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Compulsory Purchase and Development Value – Court of Appeal Ruling

Metal gate to fieldWhen private land is compulsorily acquired by public authorities, former owners are entitled to compensation equal to its open market value, which includes any development potential. That point was made in a Court of Appeal case concerning a field that was needed by a local authority for construction of a new school.

The council argued that compensation payable to the couple who formerly owned the 0.46-hectare field should be calculated on the basis of its value as agricultural land. It refused the couple’s application under Section 17 of the Land Compensation Act 1961 for a certificate to the effect that, had the land not been required for the school, it would have been ripe for residential development.

Prior to its compulsory acquisition, the boundary of a nearby settlement had been redrawn to include the field. This meant that, as the field was no longer considered to be in the open countryside, the likelihood of it being approved for residential development was greatly increased.

The council argued that the only reason for the field’s inclusion within the settlement was to facilitate construction of the school. However, the couple’s arguments prevailed before the Upper Tribunal (UT) and the council was directed to grant the certificate sought.

In dismissing the council’s appeal against that ruling, the Court noted that the redrawing of the settlement boundary meant that the field could have been developed for housing had the school project not gone ahead. The UT had rightly focused on the terms of the local development plan, which did not contain any restrictions on development of the field once it had become part of the settlement.