Part VII   
the new code - disregards and assumptions

 

Introduction

                    7.1               In this Part we consider what rules, relating to disregard of the “project” (our preferred term[1]) and planning assumptions, should be included in the new Code. We first consider what, if anything, can be salvaged from the existing statutory rules, and what should be repealed without replacement. We summarise the relevant recommendations of CPPRAG. We then discuss in more detail the key issues and make provisional proposals, first for disregarding the project, and secondly for planning assumptions. Finally, we refer to the provisions of the 1961 Act dealing with “Third Schedule rights”, and propose their repeal without replacement.

The existing rules

Clearing the decks

                    7.2               The conclusions of the historical review (summarised in the previous Part) leave us in no doubt that, as a first step, we should recommend the repeal of all the existing statutory rules relating to the no-scheme rule. The new statutory version should be in the form of a set of new rules, drawing selectively on such parts of the existing rules as have proved of value. The Code should state expressly that the new rules supersede all the existing versions, including the judicial versions of the rule.[2]

                    7.3               For the reasons discussed in the Appendix, we think that the following provisions of the 1961 Act have no place in the new Code, and we provisionally propose their repeal, without replacement:[3]

Section 5(3) (“special suitability”)

Sections 6 to 8 (disregard of changes in value actual and prospective development)[4]

Section 15(3) –(4) (“third schedule rights”) [5]

Section 16 (planning assumptions derived from the development plan)

                    7.4               The following provisions, again in the light of the Appendix, we think justify consideration for possible inclusion in modified form in the new Code:

Section 9 (disregard of depreciation due to prospect of compulsory acquisition)

Sections 14-15 (other than 15 (3)-(4)) (assumptions as to planning permission)

Sections 17-22 (certificate of appropriate alternative development)

We shall examine them in more detail as they arise in the following discussion.

The Cpprag review

                    7.5               The CPPRAG Review commented on the no-scheme rule, and the related statutory provisions. The main points made in the Review were:

                                            (1)             Disregarding the scheme The CPPRAG Review included a section under the heading “Changes in value caused by the effects of the scheme”, which considered the judicial version of the no-scheme rule, along with sections 5(3) and 6 of the 1961 Act.[6] The Review acknowledged the uncertainty of the existing law, particularly where a single major scheme is being carried out in stages. The group made no detailed recommendations, treating the issue as dependent on a “fundamental” policy decision by Ministers whether to retain the “no-scheme” principle. However, they recommended that, if the rule were to be retained:

                                                                   (a)              A decision should be made “whether to retain the existing rule by disregarding the scheme from its inception or to change to the approach of imagining that the scheme has been cancelled at the date of the valuation”;[7]

                                                                   (b)              A single statutory provision should apply to all compulsory purchase schemes and should subsume the current provisions of rule (3).[8]

                                            (2)             Changes in value resulting from the threat of compulsory acquisition Under this head, the Review considered section 9 of the 1961 Act, and noted that there had been “no arguments in principle” against it. It recommended its retention and extension to “embrace indications that adjoining or adjacent land may be compulsorily acquired.”[9] It thought that any “practical valuation problems” could be addressed through dispute resolution procedures.[10]

                                            (3)             Planning assumptions The CPPRAG Review recommended that planning assumptions should be governed by a simplified section 17 procedure, which would replace sections 14 to 16. The appeal to the Secretary of State would be retained. The procedure should be extended to cover “the whole of the land forming part of the scheme of acquisition”. There should be a clearly identifiable “relevant date”, which “should not be fixed at a point too far into the negotiations”; but too early a date would be “more likely to give rise to speculation about possible alternatives”. The date could be linked to the date for determining the no-scheme position for valuation purposes.[11]

                    7.6               The DTLR Policy Statement did not express any view on this topic.  Comment on the policy issues was deferred pending the Law Commission Consultative Report, and consultation on our proposals.[12]  We shall take the CPPRAG suggestions into account, where they arise, in the following discussion.

The content of the new code

General approach

                    7.7               In the light of the discussion in the previous Part, it seems to us that the new rules should be directed at three main objectives:

                                            (1)             for the protection of the authority, against having to pay a price inflated by its own regeneration activities or its own special location requirements, a rule requiring the disregard of increases in value attributable to the public project for which the acquisition is made;

                                            (2)             for the protection of the landowner, a rule requiring the disregard of decreases in value (or “blight”) attributable to the threat of the project and related activities of the authority;

                                            (3)             for the assistance of both parties and the Tribunal, a provision for defining the planning status of the land, that is, the permissions, actual or assumed, that are to be taken into account in the valuation.

