UPPER TRIBUNAL (LANDS CHAMBER)	
	
UT Neutral citation number: [2010] UKUT 122 (LC)
ACQ/409/2009

	TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007
	
COMPENSATION – compulsory purchase – dwelling house in a regeneration area – valuation – comparables – Land Compensation Act 1961 section 5, rule (2) – compensation determined at £96,000 

IN THE MATTER of a NOTICE OF REFERENCE

BETWEEN	GUY GRIFFITHS	Claimant

	and

	SALFORD CITY COUNCIL	Acquiring 
		Authority

	Re: 11 Leicester Road, Higher Broughton, Salford M7 4AS

	Before: P R Francis FRICS

	Sitting at: Manchester Civil Justice Centre, 1 Bridge Street West, 
	Manchester M60 9DJ
	on
30 March 2010

The claimant in person
John Barrett, instructed by the City Solicitor, Salford City Council, for the acquiring authority

The following cases are referred to in this decision:
Anthony Peter Griffiths v Salford City Council [2009] UKUT 154 (LC) LT ref: ACQ/352/2008

	DECISION
Introduction
1.	This reference, heard under the simplified procedure (rule 28, Lands Tribunal Rules 1996 as amended), was to determine the compensation payable by Salford City Council to Mr Guy Griffiths (the claimant) in respect of the compulsory acquisition of 11 Leicester Road, Higher Broughton, Salford (the subject property) under the City of Salford (Higher Broughton Regeneration Area No 2) Compulsory Purchase Order 2005 (the CPO).   The CPO was confirmed on 11 May 2007, a General Vesting Declaration was made on 12 June 2009 and the property vested in the council on 31 July 2009, which is the valuation date for the purposes of this decision.
2.	The claimant, who was the freehold owner of the subject property, appeared in person.   He produced a statement of case, valuation opinion and a bundle of appendices upon which he relied to support his claim that the property was worth £145,000 at the valuation date.   Mr John Barrett of counsel appeared for the acquiring authority, and called Mr John Timothy Wainwright BSc (Hons) FRICS, a senior valuer for District Valuer Services, who gave expert valuation evidence in support of his opinion of value in the sum of £72,750.  In addition, the acquiring authority produced a witness statement from Dr Zalkind Yaakov Wise, a Research Fellow specialising in the social history of Diaspora Jewish Communities, which referred to a report he had prepared in 2005 entitled “The Orthodox Jewish Community in Higher Broughton.”   However, Dr Wise was not called and did not give evidence.
3.	I carried out an accompanied inspection of the subject property and the immediately surrounding area directly following the hearing.   
Facts
4.	The parties had not produced a statement of agreed facts but, from the evidence and my inspection of the property and the surrounding side streets, I find the following facts.   The subject property comprises a two-storey brick built and tiled roofed end-terrace, double-fronted flush-to-pavement pre-1918 private dwelling house, located on the corner of the A576 Leicester road (to which it has its principal frontage) and King Street in Higher Broughton, a heavily developed residential suburb of Salford.   Leicester Road is a busy main route some 2 miles to the north of Manchester City Centre, containing mixed residential properties interspersed with shops and other trade outlets, and there is a school on the opposite side of that road, just to the south of no 11.  
5.	The house contains, on the ground floor, an entrance lobby, living room with 2/3 bay window, dining room, kitchen with mixed units and gas central heating boiler.  On the first floor are two double bedrooms and a bathroom.  The house has a gross external area of approximately 104 sq m and to the side there is an enclosed yard with off-street parking, the total site area equating to approximately 83 sq m.   Apart from some minor items of disrepair, and the fact that kitchen and bathroom fittings were somewhat dated, it was agreed that the property was in a condition commensurate with its age and the nature of its construction.    
6.	During the 1990s the council became concerned that the oversupply of terraced housing, low ownership ratios, social deprivation, abandonment and other housing market issues was having a detrimental affect upon the area of Higher Broughton.   As part of the government’s National Housing Policy Framework, and in accordance with the North West Regional Housing Strategy of promoting replacement of obsolete housing, a housing market renewal programme was developed.  The subject property fell within one of the areas under review by the Manchester Salford Pathfinder (MSP) programme, and the Salford City Council Housing Strategy (2004 – 2006): “Making the Future Happen in Salford” included a regeneration initiative to address the social and economic issues of the area.  Community engagement and input had been sought from residents of the Higher Broughton area, following an initial strategic review in 1998, in developing the proposed regeneration scheme.   
7.	There were two principal CPO areas involved.   The subject property is located within CPO area No. 2 which comprised approximately 243 properties on six streets of pavement fronted terrace housing situated on Leicester Road, Cardiff Street, King Street, Turner Street, Wiltshire Street and Devonshire Street.  Salford City Council’s Statement of Reasons for the CPO noted that the purpose was to assemble land in order to implement the regeneration strategy for Higher Broughton, as the demand for housing had fallen to the point where substantial proportions of the housing stock were no longer sustainable.    
Claimant’s case
