[2023] UKUT 214 (LC)

The claimant relied heavily on the sale of 9 Hardy Close as evidence of the impact which location beside a raised main estate road can have on the value of a property. 9 Hardy Close is 10 years older than the property and was sold as a four bedroom detached house, with a bathroom and shower room and an integral garage. It was described as having “a good size rear garden and larger than normal frontage with additional garden area to the side”. It was first offered for sale in April 2021 and eventually sold in May 2022 for £351,000, which compares with its highest asking price of £410,000.

My inspection confirmed that 9 Hardy Close is badly compromised by its location, in a way that is much more severe than will be the case at the property. It sits at the end of a cul-de-sac very close to and just below the level of Brooklands Road, a principal spine road through the adjacent residential area. There is a street lamp beside it in the raised road. The reason that 9 Hardy Close sits so close to the road (approximately six metres away at its closest point) is that the embankment to the road forms part of its rear garden, which is generous in area but compromised for many typical uses. Mr Moore made enquiries of the agent who sold 9 Hardy Close and was told that it had not been maintained it in good condition, which would also have affected the time it took to sell and its eventual sale price.

The sale price can be adjusted for time to the equivalent of £322,300 at the valuation date, and the details can be compared with the other sales in Hardy Close previously referred to, as set out below:

The adjusted sale price of 9 Hardy Close sits £55,000 below that of 26 Hardy Close, which is located opposite on the same road, and £50,000 below that of 10 Hardy Close, which is not a neighbour but located on a different part of the road. Both were four bedroom detached houses of the same age and design, but with smaller gardens. Amongst the various reasons why 9 Hardy Close might have compared so unfavourably with the other two houses, its location is likely to be the most important one given its very close proximity to the road. The claimant maintained that this evidence supported his claim for loss of value at £35,000, but did not attempt to isolate the element of the price differential which could be attributed to physical factors only.

Mr Moore looked at the agreed reservation prices for four bedroom houses of a particular design in the Stour View development, to see if a price difference could be identified between a property next to Pioneer Way and one on a side road. He was told that Taylor Wimpey did not make a price differentiation for location within the estate, but he identified an adjusted price difference of £10,000 between the two properties referred to earlier. No. 243, with an adjusted price of £398,000, was located on the corner of a junction between Pioneer Way and a side road, while No. 50, with an adjusted sale price of £408,000, was located further away down a side road. Mr Moore made an assumption that 60%, or £6,000, of that difference would be attributable to physical factors, which reflected 1.5% of the higher value of £408,000.

Mr Moore commented that No. 243 would suffer more traffic noise than the property, because of its location closer to Pioneer Way and on a junction, and because the noise would arise from a greater length of road than from the 40 metre spur. The effect of street lighting from two roads would be similar to that at the property. It was his opinion that the impact of physical factors on the property would be only one third of that at No. 243, and therefore the loss of value arising would be only 0.5% of the switched off value of £400,000, that is £2,000.

It was acknowledged by Mr Moore that it is difficult to analyse evidence for small differences and to value to the level of accuracy suggested by these figures. However, it was his opinion that the physical factors arising from the spur would have only a minor adverse impact on the property, for which a purchaser might make a marginal adjustment in their bid. His assessment of that adjustment and the compensation due was a nominal sum of £2,000.

The assessment of the impact of physical factors on the property must be made at the valuation date, although within a few months of the claimant writing his letter of claim, dated 6 September 2021, the worst of those factors were alleviated by the switch to part-night lighting and the provision of an acoustic fence. Would a purchaser at the valuation date have expected these alleviating measures to be put in place? I consider that a switch to part-night lighting could have been expected to happen at some point, since it is both appropriate for a residential area and a significant energy saving measure for a council, but there would have been no certainty as to when it would happen. The provision of an acoustic fence appears to have been a specific response to the claim, and as such it would not have been expected by a purchaser.

It is very common for land on the edge of villages and towns to be developed, leaving houses which were originally on the boundary with open land in a back-to-back situation with other houses. This case is more unusual in that the property will back on to an open area within the development, but with a raised spine road and raised street lighting 22 metres away from the rear elevation. At the valuation date a purchaser would have seen the street lamp behind the house, and known that it stayed on all night, but expected a change to part-night lighting at some point in the future. They would have known that the road behind would be used by construction traffic during working hours for some five to six years, and that there would be noise arising from that traffic. It is possible that they would not have looked beyond that period to consider whether intensification would arise from the future use by residential traffic.

I note Mr Moore’s opinion that a difference in price of £6,000 between No. 243 and No. 50 in Stour View (1.5% of switched off value), could have arisen from the difference in physical factors that they would be expected to experience as a result of their locations. I agree with him that in a residential property market it is not possible to discern small differences with accuracy, only to estimate the amount of discount that a purchaser might expect to negotiate in recognition of something disagreeable to them.

In my judgment a purchaser would have discounted their bid for the property at the valuation date to account in particular for the disadvantage of all night street lighting to the rear, in addition to normal street lighting at the front. Traffic noise to the rear would be less unusual in the market, but a factor in the purchaser’s mind. A seller does not have to accept the reduced bid of a purchaser but, as the claimant has demonstrated with No. 9 Hardy Close, if a property suffers from a less desirable location it can take longer to sell, and the eventual sale will usually be at a lower price anyway.

I consider that a purchaser would frame their discount as a round sum, rather than a percentage. In this case, I consider that the purchaser would have sought and achieved a discount of £10,000, which is 2.5% of the switched off value. I therefore award the sum of £10,000 as compensation under the Act.