                    7.8               More generally, the rules should, as far as possible, be clear and coherent. Further, they should leave valuers and the Tribunal with their feet on the ground in the real world, rather than force them to make unrealistic flights into a world of make-believe.

Provisional proposals

                    7.9               We set out our provisional proposals, below. The main points are as follows:

Defining the “scheme” or “project”

                7.10               As explained in the previous Part, a particular problem is uncertainty over the scope of the “scheme”. We contrasted the development of the existing law in a period when most compulsory acquisitions were authorised by special Acts for particular projects, with modern acquisitions under general statutes. We propose to discard the word “scheme”, as too imprecise and carrying too much historical baggage.

                7.11               We take as our starting-point a more precise definition of the “relevant project”, which is supported by existing authority.[13] The definition is intended to provide an analogy with the scope of the project which might in the past have been the subject of a special Act. It is intended to direct attention to a particular project for which the acquisition of the subject land is authorised, and of which the works or uses on the subject land will be an integral part.

                7.12               Such a definition, without any further elaboration, would in our view be a considerable improvement on the present law. There would remain a factual issue, to be decided by the Tribunal in case of dispute, as to the scope of the “project” in any particular case; but this would fall to be decided by a single statutory test, rather than the variety of statutory and judicial versions which exist at present. This is the basis of Proposal 9 below.

Should the project be defined in the order documents?

                7.13               As an alternative, we have considered whether it would be possible or desirable to seek greater certainty at an earlier stage. We have already noted[14] that, in the provisions introduced by the 1959 Act, the matters to be disregarded in relation to an ordinary compulsory purchase order (not related to a wider statutory designation) were confined to the area of the order itself. It would be possible to build on that in the new Code, by providing a presumption that the “project” is confined to the area of the particular order, and that it was initiated on the first notice date.[15]

                7.14               The onus would be put on the authority, if it wished to argue for a wider project, to define in the order documents the nature and scope of the project, and the resolution which authorised it. The date of that resolution would then be treated as the “project initiation date” (in place of the first notice date).  To limit the need to “re-write history”, it could be provided that the project initiation date would be whichever was the later of the resolution date and a date (say) three years before the first notice date.

                7.15               We have considered whether it might be desirable to allow the authority’s definition of the project to be the subject of objections at the same time as objections to the principle of the order, so that it could be determined by the Secretary of State (or other confirming authority) at the time the order itself is confirmed. The advantage again is that of narrowing the issues at an early stage. It may also be said that the scope of the “project” is more a matter of planning judgment, than of valuation expertise, and therefore appropriate to be considered at the confirmation inquiry. The disadvantage may be thought to be that the confirmation process could be unnecessarily complicated and delayed, by introducing issues which are of practical relevance only to compensation.

                7.16               Even if the Secretary of State were not to be formally involved in this way, the Department could have a role in providing guidance to authorities in defining the project, and in encouraging early mediation in cases of dispute.

                7.17               Under this alternative, the Proposal might include the following additional provisions after the definitions:

(2A) (i)If the authority wishes to contend that the relevant project extends to land other than the subject land, they shall include in the notice of the order a statement (in prescribed form) certifying that fact, defining the nature, extent and purpose of that project, and the date of the resolution of authorising that project;

       (ii) Where such a statement is included in the order, its contents may be challenged by the claimant (but not the authority) on the hearing of a reference to determine compensation;

      (iii) Subject to (ii), in any proceedings before the Tribunal:

                                                                   (a)              The relevant project shall be as defined in the statement under (i);

                                                                   (b)              The cancellation assumption shall be applied taking (instead of the first notice date) the later of the resolution date defined under (i) and the date three years before the first notice date;

                                                                   (c)              If no statement is served, it will be assumed (against the authority, but not the claimant) that the relevant project is confined to the area of the compulsory purchase order, and began on the first notice date.

[As an alternative to (ii), an interested person could have the right to challenge the statement by objection to the confirming authority, within the time prescribed for objections to the order, and the decision of the confirming authority would then be binding on both parties before the Tribunal.]

