Alliance against the BNRR Birmingham Friends of the Earth West Midlands Transport Campaign

Compensation and the BNRR

Over recent months the Alliance has received many queries from local residents about compensation for the damaging consequences of the BNRR (M6 Toll). It seems that a wide variety of "experts" are giving advice, some of it misleading and adding to residents' concerns.

In order to try and dispel some of these concerns we asked Steve Hinton, a Chartered Surveyor, and John Ferguson, of the District Valuer's Office, for guidance which they have very kindly provided. Both have stated their willingness to offer assistance to residents: Steve can be contacted on 01299 841293 and John on 0121 633 1182. Read Steve's Frequently Asked Questions on the issues surrounding compensation.

It seems vital to us that residents who have suffered years of blight, are suffering disruption and nuisance during construction and will suffer years of misery from this disastrous project should be made aware of their compensation rights. They may also wish to consider applying for a review of their Council Tax rating band.

The Alliance's AGM will be held on Tuesday 15th April at 8pm at Curdworth Church Hall. Compensation issues will be on the agenda. We look forward to seeing you then.

Andrew Ross, Chair
Alliance Against the BNRR & Associated Greenbelt Developments
30 Farthing Lane,
Curdworth,
Sutton Coldfield,
B76 9HF
Tel: 01675 470239

March 2003

Reproduced below is a talk given in march 2002 by John Ferguson on the processing of Part 1 Claims under the Land Compensation Act 1973 and how these relate to compensation and the BNRR.

NOTE: these notes formed the basis of a briefing delivered to local meetings to assist potential claimants who asked for clarification concerning the Part 1 claims process. They represent John Ferguson's own interpretation of the legislation and thus should not be regarded as a formal Valuation Office Agency statement.

Key Points

• Part 1 is concerned with depreciation in market value; it is not compensation for noise.
• Because it is concerned with market value, Part 1 is a matter of valuation evidence. Scientific measurements of noise and air quality are of great assistance but there is no proven relationship between noise, air quality and value.
• Claims and values are assessed on the First Claim Day reflecting the effect of physical factors on market value. The view of the BNRR in itself is not a claimable item.
• The effect on market value of better access and insulation against noise may reduce compensation under Part 1.
• Ultimately the onus is on the claimant to prove their claim.
• The District Valuers Office are gathering local market evidence and noise and air quality data.

Introduction

Thank you all for asking me to come and speak to you and for the opportunity to explain what Part 1 claims are.

I am John Ferguson and I work for the District Valuer's Office which is part of the Valuation Office, a Government Agency providing independent valuation advice to public bodies - here for the Highways Agency.

On the BNRR Scheme I negotiate and assess compensation claims referred to me by Highways Agency; my role therefore is to advise the Agency on the amount of compensation payable under Part 1. Currently however, I am dealing with acquisition cases for the scheme.

I will do my best to explain how the Part 1 process works and I will briefly outline:

1. What a Part 1 claim is and how the claims process works and
2. How compensation is assessed.

I will speak in terms of an owner occupied dwelling house or flat however, subject to what the legislation says other types of legal interest and properties can be the subject of claims, for instance farms, let properties and commercial properties. If in doubt, claimants should write to the Highways Agency first or take legal advice.

Part 1 claims derive from Part 1 of the Land Compensation Act 1973 which sets the ground rules for how claims arise and are assessed.

This legislation is concerned with where no land has been taken from a claimant.

It provides a right for certain owners to claim compensation where their property has been depreciated in value by the use of public works - here the BNRR.

To be compensatable the depreciation in value must stem from physical factors caused by the use of the BNRR which the Act lists as noise, vibration, smell, fumes, smoke, artificial lighting and the discharge on to land of any soluble or liquid substance. The most common physical factor giving rise to claims is that of noise.

So where it is shown a property has depreciated in value because of physical factors which come from the use of the BNRR compensation under Part 1 would be payable.

Two Key Dates in the Process

1. The Relevant Date - this is when the scheme opened to traffic and in the case of the BNRR is likely to be Spring 2004.
2. First Claim Day - this is one year after the Relevant Date and marks the beginning of the six year claim period during which claims can be made.

