[2025] UKUT 00121 (LC)

It was Mr Robinson’s opinion that, since the application land did not meet any of the exceptions to planning policy OS2 in the MLP 1999, everyone in the sale room when the nursery land was sold at auction on 18 August 1999 would have believed that development of six plots was the maximum achievable. The objectors had a responsibility as a public body to obtain “best price” and if they had thought there was scope for a seventh plot they would have applied for it. It was unrealistic to consider that a bidder would have offered any more than an additional £5,000 had the covenant been one with the limited modification sought in this application to permit the implementation of the planning permission.

Mr Cowling adopted the general approach set out in Sheppard, which was to assess the hope value at the valuation date of gaining planning permission for the additional house, assuming that no restriction was in place to prevent it. In August 1999 Mr Cowling’s firm had negotiated the sale of two building plots, each with planning permission for a single dwelling, at Nos. 6 and 8 North Hall Drive in the neighbouring village of Gaddesby. One plot of 0.64 acre realised £140,000 and the other of 1.51 acres realised £180,000. The only documentary evidence of these sales was an extract from the notebook of one of Mr Cowling’s colleagues, but Mr Robinson had agreed that the evidence was informative.

Based on this evidence, Mr Cowling concluded that in August 1999 a plot at the property, with planning permission, would have had a value of £170,000 had there been no restriction in place. He deducted £10,000 for the estimated cost of obtaining planning permission and assessed the hope value for planning permission in 23 years (the period from 1999 until permission was granted in 2022) by deferring £160,000 for 23 years at 5%. The yield of 5% was selected as the amount of interest that a person might have gained by putting the money into an interest bearing account for that period. This gave him a figure of £52,091, which he rounded down to £50,000, being his opinion of the additional hope value in August 1999 had there been no restriction preventing the proposed development. His opinion was therefore that the value of the nursery land at the valuation date would have been £755,000, on the assumption that the restrictive covenant was modified to permit the construction of the proposed additional dwelling on the application land.

In the joint statement, Mr Robinson agreed to provide an alternative opinion using the same approach as Mr Cowling. He had inspected, so far as possible, the two sites sold by Mr Cowling’s firm in 1999 and observed that each site had been developed to provide a fine house, in extensive private grounds, well away from public gaze. He judged them to be better plots than the application land. Mr Robinson assessed the value of the application land in 1999 at £150,000 with planning permission, adjusted down by £50,000 for clearance, contamination clean up (the sales particulars mentioned a possibility of asbestos in the area of the glass houses) and service connections. He then applied a 50% discount to the sum of £100,000 to reflect the risk of not obtaining planning permission for a seventh plot, to reach a figure of £50,000. Alternatively, deferring the sum of £100,000 for 23 years at 5%, as Mr Cowling had done, he reached a figure of £32,000.

However, Mr Robinson maintained his opinion that the more correct approach was to assess what extra bid might have been achieved in the sale room on 18 August 1999 if the nursery land had been offered for sale with the prospect of obtaining planning permission for a seventh dwelling and modification to permit its implementation. No record was available of the progression of bids at the sale, but he identified a sum of £5,000 as most likely.

Mr Cowling responded that he did not accept Mr Robinson’s application of a discount for contamination and site clearance, since no greenhouses were present on the application site when it was sold, and no evidence had been provided to support a discount for service connection or an abatement of 50% for risk.

It was Mr Cowling’s opinion that the MLP 2011-36, adopted in October 2018, was highly relevant to the assessment because the change of policy had enabled planning permission to be granted on the application land, demonstrating that planning policies evolve and change, which was central to the concept of hope value.

Mr Robinson considered that the 2011-36 plan had no relevance because it did not apply at the valuation date.

It was submitted on behalf of the applicant that the burden of establishing the effect of the restriction in reducing consideration at the date of sale, and the sum which it would be just for the Tribunal to award to make up for that effect, fell upon the objector. The objector had not discharged that burden because it had been unable to find in its records any evidence in relation to the sale so, as in Sheppard, there was no evidence that the restriction depressed the value of the land sold at auction.

Mr Cowling’s approach to identifying the compensation was flawed in working backwards to a valuation of the application site as a building plot separate from the remainder of the nursery land. Moreover, the sales evidence from 1999 appeared (based on the properties there now) to have concerned development of two-storey five-bedroom dwellings, set in a secluded position behind Gaddesby Hall. Those were not good comparables for the proposed single-storey three-bedroom dwelling on the application site.

It was submitted further for the applicant that even after the new MLP was adopted in October 2018 the development policy remained restrictive, as demonstrated by the refusal of the applicant’s first planning application in 2019. The prospect of development remained limited until the proposed development was approved in 2022.

For the objector, it was submitted that Mr Cowling had “adopted faithfully” the approach set out in Sheppard, while Mr Robinson had undertaken a highly speculative exercise in seeking to imagine himself at the auction in August 1999. As in Bowden the hope of planning permission being granted had been vindicated by subsequent events. Mr Cowling’s figure of £50,000 was 7.09% of the sale price of £705,000 achieved for both lots in 1999 and compared well with the figure of £4,000 awarded in Sheppard, which was 7.6% of the original purchase price of the house when built at £52,500.