8.	The claimant said that he had been negotiating with Mr Wainwright’s colleague, Russell Fine BSc (Hons) FRICS, since 2006 but had found the council to be uncooperative.   He had not had any dealings with Mr Wainwright due to his only recently having become involved with the matter.    Mr Griffiths said that, in support of his valuation of £145,000 for the subject property, he was relying principally on the sale of 17 Leicester Road on 10 November 2006 at £193,000.   That sale was only 6 weeks after the council had valued his own house at £62,500.   Although he acknowledged that the measurements taken by the council indicated No. 17 to be somewhat larger than No. 11 (at 137 sq m, and containing 3 bedrooms), an inspection of the ordnance survey plans, and a physical inspection, would clearly suggest that the two properties were almost identical.   He thought that there may have been a mistake in the calculation that the council’s referencer had made in converting imperial measurements to metric.
9.	In any event, Mr Griffiths said, the figure achieved was some one and a half times higher than those that had been quoted by the council for sales of properties at the same time in the Mandley Park area, which was the regeneration area lying to the east of Leicester Road, directly opposite his property, and comprising Gainsborough Street, Symons Street and Norton Street amongst others.   He stressed that there was no overall difference in values between the CPO No. 2 area and Mandley Park, the two areas having suffered equally from degredation and social deprivation, and there was no “knock-on” effect from the scheme.  However, as the sale of No. 17 demonstrated, there was a premium for a Leicester Road address.  Properties on Leicester Road rarely came onto the market, and that was probably why the council’s valuer had not produced any comparables.   There had been some additional sales, further along Leicester Road, but, Mr Griffiths said, he had not included them (despite their supporting his opinion) as he thought they may have been company sales.    He did also refer to 21 and 25 Leicester Road, which were immediately to the north of No. 17. but accepted that they were principally commercial properties (shops with residential accommodation over) and that I could not attach weight to them.
10.	Mr Griffiths said that, according to the Nationwide Building Society’s property price index, the market had only fallen 8% between November 2006 and the valuation date of July 2009.   Taking that fall into account, the fact there was some difference in size (although not as much as the council was suggesting), and that No. 17 had a double height bay to the Wellington Street East elevation and a single bay to the Leicester Road side together with a small front garden, produced his figure of £145,000 for the subject property.   His own property also had off road parking which No. 17 did not.
11.	In his view, the council’s argument that the apparently high price achieved for No. 17 was due to it being within the tightly defined area for which the local Jewish community traditionally sought houses was not borne out by the facts.  No. 17 Leicester Road had its front door onto Wellington Street East, which formed the southern boundary of the “ghetto” as defined in the plan produced with Dr Wise’s report.   But, that report was 5 years out of date, the plan was 25 years old, and there was clear evidence that the community now extended beyond those confines.  All properties occupied by the Jewish community had, attached to the front door frame, a mezuzah (a decorative case containing a piece of parchment inscribed with Hebrew verses).   As would be apparent on a the site inspection, properties on the opposite side of Leicester Road to the subject property, mainly in Bristol Street, Heaton Street and Symons Street, contained these and, to a lesser extent, Gainsborough Street (two) and Norton Street (one).   His own house, he believed, had been owned by Jews before he bought it, and indeed still contained the mezuzah which had not been removed.  The shops that were directly opposite were also Jewish owned, and the girls’ school to the south was Jewish run.                     
12.	Mr Griffiths also referred to the report to the Head of Planning and Housing of the Strategic Director for Sustainable Regeneration in September 2009, relating to the Gainsborough Street Area Block Improvement Scheme and seeking formal approval for £3.874 million funding.   In that report, which set out the background as to why the original proposals for it to be another clearance area had changed to a recommendation for a major improvement scheme to the existing properties, the average house price within that scheme area was £130,979, an increase of 577% over the 2001 figure, mainly speculatively fuelled by the buy-to-let market.   In the light of that information, Mr Griffiths said that he had asked Mr Fine, in a letter dated 13 November 2009, to reconsider the offer that had previously been made, but he did not respond to it other than to advise that Mr Wainwright would be taking the matter over.   A without prejudice sealed offer was made by the council in January 2010 in the sum of £85,000 (that letter having been, mistakenly, included in Mr Griffiths’ bundle of documents).        
13.	As to Mr Wainwright’s arguments that sales achieved in the area reflected the positive effects of the Higher Broughton schemes, and the Gainsborough Street Block Improvement Scheme, Mr Griffiths said the properties built on Broughton green were still only two-thirds sold, a proposed replacement sports field is still not in use and the planned community hub remains at the planning stage.   There are a number of derelict and boarded up properties that have still not received attention, and no developers have yet been found to build proposed residential units on the “Top Street” sites.   There was certainly, therefore, no positive knock on effect from any of the council’s regeneration proposals or actions taken to date.
