This post reflects on actions needed to give effect to the Coalition government's approach to dealing with hardship arising from the recent riots and civil commotion.
Hardship following the the loss, damage and destruction of property will be ameliorated by the actions of national and local government departments and agencies. Over the last few years they have swung into action to support those distressed by flooding: now it is the turn of those distressed by the recent riots and civil commotion.
Income Taxation: Businesses and individuals who have faced disruption and/or loss of records and other taxation-related documents will find that there will be a sympathetic understanding of requests for deferment of:
- submissions of returns; and,
- payments of income tax or corporation tax.
Council Tax and/or Business Rates: Local taxpayers should see a similar approach by their collection authority whereby payment of council tax or rates (and in some cases both) are likely to be deferred - particularly where buildings have been damaged. (Where a building has been destroyed the following should occur:
- payments should cease; and,
- where payments have been made in advance, remittance to the taxpayer should be speedily dealt with by the authorities.)
Hardship: In other circumstances, charging or rating authorities have powers to ameliorate the hardship of council tax payers or the ratepayers by foregoing the collection of the taxes due.
Assessment (Valuation) for Local Taxation
Where property has been destroyed or damaged by fire or other perils it may be entirely unuseable or only partly useable. The payer of council tax or business rates want to ensure that no unnecessary tax will be paid.
Early action by the officers of the Valuation Office Agency (VOA) might be expected to be put in hand to:
- remove from the valuation lists for council tax and/or business rates the entries for any completely destroyed buildings - at least until they are completely reinstated and re-occupied; and,
- where a damaged building has to be partly demolished, its speedy revaluation will ensure that adjustments (downwards) of any due payments of council tax and/or rates will not be unnecessaril;y higher than they should be (but see above about deferred payments).
Vacant Property Rates and Councxil tax: Hopefully, where re-occupation is delayed after reinstatement, any vacant property rates or council tax which may otherwise be due will be waived.
Small Business Premises: Where a business occupies small premises (with reference to the rateable value) the occupier may apply to the council for a reduction in the rates payable. Where a business has been disrupted, a ratepayer may find that they are:
- forced to move to smaller premises; or
- forced to reinstate a damaged large property as a smaller property.
In these circumstances the ratepayer may be eligible to small business premises rate relief - a claim should be made accordingly. [Please note : The Localism Bill has a clause providing that the ratepayer will receive the relief "automatically" - but this must await Royal Assent to the Bill.]
The reader is advised that the information in this post is based on the Prime Minister's recent statement and other published information - it is important that anyone needing help should contact their insurer or other advisers.
A person who has suffered damage to building or property or who has property stolen is likely to be indemnified in some way. Two possible ways are:
- indemnification under a policy of insurance; or
- compensation under the Riot (Damages) Act 1886.
Where insurance is paid the insurance principle of "subrogation" means that the insurance company will be able to recocover the insurance payments under the 1886 Act.
No Insurance Policy
Where an owner and/or occupier is not covered by an insurance policy it seems that the only recourse would be to make a claim for compensation to the local police authority under the Riot (Damages) Act 1886 procedures. Speedy action is of the essence.
Insurance Policy - No Valid Cover
In many standard insurance policies "riot and civil commotion" are not covered but may be covered as a "special peril". In all cases the insured should get it touch with their insurance company. Again the 1886 Act is likely to give effect to compensation by direct application.
Insurance Policy - Valid Cover
If the policy covers the loss, a claim will be considered by the insurance company under the policy. It is likely best to proceed on this basis but as noted above the subrogation will apply..
"Riot" Compensation
Here the 1886 Act is likely to apply and a claim should best be made to the police authority for the area in which the property is situated. The period of claim has been extended to 42 days but every endeavour needs to be made to act quickly.
Buildings owned by Bodies in the Public and Voluntary Sectors
The 1886 Act appears to apply to most kinds of urban buildings including churches, hospitals and other buildings owned by bodies in the voluntary and public sectors.
Burden of Compensation
Although the police are the "compensating authority" the burden of the compensation provisons will be borne by the payers of local taxes and/or the national taxpayers (to the extent that the Coalition government contributes.