Previous Tribunal decisions determining a sum payable under section 84(1)(ii) are of very limited relevance to the question I am required to determine. In each of the cited decisions, the Tribunal made a finding of fact, based on the available evidence and the circumstances of the case, to determine the difference which the restriction had made to the sale price achieved. The decisions do not set any precedent for a percentage uplift on the original sale price, nor for any methodology to assess hope value, at the valuation date, of gaining planning permission assuming no restriction. They are fact specific illustrations of circumstances in which compensation under section 84(1)(ii) has been awarded or refused.

It is essential to consider what would have been in the mind of the vendor and purchaser at the date of the auction sale, and to bear in mind the relevant planning policies and constraints at that date. In this case the MLP 1999 had been adopted just two months earlier and policy OS2 applied to the application site. None of the area subject to the restriction, including the application land, fell within any of the exceptions for development outside the village envelope. Meanwhile, the outline planning permission offered a significant opportunity for the development of six dwellings, subject to conditions intended to safeguard the character and appearance of the conservation area.

Neither expert commented in their report on the large difference between the guide prices for the lots offered for sale and the prices realised at the auction. The two lots were guided at £300,000 and £150,000 respectively and achieved £400,000 (a 33.3% uplift to £100,000 per plot) and £305,000 (a 103% uplift to £152,500 per plot) in the sale room on the night. No records are available of the way in which bidding progressed, but it can be deduced that there was keen interest in both lots with competitive bidding resulting in the purchaser paying a final bid of £5,000 over £300,000 for lot 2. It is tempting to conclude that the objector, as the public body vendor, would have been very pleased with the outcome.

Mr Cowling’s opinion of hope value relied heavily on the sale in August 1999 of two plots with planning permission in Gaddesby. A plot of 0.64 acres sold for £140,000 and a plot of 1.51 acres for £180,000. During my site inspection it was apparent that the house on the smaller plot at No.8 North Hall Drive was actually a conversion of an existing house, rather than a new build. This serves to reinforce the lack of detail available to enable a comparative analysis of those sales. However, it is obvious that North Hall Drive is a secluded and tree lined private drive and that the two plots are situated at the end of it, behind Gaddesby Hall. These plots, and the substantial two storey houses on them, have very little in common with the application land and the proposed development there. None-the-less, Mr Cowling concluded that the two sales suggested a price of £170,000 would have been achieved in August 1999 for the application land with its more limited planning permission. I note that this figure exceeds the best price per plot achieved at the auction sale and view it as a highly unlikely value. Mr Cowling then deducted £10,000 for the cost (but not risk) of obtaining that permission and by deferring the net figure for 23 years at 5% he effectively applied a 67.5% discount for risk.

I commend Mr Robinson for giving consideration to the approach adopted by Mr Cowling. Using that approach he adopted a value assuming planning permission at £150,000, deducted 33.3% for practicalities and 33.33% for risk to reach the same figure as Mr Cowling at £50,000. Applying a deferment of £100,000 at 5% he reached an alternative figure of £32,000, i.e. a discount of 68% for risk. Although Mr Robinson’s development value of £150,000 is closer to the best figures achieved at the auction, I still view it as an unlikely value for a plot with a more limited planning permission.

However, the question to be addressed is whether the purchaser at the valuation date would have foreseen any hope in future of obtaining planning permission for the proposed development sufficient to justify the payment of additional value. That hope would depend on the likelihood of changes being made in future to the recently adopted planning policy to allow some limited development on land outside the village envelope.

It was not until policy changes were made in the MLP 2011-2036, adopted 19 years after the valuation date, that there was real hope of development for windfall sites adjoining settlements. But, even after those changes were adopted, the applicant’s first application in 2019 was refused, and his appeal of that refusal was dismissed in 2020. So, whilst there was a better hope of obtaining planning permission, it remained a hope rather than a probability.

In this case the restriction was imposed on that part of the nursery land which lay outside the village envelope. It aligned with recent adopted planning policy in place at the valuation date and may even have been a reinforcement of it. An outline planning permission was in place on the remaining land within the village envelope and, as stated in the sales brochure, prospective purchasers could liaise with the planning authority to alter the proposed layout or seek to expand the permission. However, under the adopted planning policy, prospective negotiations for alteration or expansion of the permission would have been confined to land within the village envelope. I consider that prospective purchasers at the auction were extremely unlikely to have foreseen any hope of future development outside the village envelope, sufficient to place additional value on it.

Moreover, the sale prices achieved for the two lots were so much higher than the suggested guide prices that I see no evidence of the restriction having had any effect in reducing the consideration received by the objector. In my judgment no sum is due to the objector under section 84(1)(ii) for modification of the restriction to permit implementation of the proposed development.

I am satisfied, as agreed between the parties, that ground (aa) of section 84(1) is made out and that I have discretion to modify the restriction which impedes a reasonable use of the application land and does not secure to the persons entitled to the benefit of it any practical benefits. It follows, as agreed between the parties, that ground (c) is also made out because the proposed modification will not injure those persons. I have taken into account the development plan and the ascertainable pattern for the grant or refusal of planning permissions in the area.

The following order shall be made: