Land Compensation Manual Section 16: Estimates, Negotiations, Reports and Advance Payments

Part 3: Reports

The Valuation Office Agency`s technical manual covering all aspects of compulsory purchase and compensation.


16.70 Scope

This instruction relates to reports regarding the compensation or consideration for land taken, including sums in respect of disturbance, and sums payable in respect of injurious affection where no land is taken from the claimant. The principles referred to in Paragraph 16.71 below apply to all reports, but reference should always be made to the Section of this Manual relating to the type of case in question and any specific instructions followed.

Where negotiations have proved abortive see Section 16 Part 2.

16.71 Function of reports

The function of a report is to give the recipient all the information necessary to take such further action as is required without the need to refer back for clarification or additional information.

16.72 Markings ‘In Confidence’ and ‘Informal Advice’

Reports should be marked ‘In Confidence’ except where made to local authorities to which the Local Government (Access to Information) Act 1985 applies (see Paragraph 16.89).

Valuers should not describe valuations as ‘formal’ or ‘informal’ as these terms may give rise to the misunderstanding of unstated assumptions applicable in either case. Note that a valuer is just as liable for an opinion expressed ‘informally’ as ‘formally’.

Content of reports

16.73 Facts and incidents affecting value

The facts on which the valuation is based should be clearly stated. Where an interest is subject to incidents that affect value, care should be taken that the report makes reference to the nature of those incidents, so that the recipient is aware of any assumptions or understandings on which the valuation is based. In the case of abbreviated reports (eg reports made on a client’s pro forma) and reports required to certify an ‘outside’ valuer’s settlement, these matters can frequently be covered by a suitable cross-reference to information supplied with the request for the advice or certificate.

16.74 Safeguarding clauses

Where any of the facts or incidents affecting a valuation have not been verified by full investigation, inspection or survey, the report should always be worded to ensure that recipients are made aware of such limitation and can seek additional specialised advice if they so wish. All assumptions and special assumptions should be clearly stated. Where an inspection has not been undertaken the valuation should be qualified with the words ‘This valuation is supplied on the basis of restricted information’.

As a general rule, an exemption clause contained in a professional person’s contract of engagement will not be binding on third parties and although there may be some circumstances in which a disclaimer of liability will protect a professional person against claims by third parties it would not be safe to rely on a disclaimer alone (see Yianni v Edwin Evans [1982] QB 438). Accordingly, a safeguarding clause would rarely protect a valuer from an allegation of negligence.

16.75 Validity clauses

In all reports in respect of terms agreed where there is not a fixed date of valuation (eg the date of entry or the date of a binding contract) the report should state that the valuation or price quoted is not to be regarded as valid after a specified period, which normally should neither be less than three months nor exceed six months from the date of the report, nor if the circumstances are altered. This is particularly important when the market is known to be rising or falling and in some cases a three month clause will be the most appropriate.

This clause is applicable to all reports including those relating to ‘blight provision’.

Where the valuer can reasonably foresee, at the time the report is issued, that a possible change of circumstances may require reconsideration of the valuation or the price agreed the recipient should be so informed in the report.

If, during any period specified and before a contract is entered into, the valuer becomes aware of a change of circumstances that invalidates the report, the recipient should immediately be advised and an offer to issue a revised report be made.

16.76 Disposals where stage payments applicable

Where the valuer’s valuation reflects a known intention to convey the land in more than one parcel, or receive payment in stages, the report should set out the terms.

16.77 Disposals where stage payments not applicable

In other cases, unless otherwise stated, the report should assume that:

  • a) all property will be conveyed in one parcel; and
  • b) the conveyance will take place (and full consideration be received) within a reasonable time, with interest where appropriate in accordance with the Law Society Conditions of sale.

16.78 VOA instructions

In all reports, care should be taken to avoid reference to VOA instructions or correspondence that is not available or familiar to the recipient.

16.79 Details of valuation and information from confidential sources

Reports in cases of compulsory purchase should not include any details of how the valuation is arrived at as these may be improperly used by the recipient. An exception is where an apportionment of the compensation has been agreed with the claimant/claimant’s agent under separate heads of claim.

Additional information of an explanatory and non-confidential nature concerning the valuer’s valuation may be separately provided if the recipient authority or department so request.

16.80 Wording of Opinions of value

The wording of opinions of value should be subject to careful consideration. It is not possible to provide a standard wording that would cover all cases, but the opinion should incorporate the basis of valuation (eg Land Compensation Acts 1961 and 1973) and be related to the other matters referred to in the body of the report.

