UPPER TRIBUNAL (LANDS CHAMBER)	
	
UT Neutral citation number: [2010] UKUT 325 (LC)
ACQ/126/2009

	TRIBUNALS, COURTS AND ENFORCEMENT ACT 2007
	
COMPENSATION – compulsory purchase – site of former plant hire depot – planning permission – whether planning permission to be assumed on the basis that land allocated in the Development Plan – whether any other expectation of planning consent as hope value - development costs – valuation – compensation determined at £1,903,689 - Land Compensation Act 1961ss. 14(3) and 16(3)

IN THE MATTER of a NOTICE OF REFERENCE

BETWEEN	ABBEY INVESTMENTS LIMITED	Claimant

	and

	LONDON DEVELOPMENT AGENCY	Acquiring
		Authority

	Re: Land at 77–82 Victoria Dock Road, London E16 1DA

	Before: Her Honour Judge Alice Robinson &
	Paul Francis FRICS 

	Sitting at: 43-45 Bedford Square, London WC1B 3AS
	on 17-21 & 24 May 2010

William Hicks QC and Robert Walton, instructed by Dickens Schiebert Ltd, solicitors of Potters Bar for the claimant
Guy Roots QC, instructed by Hammonds, solicitors of Leeds, for the acquiring authority

The following cases are referred to in this decision:
Transport for London v Spirerose Ltd [2009] 4 All ER 810, HL
Urban Edge Group Ltd v London Underground Ltd [2009] RVR 361, LT
Thomas Newell Ltd v Lancaster City Council [2010] UKUT 2 (LC), LT
Pointe Gourde Quarrying and Transport Co Ltd v Sub-Intendent of Crown Lands [1947] AC 565, PC
Waters v Welsh Development Agency [2004] 1 WLR 1304, HL
Cedar Rapids Manufacturing and Power Co v Lacoste [1914] AC 569, PC

