The Upper Tribunal has awarded hope value in determining the amount of compensation payable in respect of land compulsorily acquired for the construction of the Hazel Grove to Manchester Airport Relief Road in Budhathoki and others v Metropolitan Borough Council of Stockport [2022] UKUT 35 (LC).
Although the road had been in use for some years, title to four plots of land owned by the claimants had not been transferred. The acquiring authority made a reference to the tribunal to assess compensation payable in order that it could pursue the deed poll procedure under section 9 of the Compulsory Purchase Act 1965.
The scheme involved the construction of a nine-mile dual carriageway linking the A6 at Hazel Grove with Manchester Airport. Two of the claimants’ holdings were pastureland to the west of the scheme and the other two owned small plots which formed part of a golf course. The valuation dates for the purpose of the Land Compensation Act 1961 were 10 and 11 March 2015.
The acquiring authority gave evidence that it was likely that the claimants had been victims of a landbanking scam in which the owner of a larger parcel of land had subdivided the land into smaller plots to be sold off individually. Often the location of such plots is shown to prospective investors on a plan which appears to illustrate a future residential development with a hypothetical access road. The plots are then offered for sale with the prospect of future development increasing their value.
There was no planning permission for any of the plots and the acquiring authority considered there to be little prospect of development, which would be dependent on all adjacent owners co-operating. It valued the plots at the valuation date at significantly less than the purchase prices paid, although the tribunal found the comparable evidence relied upon – which varied widely in terms of location and price achieved – of little assistance.
The tribunal deployed the original purchase prices to obtain a price per acre – £110,000 for the golf course land and £200,000 for the pastureland – to assess relativity which generally accorded with the acquiring authority’s approach, if not its figures. However, the tribunal considered that the acquiring authority had failed to take sufficient account of hope value, an element of which would have remained at the valuation date in the no-scheme world and increased the acquiring authority values by 20% to the figures set out below.
| First claimants | Second claimant | Third claimant | Fourth claimant | |
| Date of purchase | March 2011 | June 2008 | June 2008 | April 2011 |
| Number of plots | 3 | 1 | 1 | 1 |
| Price paid | £27,000 | £12,000 | £12,000 | £10,000 |
| March 2015 value | £1,500 | £500 | £500 | £500 |
| Hope value | £300 | £100 | £100 | £100 |
| 7.5% additional compensation for loss | £135 | £45 | £45 | £45 |
| Compensation | £1,935 | £645 | £645 | £645 |
Louise Clark is a property law consultant and mediator