Generally, claims cannot be made before the First Claim Day nor be accepted after the end of the claim period. There is an exception - where a property is to be sold within 12 months of the Relevant Date but before the First Claim Day any Part 1 claim should be made to Highways Agency after the exchange of contracts but before legal completion.

For a claim to be valid, on the date it is served on the Highways Agency a claimant who is an owner-occupier must have acquired the property before the Relevant Date. In addition, the claim form must say how much compensation is sought.

At this point it is worth emphasising the distinction between (1) the validity of a claim for which Highways Agency as compensating authority is responsible and (2) whether or not compensation is payable and how much. Provided the claimant's legal interest qualifies under the Land Compensation Act 1973 then the claim is valid.

The only proviso here is that compensation must exceed £50 for it to be payable. If the claim form appears valid the next stage is to assess how much compensation is payable - that is a matter of valuation evidence and it is at this point Highways Agency pass the claim to me or one of my colleagues for advice.

On receipt of a claim I will arrange to inspect the claim property and seek to agree the level of depreciation with the claimant or any agent acting. Depending on the outcome of these discussions the matter is reported to Highways Agency for their approval. If Highways Agency accept our advice the claimant's legal title is checked and subject to any mortgage outstanding compensation is paid, together with the claimant's Valuer's reasonable fees and statutory interest on the sum calculated from Date of Claim or First Claim Day whichever is the later.

How Compensation is Assessed

Compensation under Part 1 is concerned with depreciation in value as at the First Claim Day caused by physical factors coming from use of the BNRR then and the extent to which that use might reasonably be expected to intensify.

The compensation sum is often expressed as a percentage of the property's market value. It is therefore a valuation exercise based first and foremost on local valuation evidence - that is sales in the open market, secondly settlements negotiated freely and possibly Lands Tribunal decisions. District Valuers have confidential access to sales prices and supplement these with sale particulars and their experience of the market generally through property advice to Highways Agency including the purchase and sale of houses for scheme purposes.

The consideration of a claim where traffic noise is the principal physical factor can be aided by scientific measurement of noise levels pre and post scheme. However this is only an aid to supplement market evidence and help in its' analysis.

Noise is unwanted sound and its effects on people are subjective. Claimants will be aware of the pre and post-scheme levels based on their experience, however the market may not react in the same way. An increase in noise level may not be reflected in an effect on market value.

In short there is no proven relationship between noise and value.

Other Valuation Considerations

1. The compensation must not reflect depreciation caused by loss of view - that is, the sheer fact that the BNRR is there.
2. If the scheme as a whole has increased house values generally then compensation is off-set to reflect that - known as betterment.
3. Any offer of secondary glazing to mitigate noise or grants in lieu will be reflected to the extent it lessens the effect of the physical factors on depreciation. However I appreciate one cannot double glaze a garden and it is only the habitable rooms in the house that would be double glazed, that is not halls, bathrooms or kitchens.

In Summary

The measure of depreciation is:

1. The price a purchaser would pay with the BNRR in use but the physical factors unchanged from pre-scheme compared with.
2. The price a purchaser would pay with the BNRR in use and physical factors as they are on the First Claim Day plus as they are anticipated to become - ie intensification.

Other Matters

1. Noise insulation - this is a separate matter. In accordance with the Noise Insulation Regulations dwellings within 300 metres of the BNRR will be considered for secondary glazing where the overall noise level with the road in use will exceed the given level for a given period. However this is a separate exercise to that of Part 1 Claims.
2. Air Pollution - As I have explained smell and fumes are two of the physical factors which may give rise to a depreciation in value and thus a Part 1 Claim. We are in contact with local authorities to ascertain pre-scheme air quality in the vicinity of the BNRR to help interpret valuation evidence should this be a basis of claim.

John Ferguson FRICS FAAV March 2002
District Valuer Central, Midlands Land Services
4th floor
Cumberland House
200 Broad Street
Birmingham
B15 1TA