14.	In cross-examination, Mr Griffiths did not accept that if the Jewish quarter was extending further down Leicester Road, and into the Gainsborough Street area of Mandley Park, that would be reflected in the prices that had been achieved there.   He said it was important to recognise the value of a Leicester Road address.   He did not accept that the auction results particularly relied upon by Mr Wainwright in Symons Street were the best indicator of open market values or that the settlements referred to, in which owners had been professionally represented, should be taken into consideration.  Settlements, he said, were all based upon flawed historic valuations, as has been pointed out by his brother in the case before me in ACQ/352/2008, and which, in that case, I had accepted.     
Acquiring Authority’s case
15.	Mr Wainwright said that, according to Valuation Office Agency records, Mr Griffiths had acquired the subject property on 5 May 2004 for £30,000.   He acknowledged that it was located closer to Mandley Park than Mr Griffiths’ brother’s house had been, so in this instance and, bearing in mind what I had said about his predecessor, Mr Fine’s, choice of comparables in the earlier case (properties in the Cliff area), he said he relied upon sales in the Mandley Park streets between January 2008 and September 2009, and upon settlements in CPO area No. 2 where owners had received professional representation.   He produced a schedule (DV7) showing details of 9 sales in Mandley Park during the period, both by auction and by private treaty.  All were flush to pavement houses with single storey front bay windows and similar in size to the subject property.  All but one were 3 bedroom units, and one was semi-detached, the rest being terraced. 
16.	It was his view that the sales of 31 and 32 Symons Street were the most helpful.  No. 31 sold at auction with a completion date of 3 July 2009 at £68,000.  It was a 97 sq m inner terrace house with 3 bedrooms, replacement windows and central heating, and the sale price equated to £700 per sq m.  No.32 was almost identical, was also sold by auction, and the sale completed on 3 September 2009 at £72,000.  Although that date was after the valuation date, the auction sale at which the bid was accepted would have been earlier, and close enough to the valuation date to be representative of the market at that time.  The highest price achieved in 2009 was £85,000 for a 95 sq m 3 bedroom house in Gainsborough Street, sold on 3 March.  Whilst it had central heating, it did not have replacement windows.  The lowest price was for 3 Heaton Street, completed on 29 May 2009 at £54,000.   Mr Wainwright said that whilst the subject property was slightly larger than most of these comparables, it only had two bedrooms.  It was an end of terrace house and did have off-street parking, but the location of the comparables was quieter.   Weighing up the relative advantages and disadvantages, he was of the opinion that the claimant’s property should be devalued at the same rate as 31 Symons Street, which produced his figure of £72,750.
17.	As to the settlements, Mr Wainwright said that of the seven properties located within the CPO area listed in his schedule, 52 and 57 Cardiff Street were of the most assistance.   They were each two bedroom inner terrace units, part modernised and extending to 77 and 79 sq m.  The prices agreed by the acquiring authority with the owners’ surveyors (Clegg Morgan and Co and Peter Cunliffe & Co) were £61,750 and £62,000 respectively with valuation dates in June 2009.  These prices equated to between £780 and £800 per sq m.   The negotiations and subsequent agreements with the owners’ professional representatives all assumed a no-scheme world, and no account would have been taken of any affect that the various schemes had on the local market generally, such as the reduction in the number of available properties, and the supply and demand affects that could have had on prices.   Whilst it was accepted that settlement statistics should be given less weight than true comparable sales, they provided helpful support, and also demonstrated just how out of line Mr Griffiths’ assessment of the value of his house was. 
18.	Mr Wainwright said that he placed no reliance whatsoever upon the claimant’s principal comparable, 17 Leicester Road.  He confirmed that the quoted measurements were correct at 133 sq m and produced the calculations.  Not only was the property almost 30% larger than No. 11, but it was sold over two and a half years before the valuation date, during which time the market had suffered a serious downturn due to the economic recession.  It was also situated in the area that was favoured by the Orthodox Jewish Community who in general sought larger houses for their family needs.  Having considered the report of Dr Wise, he was of the view that the premium that such a location would command would not apply to the location of the subject property.   In any event, he said Mr Griffiths’ property was simply not large enough to be of interest to the Jewish Community who, as a matter of fact, tended to have very large families.   He said that even if the tightly defined area in which they had traditionally sought properties had expanded into Mandley Park and further down Leicester Road, that would have had an impact on achieved prices there, but there was no evidence to support that theory.
