Material Detriment in Scotland

Whilst an affected property owner may be prepared to accept the above situation and compensation arrangements, there can be circumstances where the property owner can say to the acquiring authority- no, do not acquire part-only of my property as you intend and for which you have been granted CPO powers, acquire ALL of my property (and compensate me accordingly) because the combined effect of the proposed part acquisition of my property and the utilisation of the operation of the public work cause Material Detriment i.e. my remaining property will be materially and detrimentally affected to such an extent that I can no longer obtain enjoyment/use from its future ownership and its marketability/value has decreased.

The key here is the word “Material” (see also below) if this option of, in effect, compulsory purchase in reverse is to succeed. Please note that not all properties fall within the relevant legislation and Material Detriment primarily covers residential and agricultural properties. Confusingly, the Land Compensation (S) Act 1973 deals with agricultural properties under what is known as a Purchase Notice whilst the Town and Country Planning (S) Act 1997 deals with residential properties under what is known as a Notice of Objection to Severance. Such Notices can only be served by the affected property owner after the issue of the General Vesting Declaration documentation and there are very limited timescales thereafter to ensure that any such Notice is lodged timeously to comply with the legislation. Such a Notice is not a demand on but more of a request to the acquiring authority to (compulsorily) acquire the whole property and it can either accept or refuse the Notice. If agreement cannot be reached between the parties, then the matter is decided by the Lands Tribunal for Scotland.

Over the years, few such cases have required to be considered but in 2014 the Lands Tribunal for Scotland was required to decide in the case of Morrison v Aberdeen City Council which involved the compulsory purchase of a small area of garden ground to the front of a dwelling-house which, prior to the public work, was sited on a quiet road but after the public work would be sited immediately adjacent to what was anticipated to become a very busy arterial route into Aberdeen city centre. Evidence was lead with regard to establishing the “before” scheme situation and value of the property (which was relatively straightforward) as well as evidence of the “after” scheme situation and value (which was more problematic as construction work had not even commenced, never mind the public work being completed and operational. Nevertheless, even the acquiring authority’s own valuation expert accepted that the location would change for the worse and opined that the open market value of the property would decrease by some 15% in the “after” scheme scenario; perhaps not unsurprisingly, the claimant’s valuation expert (the writer here) considered that the decrease in value would be higher (c.25%) and considerably less enjoyment in living in and owning the property would occur. Having considered all of the evidence and circumstances, the Lands Tribunal decided in favour of the claimant and thus the invoking of Material Detriment in this case was successful. Consequently, the claimant was able to secure a suitable alternative dwelling-house and compensation on the basis of the compulsory acquisition of the whole affected property was subsequently agreed amicably- which incorporated the un-blighted Rule 2 value, a “disturbance” element as well as a Home Loss Payment.

One outcome from the above is that it is not necessarily the amount or proportion of land to be acquired (although that is a factor) that will determine Material Detriment but the adverse effects of the operational public work on the property or, most likely, a combination of these two criteria. Another experience is that due to the need for the lodging of the Notice to be immediately after the issue of the General Vesting Declaration and, in most cases before vesting, and an equally tight timescale for the acquiring authority to respond thereto, then any Hearing into a dispute over Material Detriment will likely take place prior to the public work becoming operational and thus there is an inherent problem of accurately deducing all the effects of the operational scheme on the affected property. Further, glib but true, each case will require to be decided on its own merits but the Morrison case above now gives us some clear and much needed guidance on the matter. Lastly, it is considered that it is not the role of the agent acting for the claimant to force him/her from their property by invoking Material Detriment but it is, nevertheless, professionally incumbent on the agent to be aware of this potential option and to advise the claimant accordingly in order that informed decisions can be made without later regret.

Keith Petrie FRICS

Vice-Chair, Scottish Branch of the Compulsory Purchase Association