Samita Budhathoki & Ors v The Metropolitan Borough Council of Stockport

Under Rule 2 of section 5 of the Land Compensation Act 1961, compulsorily acquired land must be valued at the price which a willing seller could expect in the open market, disregarding any effect of the scheme.

Small Green Belt plots without planning permission may nevertheless have hope value. The prospect may arise where neighbouring land is divided into similar separately owned plots and purchasers could be expected to co-operate to realise a future development opportunity. The absence of persuasive comparable evidence requires a realistic evaluative judgment; earlier purchase prices may inform that judgment but may be substantially inflated by speculative and improbable development expectations.

Four references concerned compensation for small plots compulsorily acquired by the Metropolitan Borough Council of Stockport for the Hazel Grove to Manchester Airport Relief Road. Possession was taken in March 2015, which fixed the valuation dates.

The plots comprised pastureland and parts of a former golf course. They were within the Green Belt or open countryside, had no planning permission, and had been bought as small plots marketed with suggested development potential. The acquiring authority’s expert valued them on an existing-use basis with basic loss payments, relying on disparate comparable evidence.

The claimants had been barred from further participation after non-compliance with directions, or did not participate. The central issue was the open-market value of the plots in the no-scheme world, including the proper allowance for hope value.

1. Compensation was assessed at £1,935 for Samita and Vinod Budhathoki and £645 each for Mpande Simumba, Annie Simumba and the estate of John Yates.

2. Applying Rule 2 of section 5 of the Land Compensation Act 1961, the Tribunal valued each plot in the open market on the statutory no-scheme basis. The land had no planning permission and development in isolation would have been challenging. The expert’s existing-use figures were nevertheless reasonable in the absence of evidence to the contrary.

3. The claimants’ earlier purchase prices were not decisive comparables. They were remote from the valuation dates, unsupported by evidence of intervening land-value movements, and were probably influenced by improbable short- or medium-term development promises. They were not, however, wholly disregarded.

4. The Tribunal rejected the expert’s effective exclusion of any meaningful hope value. Each plot lay among other small plots acquired in anticipation of future development. Although any development would require co-operation among neighbouring owners, that prospect was itself part of the market opportunity for which the plots had been bought. This distinguished the land from an isolated, landlocked plot surrounded by land controlled by a single owner.

5. A 20% addition to the reasonable existing-use values fairly reflected that residual hope value. Basic loss payments of 7.5% were then added.

not stated in the judgment.