 

Cancellation assumption

                7.18               To provide further certainty, we provisionally propose to apply the “cancellation assumption”. This is based on the “cancellation approach”, which the House of Lords confirmed as the correct approach when determining appropriate alternative development (under 1961 Act s 17[16]). Although the House was not there directly concerned with the “no-scheme rule”, it emphasised the difficulty of trying to “reconstruct the planning history of an area on the assumption that the proposal had never come into existence at all.”[17] The “cancellation approach”, as applied in that case, required it to be assumed that the proposal underlying the compulsory purchase order was cancelled on the date of the “proposal to acquire” (equivalent to the “first notice date”).

                7.19               We would propose a similar approach. However, we have discussed above the alternative of allowing the authority to define a wider project, and an earlier initiation date, in the order documents. If that approach were adopted, the cancellation approach would be applied at the project initiation date (or, if later, three years before the first notice date)

No other statutory project for the same purpose

                7.20               In any event, in our provisional view, it is, or should be, implicit in the cancellation approach that the valuer also assumes that there would have been no other project under statutory powers to meet the same need.[18] The potential problem is illustrated by Margate Corp v Devotwill,[19] where it was held that the Tribunal had not only to disregard the particular road scheme, but also to consider what other scheme might have emerged in the no-scheme world to meet the same purpose. In relation to road schemes, the legislature intervened by requiring it to be assumed that “no highway would be constructed to meet the same or substantially the same need..." [20]

                7.21               In our view, the same thinking should be applied generally. Thus, any increase or decrease in value due both to the particular proposal, and to any other statutory proposal to meet the same need, should be excluded. On the other hand, the possibility (where appropriate) of a similar private project can be taken into account in the valuation.[21]

 

Increases in value

                7.22               For the protection of the authority, we propose a straightforward statement of the rule, requiring disregard of any increase in value caused by the “relevant project”, assessed on the cancellation assumption. This in our view will provide adequate protection against increases due either to the authority’s own investments in land assembly or infrastructure improvements, or to its special location requirements. It will thus meet the reasonable objectives of both the judicial version of the no-scheme rule, and of rule 5(3) of the 1961 Act.

Decreases in value

                7.23               As explained in Appendix 5,[22] the 1961 Act recognised the need for protection against decreases in value, by including a provision derived originally from the 1947 Act:

9. No account shall be taken of any depreciation of the value of the relevant interest which is attributable to the fact that (whether by way of… allocation in the current development plan, or by any other means) an indication has been given that the relevant land is, or is likely, to be acquired by an authority possessing compulsory purchase powers.

                7.24               The “relevant interest” in this context means the interest acquired under a notice to treat, and the “relevant land” means the land in which that interest subsists.[23] Thus, the rule appears to be directed simply to the effects of the threat to a particular owner, rather than the effects of the “underlying scheme”, or even of the compulsory purchase order (which may include other ownerships). On a literal interpretation, therefore, section 9 appears narrower than any of the other versions of the no-scheme rule.

                7.25               However, in the second Jelson case,[24] the Court of Appeal overcame this apparent limitation, by a wide interpretation of the word “indication”, which in effect equated it to the “scheme” under the judicial version of the rule. Similarly, in the Melwood Units case (1979), the Privy Council, when confirming that the judicial no-scheme rule applied to decreases in value caused by the scheme, referred to section 9 of the 1961 Act as “merely reflecting the law”.[25] 

                7.26               As CPPRAG, pointed out, if the intention is to protect against blight linked to the authority’s proposals, it may be unfair to the owner to limit the rule to indications related to the immediate purchase. In some cases, the blight may be caused directly by a threat to acquire the site of a particular business.[26] More often, however, the depreciation in value is due to general blight caused by the prospect of a project affecting a whole area, of which the threat to the particular owner is a small part. In this respect, CPPRAG’s recommendation seems too narrow. They proposed extending the rule to indications that “adjoining or adjacent land may be compulsorily acquired”. Yet, the extent to which the project involves compulsory acquisition may not be the critical factor. The project may involve works, or the prospect of works, on land already in the ownership of the authority, or land over which it is able to acquire the necessary rights by agreement.

                7.27               We propose, therefore, that the landowner will be protected by a wide rule requiring disregard of any diminution in value or reduced profits caused by the project itself or any advance “indication” of the project. Furthermore, it seems logical to link this rule, which is in substance concerned with protection against “blight” caused by the authority’s plans, to the provisions for “statutory blight” under the Town and Country Planning Act 1990 (or any replacement of those provisions).[27] The Policy Statement proposes a new regime for statutory blight, to be introduced by statutory instrument.[28] This would provide a good opportunity to link the compensation provisions with the statutory blight regime, as part of a coherent set of provisions for protection against loss due to blight.