Where the valuation date is coincident with the date of the report, this should be indicated in the wording of the opinion of value, eg ‘I am of opinion that the value of the interest described above as at [date] (the date of this report) is [£ ] [words]’.

It is important that the opinion of value is expressed both in figures and words.

Where the report is required to certify a settlement negotiated by a Government Department, LA, HA or other body, the valuer’s opinion should be confined to a statement that the price agreed does not exceed that payable in accordance with the relevant statutory provisions.

16.81 Signature of reports

All reports and file copies should be signed in full (not simply initialled). Where a report is to be issued to the client electronically, a signed hardcopy should be scanned and sent by email.

16.82 Plans

Reports should, where appropriate, be accompanied by a plan for identification.

16.83 Valuation to be recorded in case file

Where a report contains an Opinion of Value or recommends a provisional settlement, the case file must include a suitably clear, permanent and detailed valuation dated and signed by the valuer who made it.

Form of Report

16.84 General

The form which reports take will be dictated by the nature of the advice required, the type of case and the identity of the authority. Whether or not the basis of value adopted is one covered by VPS 4 (Bases of value, assumptions and special assumptions) in the RICS Valuation – Global Standards 2017, the minimum contents of reports as referred to in VPS 3 (Valuation reports) should be included.

16.85 Report cover

The report, plan and all necessary documents should be enclosed in a suitable report cover with a frontispiece for transmission to the client, except where the report is being transmitted electronically or the client has requested that covers should not be used.

16.86 Format

Reports including those franking settlements negotiated by ‘outside’ valuers should normally be made on printed forms. If a suitable form is not available the report should be in letter form (ie side headed).

16.87 Printed forms

The printed forms available include:

  • VO 2021: to be used for the reporting of terms of compensation provisionally agreed for acquisitions in the generality of cases but excluding Department of Transport/Highways England cases
  • VO 2015: to be used in cases of any kind where no land or interest or right is being acquired eg Part 1 LCA 1973; section 10 CPA 1965 and analogous claims under other Acts such as section 77 HA 1980 (alteration of level of highway) disturbance payments under section 37 LCA 1973 and discretionary payments; Land Drainage and Public Health Act cases; compensation payable on the termination of short tenancies under section 20 CPA 1965; common law claims etc.
  • VO 2022: to be used for reporting completed negotiations for acquisition in Department of Transport/Highways England cases other than short tenancies and discretionary payments
  • VO 2023: to be used for reporting proposed terms of settlement in Department of Transport/Highways England cases where no claim received and the terms of settlement are unagreed, other than short tenancies and discretionary payments
  • VO 2026: to be used in Department of Transport/Highways England cases on completion of negotiations of compensation payable on termination of short tenancies and discretionary payments
  • VO 2016: to be used for reports in connection with advance payments
  • VO 2030: to be used, as appropriate, for reports to the Upper Tribunal (Lands Chamber) in Absent and Untraced owner cases
  • VO 2029: to be used as an Appendix for all types of reports and to be used, for example, to set out extracts from related documents or to enable full information to be given when the space in the body of a printed form is insufficient

When a printed form that has been agreed with the client is used VPS 3 of RICS Valuation – Global Standards 2017 (which recommends minimum contents of reports) need not be strictly followed but the printed form should be extended to include any additional particulars under headings as appropriate to ensure that all relevant matters are covered.

When submitting any correspondence/reports relating to an acquisition by compulsory purchase reference should be made to the Land Compensation Acts 1961 and 1973 (as amended), the Highways Act 1980 or any other statutory basis under which the valuation was made or terms agreed.

16.88 Reports in letter form (side headed reports)

In cases where there is no suitable printed form reports will be made in letter form. The contents should be set out under appropriate headings, having regard to the minimum contents of reports as referred to in VPS 3 (Valuation reports) of RICS Valuation – Global Standards 2017.

16.89 Local Government (Access to Information) Act 1985

The Local Government Act 1972 is amended by the Local Government (Access to Information) Act 1985 to provide for greater public access to local authority (excluding parish) meetings, committee and sub-committee meetings. It places a duty on such authorities to publish certain information including copies of agendas, reports, minutes and background papers.

Section 100A allows access by the public and press to all meetings of the council except in two clearly defined instances. Firstly, the council may exclude the public where confidential information (as defined by section 100(3)) would be disclosed to them if they attended. Secondly, the council may pass a resolution to exclude the public where exempt information (defined in Schedule 12A to the 1972 Act inserted by Schedule 1 of the 1985 Act) would be disclosed if they were present. Such a resolution must describe the nature of the exempt information relied upon (section 100A(5)(b)). ‘Confidential Information’ includes, inter alia, information furnished to the council by a Government Department upon terms (however expressed) that forbid the disclosure of the information to the public, and one of the descriptions of ‘exempt information’ includes ‘the amount of any expenditure proposed to be incurred by the authority under any particular contract for the acquisition of property’.

