authority propose to carry the development. Broadly speaking, this will be as soon as the proposed site of a scheme (eg the preferred line of a road) has been indicated.
Authorities will wish to consider exercising their discretionary powers to acquire property seriously affected - or likely to become seriously affected - wherever this is warranted to alleviate associated hardship. Any land acquired would of course, where appropriate, fall to be treated as unused public sector land and consideration given to its disposal.
Purchase by Government Department
The criteria which Government Departments adopt in dealing with acquisitions under section 246 HA 1980 or section 26 LCA 1973 are set out in Department of Transport Circular 2/97 (see Paragraph 81 of the Circular). Paragraph 81 of Circular 2/97 is reproduced at Appendix 15/1. The justification for acquisition is to be considered solely in relation to physical factors and not in relation to depreciation in value. The physical factors are normally likely to be those set out in section 1(2) LCA 1973 but are not necessarily to be limited to them since it is conceivable that the enjoyment of land may be seriously affected by visual intrusion.
15.63 Purchase price
As the powers of acquisition are limited to purchases by agreement the statutory compensation code for compulsory acquisition does not apply. Where the valuer is negotiating terms for the purchase by a Government Department the purchase price should be assessed on the basis of market value as for compulsory purchase disregarding any depreciation or appreciation or appreciation attributable to carrying out, existence or use of the works.
The valuer should clarify with the purchasing authority whether it is prepared to reimburse items of disturbance. Where appropriate, the price should include disturbance losses reasonably and necessarily sustained where the owner’s desire to sell is entirely due to the effects of the scheme and the owner would otherwise have no reason to move. Where the property is not to be demolished and consists of both business and residential accommodation and the valuer considers that the business part is capable of continued use by the vendor for the former purpose with or without the residential accommodation, the valuer should ask the acquiring authority concerned whether or not the premises would be available and the terms upon which they could be offered to the vendor. If the premises are available there is normally, subject to the terms, no cause for payment of business disturbance and the disturbance costs should therefore be assessed in the normal way in relation to those items of expense and loss attributable to the securing of and taking up residence in alternative living accommodation.
Business disturbance should not however be excluded just because the physical effects of the construction or use of the works made it unreasonable for health or other reasons to expect the person from whom the interest is acquired to continue in business at the premises.
Where business disturbance is admissible it should be assessed with regard to section 46 LCA 1973 where the occupier is aged 60 or over and meets the qualifying conditions.
15.65 Home Loss Payments
No payment corresponding to a Home Loss Payment should be made because the acquisition is not made under compulsory powers.
15.66 Part I LCA 1973 undertaking
The compensating authority may wish to include in the contract for sale an undertaking by the vendor not to make a claim for compensation under Part I LCA 1973. It remains a moot point whether such an agreement to contract to
15.67 Legal costs
In cases where the valuer is negotiating terms for the purchase by Government Departments (except DoH) the valuer should recommend that the proper legal costs of the sale by the vendor as approved by the Government Legal Department should be paid by the purchaser. (See Section 5 Part I of this Manual).
15.68 Surveyor’s fees
Where the vendor employs a surveyor the valuer should recommend payment of the appropriate fee in accordance with Section 5 Part 2 of this Manual.
Purchase by local authorities
Where the valuer is negotiating terms for the purchase of property by a local authority an enquiry should be made whether the authority is willing to proceed on the same basis as for Government Departments. If the authority indicates a wish to adopt a different basis the valuer may proceed accordingly except where the purchase price on the basis adopted by the authority is likely to exceed the price assessed in accordance with para 15.63 when the case should be referred to the PS Professional Guidance Team.
15.70 Valuations for grant or loan sanction
Where reports are required from the valuer in connection with grant or loan sanction the value should be assessed in accordance with para 15.63.