Blight and purchase notices

                7.28               The basic rule needs to be adapted for cases where the acquisition is forced on the authority, and there is therefore no “purpose” as such:

                                            (1)             Blight notices The forced acquisition in these cases is directly linked to the blighting effect of an allocation or other proposal of the authority. It is reasonable therefore for any reduction in value caused by that allocation or proposal to be disregarded.

                                            (2)             Purchase notices The object of such notices is to relieve the owner of a burden, by giving him the right to sell to the authority land which is incapable of reasonably beneficial use following a planning decision. Given this objective, there is no obvious reason why it should be attributed more value for compensation purposes than it has in reality.  The land should be valued as it is, without any disregards.[29]

                7.29               Accordingly, our provisional proposals for the new no-scheme rule are as follows:

Proposal 9: disregarding the project

(1) The existing rules, statutory or judge-made, relating to disregard of “the scheme” will be replaced by a new statutory set of rules, by reference to the “relevant project”;

(2) In this and the following proposal:

(a) “The relevant project”: means the project for the purpose of which the authority has been authorised (under the applicable statute) to acquire the subject land;

(b) “Planning status”: means the planning permissions, actual or assumed, relating to the subject land or other land, to be taken into account for the purpose of assessing compensation;

(c) “The cancellation assumption”: means the assumption that the relevant project was cancelled on the first notice date, with no prospect of that, or any other project to meet the same or substantially the same need, being carried out thereafter under statutory powers;[30]

(d) “Planning hope value”: means any increase in value of the subject land derived from the prospect of planning permissions being granted at a date subsequent to the valuation date;

(e) “Blighted land”: means land falling within one of the categories of planning proposals defined by Schedule 13 of the Town and Country Planning Act 1990 (or any replacement thereof);

(f) Any reference to the value of land includes a reference to the profitability of a business on that land;

[(2A) (i)If the authority wishes to contend that the relevant project extends to land other than the subject land, they shall include in the notice of the order a statement (in prescribed form) certifying that fact, defining the nature, extent and purpose of that project, and the date of the resolution of authorising that project;

       (ii) Where such a statement is included in the order, its contents may be challenged by the claimant (but not the authority) on the hearing of a reference to determine compensation;

      (iii) Subject to (ii), in any proceedings before the Tribunal:

                                                                   (a)              The relevant project shall be as defined in the statement under (i);

                                                                   (b)              The cancellation assumption shall be applied taking (instead of the first notice date) the later of the resolution date defined under (i) and the date three years before the first notice date;

                                                                   (c)              If no statement is served, it will be assumed (against the authority, but not the claimant) that the relevant project is confined to the area of the compulsory purchase order, and began on the first notice date.

As an alternative to (ii), an interested person could have the right to challenge the statement by objection to the confirming authority, within the time prescribed for objections to the order, and the decision of the confirming authority would then be binding on both parties before the Tribunal.] [31]

(3) In assessing compensation there shall be disregarded:

(a) any increase in value of the subject land fairly attributable to the carrying out of, or the proposal to carry out, the relevant project;

(b) any decrease in value of the subject land fairly attributable (i) to the carrying out of, or the proposal to carry out, the relevant project, or (ii) to any prior indication of the proposal to carry out that project, or (iii) to the subject land being within a category of “blighted land”;

(4) The increase to be disregarded under (3) shall be assessed by comparing the value of the land at the valuation date with the value as it would have been at that date on the cancellation assumption.

(5) The following rules apply where land is treated as having been subject to compulsory purchase, under procedures initiated by the claimant (“deemed compulsory purchase”):

(a) If the deemed compulsory purchase follows service of a blight notice[32] under the Town and Country Planning Act 1990, the relevant project shall be determined by reference to the planning proposal (as defined in Section 149 and Schedule 13 of that Act) by which the land became blighted land;

(b) In any other case (including the service of a purchase notice under section 137 of that Act), the relevant project shall be assumed to be the service by the claimant of the notice which initiated the procedure;

(c) In either case the “first notice date” shall be taken as the date of service of the notice which initiated the procedure;

(6) Nothing in this proposal shall be taken as altering (for valuation purposes) the planning status of the subject land or any other land.

Consultation issues

(F) We invite views of consultees generally on the above provisional proposals, including in particular:

(i) Do they agree that all existing versions of the no-scheme rule should be replaced by a single statutory set of rules?

