Council Pays High Price for Derelict Eyesore

The appearance of neighbourhoods deeply matters to residents and local authorities have the power to compulsorily purchase derelict eyesores – however, the cost of doing so can be punitive amidst a galloping property market. In one case, a council ended up paying far more than it expected for a tumble-down house.

The property was in a very poor state of repair with most of its interior, including floorboards, having been stripped out. However, it was conveniently located in a desirable suburban area, close to public transport links, and had the benefit of planning permission for a substantial extension.

After the council compulsorily acquired the property and took possession, it fell to the Upper Tribunal (UT) to assess the amount of compensation payable to the former owner. The council pointed out that no one had lost their home, the property having been unoccupied, and argued that it had an open market value of £590,000.

The former owner had left no forwarding address and had played no part in the proceedings. Nevertheless, the UT found that the house had a market value of £650,000, based on the purchase price of one comparable property which had recently been sold. The UT noted that, if she applied for it in writing within six years of losing possession, the former owner would be entitled to a further basic loss payment of £48,750 under Section 33E of the Land Compensation Act 1973.