HMRC (but not the Valuation Office on its own) as a Government Department could claim that information furnished to a council is ‘confidential information’ using the protection afforded by section 100A(3)(a). However, the Commissioners would be unlikely to authorise use of this power without good reasons. To prohibit the disclosure of information to the public without exceptional circumstances would be contrary to the clear intention of Parliament.

Valuers’ communications to local authorities, joint authorities, joint boards or committees and combined police or fire authorities (but excluding parish councils) should wherever they contain confidential material that would have resulted in their previously being endorsed ‘in confidence’ and there is a need of confidentiality, include a paragraph therein to draw attention to the ‘exempt information’ provisions as follows:

‘Your Council is recommended to treat this report/correspondence as Exempt Information under Schedule 12A Local Government Act 1972 (as amended)’.

It is a matter for an authority receiving a communication with this endorsement to decide whether to pass a resolution to exclude the public when the matter is discussed and to endorse the report or correspondence ‘not for publication’ etc in accordance with section 100B(5)(a) and (b).

16.90 Latent Damage Act 1986

Latent damage is damage that is not patent or immediately apparent and an indeterminate period of time may elapse before the damage becomes manifest. It is not unique to the construction industry but can give rise to negligent professional advice.

The Latent Damage Act 1986 amended the Limitation Act 1980 concerning limitation of actions for negligence not involving personal injuries and provided for a person taking an interest in property to have, in certain circumstances, a cause of action in respect of negligent damage to the property before taking that interest.

The Act amends the law as follows:

Section 1 of the 1986 Act gives the plaintiff a choice of the longer of the following two limitation periods:

  • (i) six years from the date when the cause of action arises ie when the damage actually took place. In cases where negligent advice is given, or a negligent misstatement is made, time begins to run as soon as the client (receives and) acts on that advice; or
  • (ii) three years from the date when the plaintiff discovers (or would discover) any significant damage, ie where the plaintiff has let more than three years elapse since reasonably acquiring knowledge of all material facts of the damage, such facts being serious enough to lead a reasonable person to take legal proceedings.

They may therefore take legal proceedings under this Act, providing one of the periods in (i) and (ii) above is still running. The section also imposes a longstop period of fifteen years from the date of the defendant’s breach of duty that gave rise to the damage.

Once this period has expired all actions are barred even though the periods in (i) and (ii) above may not have commenced.

Section 3 of the 1986 Act covers the accrual of action to a successive owner in respect of latent damage to property, provided that the successive owner acquired it in ignorance of its being already damaged.

The possibility that a purchaser might bring successful legal proceedings under the Limitation Act 1980 as amended by the Latent Damage Act 1986 is a factor that should be taken into account during valuations where difficulties with structural damage, defects or negligent construction are present. It would not seem likely that the market would make an enhanced bid on account of the speculative prospect of successful litigation but valuers would be required to decide any cases based upon the relevant facts.

16.91 Safeguarding clauses

General safeguarding clauses or disclaimers of liability should not be used in a report. Instead, a clear statement should be included of the assumptions and special assumptions adopted in the report, together with the statement that the report might need amendment if those assumptions prove incorrect.

However, the following paragraph should be adopted relating to the reliance on the report by third parties:

‘The report should only be used for the stated purpose and for the sole use of your organisation and your professional advisers. No responsibility whatsoever is accepted to any Third Party who may seek to rely on the content of the report unless previously agreed’.

The precise wording of the report must be a matter for the judgement of the valuer but it is essential that the valuer alerts the client to any matters of fact where reliance has been placed on sources of information outside the valuer’s control, or where assumptions have been made, eg where a valuation is based on existing records without inspection, where the state of repair of a property is taken to be as described in the acquiring authority’s request for advice, or where land is assumed to be stable and suitable for development, without abnormal site works.

16.92 Oral reports

Where informal advice is given orally (eg where a client requires advice very urgently) a file note containing both the valuation and a record of any caveats given in the course of the advice should be retained on the case file. In all cases the oral advice should be followed as soon as possible by written confirmation of the advice given orally.