Future
It may be that past calls for the remains of the Riot (Damages) Act 1886 to be repealed will be heeded. The Act is a shadow of the original but the effect is that indicated above. The issue is a fourfold question,namely:
- Should the government (taxpayers) bear the brunt of such losses?
- Should the insurance industry take up the challenge make the "special peril" a standard?
- Should the local community (local goverment tax payers) take the brunt?
- Should we all be self-insured?
At last the Localism Act 2011 is established in law? The links below describe how local authorities will be required to publish information about their own property - the description gives an aggregate of the open market values of all such property.
However, the 2011 Act provides for some local authorities to make a list of assets (land and buildings) which have "community value" (which is not be the same as "open market value"). I suppose that the list will certainly include assets deemed or nominated as community assets belonging to bodies and individuals who are not local authorities: but will the list include local authority property assets? No doubt the forthcoming regulations will tell us.
Whilst browsing I hit upon a DCLG site which gave a pretty map of the locality with all kind of coloured pointers. Hitting on the pointers I received some detailed information about the public property on each hit, such as a) name, b) address, c) postcode, d) organisation, e)contact, d) currency (date), e) area, f) use status, g) tenure, h) easting, i) northing, j) reference, and i) ID. Will future such lists indicate public property which has community value?
[Please Note: Wish I could show you but my viewing was (apparently) for my eyes only (or more complicated words than that)! Having signed the OSA I felt obliged to resist showing you the many boxes which state "Data Not Available". Nevertheless once it is fully developed it should prove a useful first pointer for residents and others of what is out there in the public domain. However, I am not allowed to copy it and there was hint that it may be shown for a limited time; even if it stays for ever, I may not be able to find it again! It has been an exciting half hour!!! Sad.]
http://www.24dash.com/news/housing/2011-08-05-Pickles-orders-councils-to-publish-assets?utm_source=24dash+newsletter+subscribers&utm_campaign=1c4848811f-UA-31909-1&utm_medium=email
With the prospect of local land being listed under the Localism Act 2011 (November 2011) as assets of community value there may develop a market "niche" for those who seek to agree claims for compensation upon the compulsory purchase of a such assets. It may, therefore, become appropriate for the stakeholders to get an idea of the following:
- the approaches to compensation which might arise; and,
- the possible pitfalls along the line.
Firstly it may be noted that community value is not really about open market value (OMV) but the view in section 88 (1),(2), and (3) that a property furthers the social wellbeing or social interests of the local community. "Social wellbeing" is not defined in the section but in section 88(6) "social interests" covers
(a) cultural interests;
(b) recreational interests; and,
(b) sporting interests.
The Act is silent as to whether these interests have to be "lawful"! As an aside - this aspect of the Localism Act 2011 takes my mind to lawful sports and pastimes of the Commons Act 2006 - one of the "measures" of judging land use when determining land as a prospective village green or town green. Will such land be considered as an asset of community value? The 2006 Act suggests that it could be! [At present the government has a consultation out on heritage greens.]
The basics of compensation for assets of community value are likely to be very similar to (if not the same as) that for other property affected by a compulsory purchase order (CPO). However, a CPO for community property is likely to involve only one parcel of land (or land with building(s)). In other words the surveyors involved may have little in the way of current transactions as comparatives for determining the value of the community asset. Here, however, the post is about the legal framework for determining the basis of value.
The law provides that the owner should be compensated in a manner which means that he or she should not be worse off after the event than before the event - the event is the act of acquisition under the CPO but the date at which compensation is assessed is determined in law. If an interest happens (in the unlikely event) to be unlawful, it cannot be reflected in the OMV since the six rules of compensation should be used by the acquiring body to exclude it as being immoral etc (see the Land Compensation Act 1961 (as amended).
Cutting to the bone, broadly and briefly there are statutory rules and assumptions which, in effect, allow two bases of compensation; the owner claims the higher of the following:
- open market value of the property assuming it is in the present use, together with "disturbance" (together with, legal fees and costs and surveyor's fees); and,
- open market value based upon development potential (together with legal fees and costs and surveyor's fees).
By way of illustration, a village shop with a large yard might be valued as a shop at say, £490,000 including disturbance and fees etc: as a redevelopment site it for housing it might be valued at say, £900,000 including fees etc. In this instance owner would be entitled to the latter sum.