19.	Mr Griffiths’ evidence concerning average prices was not accepted by Mr Wainwright.  He said that, being an overall average (spread over two years), that would have included very much larger properties, and could not therefore be used to define the value of one particular type of house.   He also dismissed the claimant’s reliance upon the sales statistics for the Mandley Park area during 2006 and 2007 as the market was very different at the valuation date, as his own schedule showed.   As to any difference between the location of the subject property and Mandley Park, he said that, despite the view that I had expressed in my decision on his brother’s Hampshire Street property where I said Mandley Park would command a 20% premium, he thought due to the closer proximity of the subject property that would be 10% in the no-scheme world.   However, in his estimate of value he had added back that 10% to reflect the fact that the subject property was end-terrace, and had off street parking.   Thus the £700 per sq m achieved on his best comparable was the right multiplier to apply to 11 Leicester Road.                  
Conclusions
20.	Mr Griffiths’ case principally relied on the sale in 2006 of No. 17 Leicester Road.  It was the closest in terms of location of any of the comparables used by either party and, although it was undoubtedly a better, larger and indeed more aesthetically pleasing house than the subject property, I consider that it deserves to be given some weight and disagree with Mr Wainwright, therefore, that it should be ignored.    Although the sale was some considerable time before the valuation date, during a period of strong market growth and general economic confidence, and the property fronted Wellington Street East, which was agreed to be one of the Jewish Community’s favoured streets and for which a significant premium could be expected, in my judgment it was so close to the subject property as to raise serious questions over the council’s valuation of it at £62,500 at around the same time.   I accept the claimant’s evidence that the boundaries of the Jewish Community’s preferred area do not appear to be so tightly defined as has been made out, and find I cannot give any weight to the report or statement of Dr Wise for the reasons given by Mr Griffiths.   However, and despite what I have said above, the fact remains that 11 Leicester Road is only two bedrooms, is certainly less attractive than No. 17 and has its main entrance onto the busy main road, rather than the quieter elevation onto King Street.  I do not think it would attract the level of “Jewish” premium that a property having its entrance onto Wellington Street East would, and in formulating my decision, take into account Mr Wainwrights undoubtedly correct view that if their area had expanded (which it has – as evidenced by the mezuzahs) then there would be evidence of premiums in Mandley Park and further down Leicester Road.            
21.	The schedules of sales in the Mandley Park streets that Mr Griffiths produced in his bundle of documents clearly showed prices being achieved in 2006 and 2007 regularly exceeding £100,000 and reaching averages of about £125,000.  However, they do not show the prices in 2009 as Mr Wainwright’s comparables do.   His schedule of sales demonstrates just how much the market had fallen from the peaks previously achieved, and I must accept it as the most reliable information.   The Nationwide Indices upon which Mr Griffiths relies are the national average house prices and are not those relating to the locality.  They can only be a very approximate guide, and cannot, as Mr Wainwright pointed out, be capable of being used as a primary method of valuation for a specific property.  
22.	Mr Wainwright said that the fact that the subject property is end terrace, and has off street parking, served to balance out the 10% premium that would apply to the properties he used as his comparables on Mandley Park.  He thus used the same multiplier as for 31 Symons Street - £700 per sq m.   I find that, despite having found in my decision on Mr Griffiths’ brother’s property on nearby Hampshire Street (which was in CPO area No. 1) that Mandley Park would, in the no scheme world, have enjoyed a premium of 20%, I cannot agree with his suggested differential here.  The subject property is right opposite the streets that make up Mandley Park and is in very close proximity to the shops and other local facilities.   In my view, in the no scheme world there would be no differential between the two locations.  The fact that the properties on Symons Street, Gainsborough Street and the other Mandley Park streets are undoubtedly quieter is more than balanced by fact that the subject property is end terrace, is double fronted, is very close indeed to the main “Jewish Quarter” and has off street parking – this latter point being, in my judgment, of not insignificant value.   Overall, I conclude that, allowing for these factors, and the parking in particular, the subject property would, if anything, command a premium of 15% over the Mandley Park comparables.    
23.	I note that in using the analysis of the 31 Symons Street, Mr Wainwright has adopted £700 per sq m as a multiplier.   If he had used 32 Symons Street, that would have been £750 per sq m; if he had used 48 Gainsborough Street, the figure would be £894 per sq m and the settlements ranged from £780 to £800 per sq m.    In my view, a figure of £800 is appropriate, to which, as I have said above, 15% should be added giving £920 per sq m.   Based upon 104 sq m, that gives £95,680 – say £96,000.      
24.	Compensation for the compulsory acquisition of 11 Leicester Road, Salford, is therefore determined at £96,000.   Although the provisions of section 4 of the Land Compensation Act 1961 are not precluded from applying when a reference is heard under rule 28, the Simplified Procedure is in general a no-costs procedure, and I infer that in agreeing to it the parties intended that no order for costs should be made.   I therefore make no order as to costs.
			DATED 29 April 2010

			P R Francis FRICS