16.93 General

It is a valuer’s duty to the Commissioners to avoid the risk of any charge of professional negligence. When considering the form and content of any report, particularly relating to a case where the valuer has negotiated an acquisition, or where the valuer is giving advice upon which the recipient will rely to effect a purchase, it is essential that the duty of care referred to in Smith v Eric S Bush [1990] UKHL 1 and Harris v Wyre Forest District Council [1990] 1 AC 831 is borne in mind. The decisions in these cases only serve to re-emphasise the principles of past case law. This places an unavoidable duty on the valuer to recognise defects that are likely to affect value by using reasonable skill and care derived from training and experience. The valuer must value the property after taking into consideration all defects that are or ought to be obvious in the course of a visual inspection of so much of the exterior and interior as may be accessible without due difficulty and extends to the need to obtain the MV’s report in appropriate cases.

Following the decision in Roberts v J Hampson & Co 1988 2 EGLR 181, if there is a specific ground for suspicion and the trail of suspicion leads behind furniture, under carpets or into the attic, the valuer must take reasonable steps to follow the trail, until all the information which is reasonable to make the valuation is obtained.

All staff should be made aware of the publication titled ‘Common Defects in Buildings’ by J H Eldridge, which may be of assistance where defects are apparent.

In cases where negligence by a valuer employed by the VOA is claimed, the VO does not claim Crown privilege, consequently valuers must expect their files to be made available for scrutiny under disclosure procedures of the Courts or to the Ombudsman. It is therefore essential that file notes, inspection and valuation details etc should be included in the file on the assumption that they may subsequently be exposed to the Courts or Ombudsman.

The VOA is an Executive Agency of Her Majesty’s Revenue and Customs. It is the policy of HMRC (in common with other government departments) to self-insure in respect of professional indemnity and other insurance risks. HMRC is legally responsible for any liability that VOA may incur in respect of any third party claims arising from the provision of its services.

16.94 Buildings

In cases involving the acquisition of buildings, attention is drawn to Practice Note 16/1 ‘State of Repair of Buildings’.

Contaminated Land

16.95 General

Land may have become contaminated by its previous uses. Sites in inner cities and urban areas are particularly suspect. Such contamination may restrict or prevent development of the land because of immediate or long-term hazards to human health, plants, amenity, construction operations or buildings and services.

The RICS Guidance Note ‘Contamination, the environment and sustainability: their implications for chartered surveyors’ (2010) 3rd Edition provides advice and guidance on dealing with the valuation of contaminated land. It also contains inspection checklists for commercial, rural and residential property. The Guidance Note should be read by all valuers who have to deal with contaminated or potentially contaminated land.

There are many sources of contamination eg industrial process leakage; deposition of airborne particles; storage and disposal of raw materials, wastes and residues; application of sewage sludge to land and in certain locations; mineralised rocks and soils. The possibility of contamination falls to be considered in order to overcome the undesirable consequences of emergency remedial action (remedial action being more expensive after development has taken place), effect on value, delay of development and adverse publicity.

Examples (not exhaustive) of sites on which contaminants may be found are as follows:

  • landfills and other waste disposal sites
  • gasworks and other coal carbonisation plants and by-products works
  • sewage works
  • scrapyards
  • railway land
  • oil refineries, petroleum storage and distribution sites
  • metal mines, smelters, foundries, steelworks and metal finishing installations
  • chemical works
  • munitions production and testing sites
  • asbestos works
  • tanneries
  • paper and printing works
  • industries making or using wood preservatives

The likely contaminants to be found on these sites are:

  • some metals and their compounds - particularly cadmium and lead
  • oil and tar wastes
  • organic compounds - eg phenols
  • sulphates
  • dangerous gases and materials eg methane gas, coal dust, plastics and rubber

Apart from the danger to health and the risk of explosion, the contaminants may have an adverse effect on building construction eg sulphate attack on concrete.

The following features may indicate contamination:

  • absence or poor growth of vegetation
  • surface materials: unusual colours or contours may be due to chemical waste and residues
  • fumes and odours; drums, containers etc that may contain hazardous substances

In addition to local knowledge, historical information from plans and rating records may assist in identification of contamination.

Once contaminants are found then it will be necessary for the appropriate party to carry out a sampling exercise (preferably a regular sampling grid) so that ‘trigger concentrations’ (mg/kg of air dried soil) may be established. Should contamination exceed the trigger concentration then remedial work will be necessary.

The principle method of remedial action are:

  • (i) removal of contaminated material - costs may be high and disposal difficult
  • (ii) covering up with imported clean cover material as permanent hard surfaced cover
  • (iii) chemical or physical treatment in-situ. The effects of sulphate attack can be overcome by the use of properly proportioned good quality concrete with the addition of protective coatings where necessary

Where valuers require assistance with contamination matters they should contact the Minerals Team so that a contamination specialist could assist as appropriate.