However, in a case (Greenweb v London Borough of Wandsworth (2008) (similar to a CPO situation) the claimant company had originally paid £30,000 for a small parcel of land. The land was open space - seemingly available to the public. The acquiring authority and the claimant agreed that its market value was a sum of £15,000 but the company argued that under the statutory rules etc, it was entitled to much more - as a result of the Lands Tribunal decision going before the Court of Appeal the company ended up with £1,600,000!
Vague memories of something called the "community land scheme"(CLA) (c 1976) came to mind when I read of misgivings about the policy proposal for land auctions by local authorities.
Briefly, the land auctions scheme is that owners of property with development potential will "offer" their land to the local authority at a sealed-bid price. If the council decides to "buy" the land at that price, it will then obtain planning permission. Subsequently the local authority will sell the land at auction to the private sector for development, ie in the expectation of a price higher than the bid price.
The proposal is (very very loosely) akin to what I imagine might have happened after the "second appointed day" (SAD) of the CLA - that day did not arrive! [If memory serves correctly, aftre SAD the land was bought by the LAs at "current use value" not at a sealed bid price.}Will the same fate await land auctions via local authorities?
The Localism Act 2011 requires an owner who has a property which is listed on the local authority's list of assets of community value to give notification of disposal. This will kick in an interim moritorium period of disposal, ie six weeks in which a community group may declare an interest in exercising their right to bid for the property. If one does so a full moratorium period on the disposal arises, namel six months.
It follows that the stakeholders will all have to be alert to the impact of such a moratorium, namely:
- the owner should be aware that the property is on the list and be concerned that the appropriate "notification of disposal" (see section 96) is made;
- any owner's estate agent should take into account the timing of the various periods given in the chapter, eg "full moratorium period", "interim moratorium period" and "protected period";
- prospective buyers (both community buyers or private buyers) will need to understand the nature and timings of any possible delays;
- any community interest group (see section 95(6)) wanting the property will need to comply with the procedures;
- the local authority (see section 106 (1), (2), (3), and (4)) will need to be geared up to give effect to the procedures.
Once the Regulations are published (probably in a few months) the full gamut of the legislation will begin to bear!
A point to bear in mind: where the vendor has a "going concern", eg as a branch in a bank and decides to close the bank branch, it may be difficult afterwards to maintain or claim the "community value" in the empty property. The issue is that the "community value" may lie in the continuation of the use, in this case banking: it is not in the property per se.
"Community asset" is a relatively new term which is being "enclosed" with a new statutory aura of terminology; so this post attempts a short list of the new jargon. I must admit that I have a layman's understanding of such matters so I am pleased at last to delve into the Localism Act 2011 which has just received Royal Assent (16 November 2011). Now we must await the pethora of Regulations!
To the glossary - where the Bill is lacking in detail it might be expected that forthcoming regulations will fill gaps. Let the hunt begin!
Part 5, Chapter 3 of the Localism Act 2011 (sections 87 to 108) sets out the law of "assets of community value. " Under these provisions new terms we have to deal with include the following:
- community value - (see section 88(1)(a) - This is not a reference to monetary value such as "open market value" but to a quality of the land in its current use in furthering the "social wellbeing or social interests of the local community" [Note tht further detail is given in the section!];
- list of assets of of community value (see section 88) - The lists are to be drawn up by the local authority (see section 106(1) and (3)), eg district council, county council, etc.
- community nomination (see Section 89(2)(a) and (b)) This allows community councils, town councils and parish councils and their ilkies (certain voluntary bodies) to nominate land for the list. [They seem to be in a relatively weak position.];
- land of community value - "land" is widely and interestly defined (see section 108(1));
- owner - (see section 107) is defined in relation to land as to whether the estate held is freehold or a freehold with one or more leases. [In the latter the owner owns the leasehold furtherest from the freehold!]
- list of land nominated by unsuccessful community nominations (see section 93)
- moratorium on disposing of listed land - (see section 95(1)) - here land on a list cannot be disposed of unless Conditions A, B, and C have been fulfilled (see Section 95 (2), (3) and (4));
My first look excited curiosity and revealed my general "cloud of unknowing" about such matters. A whole new field of interpretation is about to hit me - or so methinks! Later posts will explore these terms and more further.
