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Valuing opportunity to develop roof space found to be irrelevant
The Upper Tribunal found that a First-Tier Tribunal (FTT) should not have included planning refusals after the valuation date in the value of an opportunity to develop a block of flat’s roof space, saying that these matters were irrelevant.
The case, Francia Properties Ltd v St James House Freehold Ltd, revolved around a potential roof top development. Planning permission was refused for various schemes before the valuation date but was eventually granted for a more modest scheme after the FTT decision.
The valuation date for the purposes of determining the value of the freehold was 20 October 2015, the date on which the respondent served notice claiming entitlement to acquire the freehold. Before reaching its decision, the FTT received evidence of a history of unsuccessful applications for planning permission to develop additional accommodation on the roof of the building. Only one such application had been determined by the valuation date, with subsequent refusals coming after that date. In reaching its decision on the value of the development opportunity the FTT made a deduction of 65% from the development value to reflect what it considered to be “the more than minimal risk involved” in achieving the development “having regard to the previous planning refusals”.
The Upper Tribunal decided that the FTT was wrong to take into account refusals after the valuation date so the appeal was allowed, and the value of the roof top development was re-determined at £100,000. The following factors were taken into account by the Upper Tribunal when coming to this decision: a discount for risks; the form of development; and the value of the new flats.