Entering the Lands Chamber
The Lands Chamber plays a hugely important role in resolving disputes. Disputes are common place, sometimes because of genuine disagreements and sometimes because of one party being unreasonable or unrealistic. For example, where leaseholders wish to extend their leases, there is a process where disputes could end up in the First Tier Tribunal of the Lands Chamber. The process is relatively quick, a little arduous but it provides results where the expense taken can often be worthwhile.
With Compulsory Purchase though, there is no First Tier Tribunal. It’s all the way to the Upper Tribunal. This means the costs are typically far greater, the rules are for more formal and crucially the time to get there can take far longer.
The time delay
To have the right to apply to the Lands Chamber, claimants first of all need to have lost their property to Compulsory Purchase. On a practical basis, this normally means that homeowners would have moved out of a property before they have their case is heard at the Chamber. With long delays at present in getting a hearing date, it can be around a year from application to judgment. Meanwhile, homeowners need to be living somewhere and it is highly unlikely to be the property they lost ownership of.
What is involved?
At the Upper Tribunal of the Lands Chamber, there are various procedures which claimants and acquiring authorities can be directed down. Preferences can be stated but ultimately it is the Tribunal’s decision. The problems with this of course is that some procedures are more time consuming, technical and importantly more expensive than others. Also, crucially, some are far more likely to award costs against a party which behaves unreasonably or whose offer is beaten than others. The majority of residential cases are on the simplified or written representations procedure. Costs can vary but to budget for £30,000-£40,000 is not unreasonable. If the standard procedure is used, costs could be far higher, often over the £100,000 level. Potentially even more so with the specialised procedure, albeit this is highly unlikely for a residential case.
What about the money?
Before applying to the Lands Chamber, it is sensible to make an application under Section 52 of the Land Compensation Act 1973. This is for 90% of the acquiring authorities estimate of the total value of the claim. Importantly, it is not the claimant’s estimate. The remaining 10% and potentially a further uplift (or reduction if overpayment was made) can still be negotiated afterwards or referred to the Lands Chamber.
Here, the law doesn’t work but thankfully changes are on the way, currently out to consultation. The reason it doesn’t work is that if acquiring authorities are late in payment, the interest rate they are charged is 1% below the Bank of England Base rate. At the time of publication of this article, the Base rate is 0.5%, leaving the interest rate charged on late payments capped at zero. This can leave some acquiring authorities reluctant to pay. At the time of writing this article, we are currently waiting on one payment that could be over £1million and the three months the payment should be made within is fastly approaching with no sign of it.
Should I go to the Lands Chamber?
The costs of going to the Lands Chamber can be very prohibitive. In the ‘What is involved’ section above, some of the potential costs are highlighted. The Chamber should therefore normally only be considered if the difference between the parties is significant enough to. There is even a legal principle called ‘Delaforce’ which is that settlements on Compulsory Purchase terms are often a little underneath Market Value because the costs of securing Market Value at the Chamber outweigh the benefits that would be derived. For example, paying £30,000 to get an extra £10,000 on the price may mean that a claimant wins on the Value but loses overall.
There are some Chartered Surveyors who have a preference in going to the Chamber. Their own fees can be quite high if they do. We firmly believe that it should only be a very last resort. Both acquiring authority and claimant should want to avoid the costs, delays and uncertainty it brings. If two reasonably minded Chartered Surveyors have extensive negotiations in a sensible and open manner, it should be possible to reach agreement or at the very least get so close to it, that a Chamber reference would be unwise. Where Surveyors do not engage properly with each other (this can be Surveyors on either side), there is an increased possibility that at the time the property is vested under the CPO, that the margin for negotiations has not been narrowed down. This is poor practice and shows that something has gone wrong somewhere – certainly for a residential case where the potential valuation difference of opinion should be less than with many commercial properties.
This is why claimants very rarely apply to the Lands Chamber. The last one that did with a published judgment that I’m aware of did so without professional support. Significant expenses were incurred and the Council’s opinion of value was agreed by the Chamber. Acquiring authorities try to avoid it as well due to the time and budget implications. However, sometimes they choose to take a test case to try and set a precedent. In doing so, they would consider which test case they believed would suit their requirements best.
Would Sawyer Fielding go to the Lands Chamber?
If we need to and it is the appropriate option for our clients, then yes, undoubtedly. Our Director Dan Knowles MRICS has made Lands Chamber applications (references) before so can do so again. However, it really should be a last resort for the reasons above and we would always hope to narrow down negotiations sufficiently to make a reference not in anyones interest – claimant or acquiring authority.
If we are at the Upper Tribunal of the Lands Chamber, then one key issue changes and that’s our duty of care. At the Chamber, our position changes from advocate to expert witness. That means our duty of care is to the process, not to our clients.
For more information, feel free to contact us and peruse other pages on this website.