Mehrunnisa Alikhan Ahmed Khan v Wolverhampton City Council [2025] UKUT 335 (LC)

[2025] UKUT 00335 (LC)Case No LC-2025-10
IN THE UPPER TRIBUNAL (LANDS CHAMBER)
IN THE MATTER OF A NOTICE OF REFERENCE
Venue Royal Courts of Justice
Between
MEHRUNNISA ALIKHAN AHMED KHANClaimant
9 October 2025
TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007
COMPENSATION – Compulsory Purchase – semi-detached residential property in disrepair – non-participation of claimant – market value of property – disturbance compensation
Re: 45 Springhill RoadWednesfieldWolverhamptonWV11 3AWD N Martin TD MRICS FAAVDETERMINATION ON WRITTEN REPRESENTATIONS© CROWN COPYRIGHT 2025The following case is referred to in this decision:Lloyds Banking Group plc v Burnley Borough Council[2024] UKUT 020 (LC)Pramar v The London Borough of Barnet[2015] UKUT 0510 (LC)

Introduction

[1]This decision, determined under the Tribunal’s written representations procedure, concerns the assessment of compensation due to Mrs Khan (“the claimant”), the former owner of 45 Springhill Road in Wednesbury (“the property”) which was compulsorily acquired by Wolverhampton City Council (“the authority”) following a General Vesting Declaration (“GVD”) dated 28 April 2022.[2]Communications with the claimant broke down so the authority made a reference to the Tribunal under section 1 of the Lands Compensation Act 1961 for compensation to be determined.

Background

[3]The property is a three-bedroom, semi-detached house, situated on the northern edge of Wednesbury, three miles north east of the city of Wolverhampton. It has an attached garage linking it to the neighbouring property and a total floor area, including the garage, of around 1,000 sq ft. The construction is of cavity brick walls under concrete tiles, with double glazed windows.[4]The state of the empty property was first notified to the authority’s Empty Property Team in April 2016, due to its poor condition, and subsequently to the Environmental Health Department due to vermin infestation. Negotiations with the claimant, who lives elsewhere in Wolverhampton, did not give rise to improvements and no works were undertaken in response to a notice issued under section 83 of the Public Health Act 1936 requiring removal of refuse, cleansing and pest control treatment. On 20 July 2017 the authority obtained a warrant to enter the property and execute those works. This event remains a source of dispute with the claimant.[5]The property remained vacant and in due course the authority made The Wolverhampton City Council (45 Springhill Road) Compulsory Purchase Order 2019 under section 17 of the Housing Act 1985 and the Acquisition of Land Act 1981. A public inquiry was held on 14 September 2021, at which the claimant appeared as the sole objector. The inspector made a site visit on 17 September 2021 and by a decision of 13 October 2021 confirmed the order.[6]A GVD was made on 28 April 2022 and a letter sending notification to the claimant was dated 29 April 2022. The vesting date was stated to be three months after the owner received notice, which the authority has assumed, for the purposes of this reference, to be 2 August 2022.[7]However, at the time the authority appears to have believed that the valuation date immediately followed the GVD. Mr Kaur, an Estates Officer for the authority instructed Bruton Knowles in Birmingham to prepare a building condition survey and a “compensation valuation” report as at 29 April 2022. May Beaney MSc MRICS, an RICS Registered Valuer, made an inspection on 1 July 2022, together with a colleague who conducted the building condition survey, and issued a valuation report dated 26 July 2022 (“the Red Book valuation”) in which the market value of the property at 29 April 2022 was assessed to be £150,000. This was a rounded figure based on an opinion of market value in good condition of £235,000, less the estimated cost of remedial works at £84,356, derived from the Bruton Knowles building condition survey dated 22 July 2022.[8]The authority says that the claimant was made aware of the report and that communications took place with her regarding the proposed compensation sum of £150,000, which she is said to have been prepared to accept. However, the claimant is said to have alleged that items of personal property and belongings were removed from the property when the authority entered in July 2017, for which she also required compensation. The authority disputes the allegation and says that no list or evidence was provided by her.[9]The parties have therefore been unable to agree the compensation due to the claimant, which led to the authority making this reference. The authority stated on the reference and in their statement of issues that they seek determination of compensation for the value of the property at £150,000. In addition, they seek determination of any compensation arising from items alleged to have been taken from the property.[10]The Tribunal directed the authority to file expert valuation evidence in support of its valuation and the authority instructed Ms Beaney to provide an expert report on the market value of the property for compensation, at the assumed vesting date of 2 August 2022. Her report (undated) was filed with the Tribunal on 16 April 2025. The report concluded with an opinion of value for compensation, as at 2 August 2022, at £120,000. This was a rounded figure based on an opinion of market value in good condition of £200,000 less the estimated cost of remedial works, derived from the building condition survey dated 22 July 2022, at £80,339.[11]The only communication received from the claimant in response to notice of the reference was on 10 July 2025, when a member of Tribunal staff received a telephone call from her confirming that the documents had been received and stating that she was unable to engage with the Tribunal or the authority. The claimant repeated her allegation that the authority had removed possessions from her house without her permission when they entered in 2017 to remove refuse and carry out pest control work.[12]The Tribunal then wrote to both parties by post, requesting responses by 29 August 2025, so that the claimant had a final opportunity to state her position. The claimant was asked to supply a list of items she believed were taken from the property, with any available evidence of value, and to confirm that she had previously accepted the authority’s offer of £150,000 in compensation for the property. The authority was asked to provide a copy of the report which recommended compensation of £150,000, and any evidence in support of their position that nothing of value was removed from the property when entry was taken.[13]Nothing further was heard from the claimant. The authority supplied the Red Book valuation of 26 July 2022, copies of letters sent to the claimant in early 2022 before the GVD was made, and a witness statement from Mr Dean Pickering, whose business carried out house clearance at the property for the authority.

Statutory background

[14]Section 5 of the Land Compensation Act 1961 (“the 1961 Act”) sets out the rules for the assessment of compensation following compulsory purchase of property, of which the relevant rules at the valuation date were:
“(1) No allowance shall be made on account of the acquisition being compulsory: (2) The value of land shall, subject as hereinafter provided, be taken to be the amount which the land if sold in the open market by a willing seller might be expected to realise: … (6) The provisions of rule (2) shall not affect the assessment of compensation for disturbance or any other matter not directly based on the value of land.”

Market value of the property at the vesting date

[15]I have two pieces of valuation evidence provided by the authority, each stating that it provides an opinion of the market value of the property for compensation. The Red Book valuation, dated 26 July 2022, placed a value on the property at 29 April 2022 of £150,000. This followed an inspection on 1 July 2022 and relied on the Bruton Knowles building condition report dated 22 July 2022. It is the valuation upon which the authority relied in its negotiations, and which it asks the Tribunal to award.[16]The expert report, undated but filed with the Tribunal on 16 April 2025, placed a value on the property at 2 August 2022 of £120,000. Ms Beaney had reinspected the property on 4 April 2025, but also relied on notes and photographs from the earlier inspection, together with the Bruton Knowles building condition report dated 22 July 2022. In her expert report Ms Beaney made reference to having provided a Red Book valuation of the property in July 2022, but not to her opinion of value in that report and there is no explanation of reasons for the difference.[17]The correct date for the valuation of the property for compensation is the assumed vesting date of 2 August 2022, rather than 29 April 2022, but it would be surprising if the market value of the property had fallen from £150,000 to £120,000 over that short period. The authority has not sought to amend its case to reduce the compensation sum to £120,000, but some reconciliation of the two figures is needed to identify reasons for the difference. The key information from each report is summarised below.[18]It is apparent that in the expert report a smaller floor area is reported. The original floor area of 1,050 sq ft included the garage at 117 sq ft, while the later one did not.[19]The value of the property (assuming good condition) in the Red Book valuation is derived from an analysis of five sales of three-bedroom semi-detached properties between May 2021 and March 2022. Three were located in Springhill Road and two in neighbouring roads. The prices ranged from £200,000 to £270,000 and Ms Beaney settled upon a value for the property of £235,000.[20]In the expert report the valuation is derived from analysis of five sales of three-bedroom semi-detached properties in Springhill Road between May 2021 and July 2022. Only two of the sales were used in both reports, although only one sale post-dated the earlier valuation date. The range of prices is from £195,000 to £220,000, with the highest price achieved in July 2022. Ms Beaney settled on a value of £200,000 for the property in good condition, which sits £35,000 below her previous opinion.[21]In the Red Book valuation the total cost of repair, taken from the building condition survey, was estimated at £69,860 before VAT. 15% was added for overhead and profit (OH&P) and a further 5% for contingencies, to reach a total of £84,356, which was deducted from the market value of £235,000. In the expert report the same estimated costs of repair were used, but without the addition of 5% for contingencies, so a smaller deduction of £80,339 was made. The figures deducted for costs in both valuations excluded VAT, which would have been recoverable by a VAT registered business, such as a local builder or developer, but not by a private purchaser commissioning the repair works.[22]It is apparent that care should be taken in adopting this approach to valuation, which produces a market value based on subjective deductions. It should also be mentioned that in some cases, although not here, there may be evidence that properties requiring refurbishment are sought after by buy-to-let landlords and builders/speculators. In Lloyds Banking Group plc v Burnley Borough Council [2024] UKUT 020 (LC), where expert evidence was adduced for the claimant, the Tribunal (Mr Peter McCrea FRICS FCIArb) said at [23]:
“In my judgment it is misleading simply to deduct the cost of refurbishment work ... from a refurbished value to arrive at a value in poor condition. The market seems more nuanced than that. ... It appears that developers/landlords are prepared to spend time and effort refurbishing a property with a view to letting it, without the need to immediately recover their costs. ...”
[23]Ms Beaney was entitled to change her opinion of the value of the property in 2022, with the benefit of hindsight and more evidence, but it is disappointing to have no explanation or rationale for the different use of comparable evidence and different approach to the deduction for repairs. However, the authority have made no submissions that the value provided in the expert report should be preferred to the earlier valuation on which they based their negotiations with the claimant, and which they have asked the Tribunal to determine. I am also inclined to give more weight to a valuation made close to the valuation date, in the knowledge of market conditions prevailing at the time, than to one made nearly three years later.[24]I therefore determine the market value of the property for compensation at £150,000.

Disturbance compensation

[25]The authority has provided copies of letters and notices dated 3 February 2022 and 31 March 2022 which were sent to the claimant at her home address requiring her to remove all property and personal items from the property by 21 April 2022. It has also provided a witness statement signed by Mr Dean Pickering, the contractor responsible for the house clearance at the property when the authority took possession, stating that no items of value were found at the property.[26]I am conscious that none of the documentation provided by the authority deals with the specific allegation by the claimant that items of value were removed in July 2017 when the authority entered the property to carry out cleansing and pest control. But I have nothing from the claimant to explain her claim or to identify items which may have been removed without her consent, nor does that earlier intervention amount to disturbance caused by the compulsory acquisition of the property in August 2022. Any claim relating to it falls outside the Tribunal’s jurisdiction.[27]Without evidence I am unable to determine any compensation due to the claimant under the heading of disturbance.

Basic loss payment

[28]I have not received submissions regarding the claimant’s entitlement to a basic loss payment under section 33A of the Land Compensation Act 1973 (“the 1973 Act”) at 7.5% of the value of the interest. It was explained in Pramar v The London Borough of Barnet [2015] UKUT 0510 (LC) at paragraph [46] that under section 33E of the 1973 Act a claim for a basic loss payment must be made in writing to the acquiring authority.[29]No claim for a basic loss payment has been made so I can make no award of one. It remains open for the claimant to make such a claim.

Determination

[30]I determine the value of the property for compensation on the vesting date of 2 August 2022, at £150,000.[31]The sum of £150,000, plus any statutory interest due from the vesting date, shall be paid to the claimant. Diane Martin TD MRICS FAAV 9 October 2025 Right of appeal