Richard Gennard v Leicester City Council

Compensation under section 84(1)(ii) of the Law of Property Act 1925 is a fact-specific assessment of the effect which a restrictive covenant had on the consideration received when it was imposed. Earlier awards do not establish a percentage uplift or a prescribed method for valuing hope of planning permission.

The Tribunal must assess what the vendor and purchaser would realistically have contemplated at the valuation date. It must take account of the planning policies and constraints then in force. Later policy change and planning permission may illuminate the history, but do not establish that a purchaser then had sufficient hope of development to pay more. Where the evidence does not show that the restriction reduced the price achieved, no payment is justly due.

Richard Gennard v Leicester City Council concerned land at the rear of 49 Main Street, Rotherby. A 1999 transfer restricted its use to a paddock, garden land or horticultural nursery. The applicant later obtained planning permission to convert an existing outbuilding into a single-storey dwelling, but the covenant impeded the development.

The parties agreed that the restriction could be modified under section 84(1) of the Law of Property Act 1925. They also agreed that any payment should be assessed under section 84(1)(ii). The sole disputed issue was whether the covenant had reduced the price paid for the land in 1999, and, if so, the sum justly payable to the Council.

1. Application granted. The Tribunal modified the restrictive covenant under section 84(1)(aa) of the Law of Property Act 1925 to permit implementation of the planning permission granted on 30 November 2022. The parties had agreed that the covenant impeded a reasonable use of the land, secured no practical benefit, and that the modification would cause no injury. Ground (c) was therefore also made out.
2. Under section 84(1)(ii), the issue was the effect of the covenant on the consideration received when it was imposed. Previous Tribunal decisions were fact-specific illustrations. They established neither a standard percentage uplift nor a mandatory methodology for assessing hope value.
3. The proper inquiry was what the vendor and purchaser would have had in mind at the 1999 auction. The recently adopted planning policy then prohibited development outside the village envelope unless an exception applied. No exception applied to the restricted land. The existing outline permission gave a substantial opportunity to develop six dwellings within the envelope, subject to conservation-area safeguards.
4. Future change to planning policy was too remote to give a purchaser a sufficient prospect of development outside the envelope for which it would pay additional value. The later policy change occurred 19 years after the valuation date. Even then, a 2019 planning application was refused and the appeal dismissed.
5. The Council had not shown that the covenant depressed the consideration received. The two auction lots sold substantially above their guide prices, and the proposed comparable sales were materially dissimilar. No sum was due under section 84(1)(ii). The modification was granted without compensation.

not stated in the judgment.