(ii) Do they agree with our proposed definition of the “relevant project” as the basis of the new rules?

(iii) Do they agree with our proposal to apply the “cancellation approach” in this context?

(iv) Would they favour the suggested alternative for defining the “project” at the time of the order (para 7.17 above); if so, should the authority’s definition of the project be open to challenge (a) at the time of confirmation of the order, by objection to the confirming authority, or  (b) only before the Tribunal, at the time of the determination of compensation?

Planning status

General approach

“Planning status” defined

                7.30               In this proposal we address the problem of defining the “planning status” of the land for valuation purposes. We use that term to describe the planning permissions, actual or assumed, relating to the subject land or other land, to be taken into account for the purpose of assessing compensation (see Proposal 9(2) above).

The 1961 Act

                7.31               The 1961 Act contains elaborate provisions to define the permissions, actual or assumed, which are to be taken into account in the valuation. The rules appear to exhibit some ambivalence, as to whether the planning status of the land is to be taken as it is in the real world, or is to be reconstructed in a hypothetical “no-scheme world”.

                7.32               Thus, on the one hand, regard is to be had to any actual permissions for development of any site which includes the subject land (whether or not those permissions would have been granted apart from the scheme); and permission is to be assumed for the authority’s own development. On the other hand, 1961 Act section 17 introduces a hypothetical element, by providing a procedure which enables permission to be assumed for developments which would have been permitted in the absence of the proposal for compulsory purchase.

Planning status as a fixed factor

                7.33               We think that, in this respect, the approach of the 1961 Act can be defended.[33] It seems right in principle to treat the actual planning status of the land as a fixed factor, not subject to the “no-scheme” test. This is consistent with the modern planning system, under which planning permission runs with the land, and, in general, there is no provision for recoupment of planning gains or compensation for planning losses. In the post 1947 Act world, the landowner is not normally entitled to compensation for the adverse economic consequences of planning allocations (for example, if his land is in the green belt), any more than he is charged for the benefits (for example, allocation as a shopping centre).[34]

                7.34               Furthermore, this approach of treating planning as a fixture, subject to limited exceptions, restricts the possible area of speculation. Thus, for example, in the Wilson case,[35] permission was assumed for residential development on the subject land in accordance with the authority’s proposal.[36] Without that assumption, the Tribunal would have had to embark on a wholly speculative inquiry, to find out what would have happened to the planning of the area, if the authority had not selected it for its own residential scheme.

                7.35               However, the fact that permission was assumed for residential development, did not prevent the disregard (under the Pointe Gourde rule) of the added value given to the subject land by the prospect of implementation of the permission by the authority (including infrastructure improvements etc). Thus, existing law maintains a distinction between the value attributable to planning permission for the project, which is assumed to run with the land, and value attributable to public investments in that project, which are disregarded. In our provisional view, this is a valid distinction, which should be maintained in the new Code.

                7.36               On the other hand, at the more detailed level, the section 17 certificate procedure recognises the perceived unfairness of depriving an owner of the value of a potential development site, because it has been selected to meet a public need, such as for a school, as compared to his immediate neighbours who have the advantage of permission for private development. 

Planning status in the new Code

                7.37               Accordingly, the main points of our proposals are as follows:-

                                            (1)             The claimant will be able to claim the benefit of any actual permissions in existence at the valuation date, in addition to an assumed permission for the authority’s development. 

                                            (2)             Further, he or she may claim the benefit of an assumed permission for any alternative development which would have been permitted if the land had not been proposed for compulsory acquisition.  This will be assessed in accordance with the “cancellation assumption” as explained above; that is, one imagines the position as if the proposal to acquire and the underlying project were cancelled at the first notice date. 

                                            (3)             These assumptions will not be limited, as now, to the subject land. This can cause arbitrary and unrealistic distinctions between the assumed planning status of that and any surrounding land which is relevant to the valuation.

                                            (4)             The claimant will have the option of seeking an advance determination of this issue by a procedure similar to the section 17 Certificate procedure (“planning status certificate”).  Under this, a decision is made by the local planning authority, which is then taken into account by the Tribunal. However, in recognition of the hypothetical nature of the exercise, the rules are more flexible than under the 1961 Act; thus:-

                                                                   (a)              The application need not be confined to the precise area of the subject land (which will have been selected by the authority for the purposes of its project, and may not represent a sensible site for alternative development);

                                                                   (b)              The certificate will give only “general indications” of the conditions or obligations likely to be imposed. In the real world these would be subject to detailed negotiations between developer and planning. It is unrealistic and wasteful of resources to require such detail in a hypothetical exercise. It will be for the Tribunal, where relevant, to hear evidence and reach a view as to the likely effect of such requirements on value.

                7.38               The intention is that the rules for establishing planning status, actual or assumed, should be an exclusive code.  This represents a departure from the present law where it is possible for different decisions to be reached under the statutory rules and under the judicial version of the no-scheme rule.

Date of assessment

                7.39               Use of the first notice date is consistent with the present rules applying to section 17 certificates under the 1961 Act. The Act provides alternative dates for reverse procedures, such as purchase notices (date of deemed notice to treat) and offers to purchase (date of offer). [37] The same rules can be applied under the new Code. A positive certificate should (as now) remain binding. However, we would propose that a negative certificate should be open to review by the Tribunal, in the light of changes in planning policy or physical circumstances (so far as consistent with the no-scheme rule) up to the valuation date.

Appeals

                7.40               At present the appeal against such a decision lies to the Secretary of State.  We have included this as a possible option. However, we have also included an alternative option of appeal to the Lands Tribunal.  This seems to us likely to be a more efficient use of resources, and may also be more consistent with the principles of the Human Rights Act 1998, at least where a Government Department is the acquiring authority:-

Efficiency

                7.41               At present there is a right of appeal to the Secretary of State, which takes a form similar to a planning appeal. This may result in a duplication of work, since even if the Secretary of State confirms the planning authority’s decision to issue a negative certificate, it is not binding on the Tribunal.

                7.42               There seems to be no real need for the Secretary of State to be involved. It may be useful to retain the role of the Inspectorate, in cases where complex planning issues may arise, together with the possibility of a local inquiry. Regulations could provide (with the agreement of the Chief Planning Inspector) for the actual decision to be made by an inspector under procedure analogous to the present local inquiry (with delegated authority from the Tribunal, instead of the Secretary of State). Alternatively, arrangements could be made (under existing procedures) for the Tribunal to sit with a planning inspector as assessor.

Human Rights

                7.43               In any event, the provision for appeal to the Secretary of State against decisions under section 17 may need to be reviewed under the Human Rights Act 1998. Article 6(1) of the Convention guarantees a right to a fair hearing by an independent tribunal in the determination of civil rights. The Secretary of State is not an independent tribunal in that sense. His apparent lack of independence is particularly noticeable in cases where the acquiring authority is a Government Department. For example, in Fletcher Estates[38] where the land had been acquired by the Secretary of State for Transport, the local authority had granted to the owner a certificate for residential development, but this was overruled on appeal by the Secretary of State for the Environment. Thus, the Secretary of State appeared to be judge in his own cause.

                7.44               In the recent Alconbury case, it was held that the Secretary of State’s role in determining planning appeals and confirming compulsory purchase orders, even if he has a financial interest,[39] is consistent with Article 6(1) because he has a direct interest in the policy issues involved, and the legality is supervised by the High Court.[40] However,  his role in appeals on section 17 certificates is not directly comparable. These have no policy significance in the real world, and are simply a part of the process of determining compensation.

                7.45               On the other hand, in a recent case,[41] the Court of Appeal advocated a flexible approach, in the light of the Alconbury decision, in applying Article 6 to different factual circumstances. Arguably, the procedure for appeal to the Secretary of State can be justified by the objective of replicating “real-life” planning procedures, and the control provided by the High Court on points of law is sufficient protection to satisfy the Convention. However, the position is uncertain.

                7.46               Accordingly, our proposals are as follows:

Proposal 10: Planning status

(1) The following rules will apply for the purpose of determining planning status at the valuation date:

(a) Account is to be taken of any planning permissions in existence at the valuation date (on the subject land or any other land);

(b) Planning permission is to be assumed (so far as not in existence at the valuation date) such as would permit the carrying out of the relevant project (on the subject land and any other land comprised in the project);

(c) Planning permission is to be assumed for any development (on the subject land or any other land) such as would reasonably have been expected to be granted not later than the valuation date, on the cancellation assumption;

(d) No other assumptions are to be made as to the existence of any planning permissions at the valuation date, but this rule does not prevent account being taken of any planning hope value.

(2) For the avoidance of doubt, in relation to any permission assumed under this Proposal:

(a) the assumption that permission has been granted does not of itself imply any assumption that work has been or will be carried out, or expenditure incurred, in implementing the permission;

(b) regard shall be had to any costs or expenses which would reasonably have been expected to be incurred in obtaining or implementing the permission; or in complying with any conditions, obligations or requirements to which the permission was, or would reasonably have been expected to be, subject.

(3) For the purpose of determining the permission or permissions to be assumed under (1)(c) above, either the claimant or the authority may, at any time after the first notice date, apply to the local planning authority for a “planning status certificate”, in accordance with the following rules (and “procedural regulations” to be made by statutory instrument):

(a) A planning status certificate is a certificate stating the opinion of the local planning authority as to the development (if any) on the land comprised in the application for which planning permission would reasonably have been expected to be granted on the cancellation assumption;

(b) The application for a certificate may relate to the subject land or any part of it, and any adjoining land which could reasonably have been expected to be part of the same development (whether or not in the ownership or control of the claimant);

(c) The certificate should include:

(i) Where permission would reasonably have been expected at some future date, an indication of the date;

(ii) A general indication of any conditions, obligations or requirements, to which the permission would reasonably have been expected to be subject;

(d) Either:[42]

(A) There shall be a right of appeal against the certificate to the Secretary of State, by either the claimant or the authority (based on the present right under 1961 Act, s 18ff); or

(B) There shall be a right of appeal against the certificate to the Tribunal, by either the claimant or the authority, subject to procedural regulations, and any time-limits there laid down; the regulations will give the Tribunal a wide discretion as to the timing and nature of the hearing of the appeal, having regard to any related compensation reference; in particular the Tribunal may direct:[43]

(i) that the appeal be determined on its own, or at the same time as a reference relating to the determination of compensation for which the certificate is required;

(ii) that the hearing of the appeal should take the form of a local inquiry before a planning inspector (appointed for the purpose by the Chief Planning Inspector), and that the inspector be given delegated power to determine the appeal on behalf of the Tribunal;

(e) In determining compensation:

(i) the Tribunal must take account of any permission, which is to be assumed in accordance with the planning status certificate;

(ii) in deciding (under the above rules) whether any other permission is to be assumed at the valuation date, it must have regard to any contrary opinion expressed in the certificate;

(f) Regulations may provide for the certificate procedure to be applied (with or without modifications) to special cases, including:

(i) where an offer is made by the authority, before the first notice date, to negotiate for the purchase of an interest in land which is, or may be, subject to compulsory purchase;[44]

(ii) where a claimant is absent from the United Kingdom or cannot be traced.[45]

Consultation issues

We invite consultees’ views generally on the above proposals. In particular:

(1) Do consultees agree that (a) permissions existing at the valuation date should be taken into account (whether or not they would have been granted apart from the project) (b) permission should be assumed for development in accordance with the authority’s proposals?

(2) In relation to the proposed “planning status certificate”:

(a) Do consultees agree that the applicant should be permitted to include (as we propose)  the subject land or any part of it, and any adjoining land which could reasonably have been expected to be part of the same development (whether or not in the ownership or control of the claimant); if not, how should the application area be defined?

(b) Do consultees consider (i) that the existing right of appeal to the Secretary of State should be retained or (ii) that the local planning authority’s decision should be subject to appeal to the Lands Tribunal, which may, at the discretion of the Tribunal, be dealt with in advance of, or at the same time as, other valuation issues; and, in the former case, may be delegated to a planning inspector?

Third schedule rights

                7.47               It is convenient to deal here with 1961 Act, section 15(3) and (4), even though not directly related to the no-scheme rule. They are concerned with planning assumptions to be made, in assessing compensation, based on so-called “Third Schedule rights”.[46]

                7.48             This concept dates back to the 1947 Act, under which the rights to carry out certain categories of minor development, listed in the Third Schedule to that Act, were treated as falling within the “existing use” of land. They were subject to compensation if the land were compulsorily acquired, and, in some cases, even if permission for such development was merely refused. The concept survived the restoration of market value, and still exists, in much restricted form, in the Town and Country Planning Act 1990.[47]

                7.49             The survival of these rights in the 1961 Act seems an unnecessary complication. Our provisional proposal is to simply to repeal section 15(3) and (4),[48] without replacement.

Do consultees agree that 1961 Act section 15(3) and (4) (“third schedule rights”) should be repealed without replacement?