[2025] UKUT 00121 (LC)

The restriction in the Charges Register for the property was imposed on lot 1 and lot 2 by transfers between Leicester City Council (Transferor) and Andromeda Properties Limited (Transferee) dated 20 September 1999. The Additional Provisions of the transfer state:

“13.3

The Transferee hereby covenants with the Transferor as follows:

(1)

Pursuant to Section 33 of the Local Government (Miscellaneous Provisions) Act 1982 and for the benefit of the Transferor’s Retained Land:

(A)

not to use that part of the Property hatched black on the Plan for any purpose other than as a paddock garden land or horticultural nursery

...”

It was submitted for the applicant that the decision of the Lands Tribunal (NJ Rose FRICS) in Re Broomhead’s application (2003) LP-7-2001 (unreported) was support for the contention that it would not be just to award any sum in consideration. It concerned a house sold in 1967 with paddock land which was subject to a restriction not to build on it. Planning permission for residential development was granted in 1999. The Member modified the restriction and determined that no compensation was payable under section 84(1)(ii) because, on the evidence, the restriction had no effect on the price paid for the paddock in 1967.

Submissions for both parties relied on the more recent decision of the Tribunal (Peter McCrea FRICS FCIArb) in Sheppard v Martin Grant Holdings Ltd [2020] UKUT 171 (LC), where the Member said at [24]:

“24.

The question to be addressed is how much more, if anything, the purchaser might have paid had sufficient of the restrictions been removed such to allow the proposed second house on the site, subject to planning permission. But it cannot be assumed, as Mr Bray has done, that planning permission for the extra house would have been in place in 1985. It is the hope of gaining planning permission, and not being prevented from implementing that permission by restrictions, that is the subject of the valuation exercise...”

In Sheppard, planning permission had been received in 2017 for demolition of a garage and erection of an attached two-storey dwelling on land which was subject to a restriction imposed in 1985 impeding that development. As in this case, the single issue was the amount due under section 84(1)(ii). The Member said at [25]:

“25.

What must surely also be assumed to have been in the mind of the 1985 vendor and purchaser is the effect on number 5 of the proposed development: it would lose its garage; it would become semi-detached; its garden would become long and narrow; and its smaller drive would still accommodate two cars but only in tandem. In my judgment, the 1985 purchaser would have been willing to pay a maximum of 5%, or £2,625, on top of the purchase price for the benefit of sufficient modification of the restriction to allow a second house to be built as now proposed, subject to planning permission.”

He then went on to consider at [26] to [29] whether that figure should be adjusted to allow for inflation since 1985. This had been done by the Tribunal in some previous cases, but not all. At [30] to [31] he concluded:

“30.

However, the amount that would represent a “just” award, is a matter of judgment. It is for the objector to provide evidence to support the suggested impact if they can. I have not seen any evidence from them of sales records, whether semi-detached houses sold for less than linked-detached, whether there were any negotiations with Ms Hughes, or indeed any purchaser on the estate, as to the monetary effect of any of the restrictions. It is perhaps not surprising that these records are not available, given the passage of time, but they mean that there is no firm evidential basis for assessing the appropriate sum. With respect to Mr Bray, in my judgment he has valued on an incomplete basis, in only seeking to arrive at a residual value for that part of the land which would be developed. I am also conscious of the benefit which MGH has derived from the restrictions since 1985.

31.

Taking all of the above into account, in my judgment the appropriate amount of

compensation that the applicant should pay to MGH is the applicant’s longstanding offer of £4,000. “

Submissions for the objector relied on Re Bowden’s Application (1984) 47 P & CR 455 and Re O’Byrne’s Application [2018] UKUT 395 (LC).

Bowden concerned a plot of land sold in 1964 by a Church of England body for £1,000, subject to a restriction permitting erection of only one house. In 1981 outline planning permission was given on appeal for a bungalow to be built on the same plot. The Lands Tribunal, (Sir Douglas Frank QC, President) determined compensation under section 84(1)(ii), noting a dearth of evidence, at £250. He said: “...I am satisfied that there must have been some hope of the granting of planning permission in the future and that has been corroborated by subsequent events.”

O’Byrne concerned a planning permission granted in 2017 for conversion of two barns, in an area designated as green belt, into a single dwellinghouse. Implementation of the permission was impeded by a restriction to use as a single dwellinghouse, which had been imposed in 2001 when the farmhouse and buildings were sold to the applicants for £600,000. It had been agreed that compensation would be assessed under section 84(1)(ii). The experts agreed that conversion of existing buildings fell within an exception for which development in the green belt was not inappropriate, and agreed that without the restriction there would have been hope value for conversion in 2001. This was confirmed by the grant of planning permission in 2007 for conversion of one of the barns. The expert for the applicant assessed hope value at £30,000 - £60,000 and the expert for the objector at £75,000 to £100,000. The Tribunal (HHJ Behrens and A J Trott FRICS) determined that the purchase price would have been 10% higher without the restriction to a single dwelling and awarded a sum of £60,000.