The freehold owner of a semi-derelict property that was compulsorily acquired by a local authority has been awarded £105,000 compensation. Rejecting Leicester City Council’s plea that compensation should be assessed at in the region of £91,000, the Upper Tribunal ruled that it was legitimate to take into account the property’s subsequent re-sale at auction for £120,000.
The property, which was in a prime residential area in the city, had been allowed to deteriorate to the point where it was considered uninhabitable. Its windows and doors had been boarded up and its garden was entirely overgrown. Its roof was in poor condition and the interior was filled with dumped rubbish, old furniture and clothing, newspapers and magazines.
With a view to returning the property to useful occupation, the council exercised powers under the Housing Act 1985 to compulsorily acquire it. A compensation offer of £91,000 – based on an estimated value of £135,000 in modernised condition, less estimated costs of refurbishment and house clearance – was rejected by the owner. The property was subsequently sold by the council for £120,000 at auction on condition that the buyer carried out full restoration works.
In setting appropriate compensation at £105,000, the tribunal considered the value of comparable properties in the same area at the relevant time and, after having regard to section 5A of the Land Compensation Act 1961, ruled that it was permissible to take account of the price the property had achieved at auction.