The following cases were also referred to in argument:
Grampian Regional Council v Secretary of State for Scotland [1983] 3 All ER 673, HL
Fletcher Estates (Harlescott) v Secretary of State for the Environment [2000] 2 AC 307, HL
Margate Corporation v Devotwill Investments Ltd [1970] 3 All ER 864, HL
Persimmon Homes (Midlands) Ltd v Secretary of State for Transport [2009] UKUT 126 (LC), LT
Purfleet Farms Ltd v Secretary of State for the Environment [2002] RVR 203, LT
Jumbuk Ltd v West Midlands Passenger Transport Executive [2008] RVR 186, LT
	DECISION
Introduction
1.	This is a decision to determine the compensation payable to Abbey Investments Limited (the claimant) by the London Development Agency (LDA or the acquiring authority) in respect of the compulsory acquisition of 77-82 Victoria Dock Road, London E16 1DA (the reference land) under the London Development Agency (Silvertown Way, Canning Town) Compulsory Purchase Order 2006 (the CPO).
2.	Mr William Hicks QC and Mr Robert Walton of counsel appeared for the claimant and called four expert witnesses: Dr Nicholas John Bather BA (Hons) PHD MRTPI (Planning), Mr James Carr BSc (Hons) Dip Arch (Dist) RIBA ARB (Design), Mr Jonathan Smith BSc MRICS (Development costs) and Mr Richard William Cobb FRICS (Valuation).   Mr Guy Roots QC appeared on behalf of the acquiring authority and called Mr Stephen Robinson MA FRICS MRTPI (Planning and Design), Mr Thomas Peter O’Brien BSC (Hons) MRICS (Development Costs) and Mr Colin Michael David Cottage BSc (Hons) MRICS IRRV (Valuation).  
Facts
3.	The parties produced statements of agreed facts and issues remaining to be determined on planning and valuation issues.   From these, together with the evidence and our inspection of the reference land, developments cited as comparables and the surrounding area generally on 8 June 2010 we find the following facts.  The reference land comprises a rectangular site of .0995 ha (0.246 acres) which was described in the Schedule to the CPO as “995.0 square metres or thereabouts of land and buildings….comprising steel clad unit used as a hire depot together with fenced open storage area.”   It is located immediately to the south of Canning Town Transport Interchange (bus station, Jubilee Line underground and Docklands Light Railway), fronting the A1101 Silvertown Way, a main entry point to the Docklands area south of the Royal Docks and Thames riverside, to the east, and Victoria Dock Road, with railway lines beyond, to the west.   On the opposite side of Silvertown Way is a large modern residential flatted development (The Sphere), a Holiday Inn Express hotel together with housing areas to the north, and industrial users to the south.   Beyond the railway lines, to the west of Victoria Dock Road is open land leading to Bow Creek on the River Lea.  The land immediately adjacent to the reference land, to the north and south, was occupied by commercial/industrial and open storage enterprises and included semi-derelict, under utilised or vacant properties.
4.	At the valuation date, the modern steel framed warehouse building on the reference land contained a ground floor showroom, office, workshop, and wc extending to 317.54 sq m (3,418 sq ft), with a rear store of 78.55 sq m (843 sq ft) and a first/mezzanine floor of 99.57 sq m (1,072 sq ft) giving a total built area of 495.66 sq m (5,333 sq ft).   The rest of the site, extending to 300.00 sq m (3,229 sq ft), which was accessed off a slip road to Silvertown Way, known as Peto Street North, comprised a fenced open storage area.  The land was acquired by the claimant in October 1988 and was occupied under the terms of an open ended inter-company agreement by M & J Engineers Ltd, a trading subsidiary of the claimant, as a plant depot from October 1989 to 29 August 2008.   The rent payable at the date the premises were vacated was £44,000 pa reviewable three-yearly.  It was agreed that, for the purposes of the assessment of compensation, the land was to be assumed to be available with vacant possession.  The site has now been cleared, levelled and boarded up, as has the rest of the 2.4 ha (5.93 acres) comprised within the CPO.
5.	Following an initial approach from LDA in March 2005, advising that it was proposing to make a CPO, the claimant responded to the effect that it would be contested on the grounds that it wished to promote its own scheme for the reference land and surrounding area.  Negotiations between the parties commenced and an initial offer of £1.25 million was made for the land.  The CPO was subsequently made on 29 March 2006, for the purposes of furthering the economic development and regeneration of the LDA’s area in general and in particular Canning Town, by securing development west of Silvertown Way between the Docklands Light Railway Station and the Lower Lea Crossing.  The proposals described in the CPO were formally objected to by the claimant.  However, negotiations continued between the parties despite this objection, and in October 2006 the claimant submitted a residual valuation of £6.774 million.  A public inquiry was held in January 2007, and the Order was confirmed by the Secretary of State without modification on 13 April 2007.  A General Vesting Declaration was made on 27 March 2008 and the land formally vested in the acquiring authority on 29 April 2008, which is the valuation date for the purposes of this reference.   An advance payment of £1.5 million was made to the claimant on 16 June 2008, and the notice of reference to this tribunal was submitted on 6 March 2009.
6.	The development plan comprised the London Plan Consolidated with Alterations since 2004 (2008) and the London Borough of Newham Unitary Development Plan 2001 (the UDP). Relevant supplementary planning guidance included the Lower Lea Valley Opportunity Area Planning Framework 2007 and the Canning Town and Customs House SPG 2004 which was in the process of being updated, the most recent draft prior to the valuation date being March 2008. Relevant national policy included PPS1 Delivering Sustainable Development, PPS3 Housing and PPG12 Development Plans. 
7.	By the end of the hearing, the claimant was arguing for compensation under section 5 rule (2) of the Land Compensation Act 1961 Act (the 1961 Act) in the sum of £3,250,000 together with agreed statutory expenses and pre-reference costs. The acquiring authority’s valuation under rule (2) amounted to £1,000,000, its assessment of value having reduced following the House of Lords decision in Transport for London v Spirerose Ltd [2009] 4 All ER 810.
Issues
8.	The following issues arise:
1.	Is planning permission to be assumed pursuant to section 16(3) the 1961 Act for development of either the reference land or a larger site including land to the north and south?
2.	If not, was there hope pursuant to section 14(3) of the 1961 Act that planning permission might be granted for such development?
3.	In the light of the answer to the above questions, what was the open market value of the reference land pursuant to section 5 rule (2) of the 1961 Act at the valuation date?
Other elements of compensation have been agreed.
9.	We approach our decision in two parts.  Firstly, the planning evidence and our conclusions on the first two issues.  From this, we turn to the third issue and the question of value based on those findings.
Planning
10.	The claimant argued that the reference land should be valued on the basis that either planning permission might reasonably have been expected to be granted for a mixed use development described as ‘the notional scheme’ by virtue of section 16(3) of the 1961 Act; alternatively that it had hope value for such a development by virtue of section 14(3) of the 1961 Act.  In the alternative, planning permission might reasonably have been expected to be granted for, or there was hope value based on a similar scheme, but incorporating land to the north and south (‘the larger scheme’).
11.	The notional scheme, for which design drawings had been prepared by Mr James Carr of Barton Willmore, Consultant Architects, comprised 45 apartments (17 x 1 bed, 28 x 2 bed including 16 affordable units split 60:40 social rented/intermediate tenure), 284 square metres of retail class A1 at ground floor fronting Silvertown Way and 427 square metres of office class B1(a) at ground floor fronting Victoria Dock Road. Basement parking for 24 cars was proposed together with 45 cycle spaces.  The building, L shaped above first floor level, would be 7 storeys high fronting Silvertown Way and 5-6 storeys fronting Victoria Dock Road, with a landscaped amenity area located above the first floor offices between the two wings.  Mr Carr also produced an alternative proposal (‘the enhanced notional scheme’) which varied the residential component only. It contained, on the reference land, 49 units comprising 6 studio apartments (6 habitable rooms), 7 x 1 bedroom flats (14 hab rooms) and 36 x 2 bedroom units (108 hab rooms), totalling 128 hab rooms.  This was the development adopted by the valuers in their final residual appraisals and included 35% affordable housing at a 50/50 social rented/intermediate split.  The larger scheme in effect repeated the form of development on the sites to the north and south resulting in, roughly, three times the scale of development.
12.	It was common ground that for the purpose of section 16(3) it is to be assumed that the LDA’s proposals to acquire the reference land were cancelled on the valuation date of 28 April 2008, and that whether this would lead to the further assumption that the LDA’s proposals for the rest of the order lands were also cancelled is a question of fact and judgment depending on the circumstances of the case, see Thomas Newell Ltd v Lancaster City Council [2010] UKUT 2, paragraphs 23 to 30. Although in its closing submissions the LDA stated that it did not seem entirely logical to assume only cancellation of acquisition of the reference land, the point was not pressed. The fact that the CPO inquiry Inspector concluded that a successful regeneration scheme was more likely to be achieved if the LDA acquired the reference land did not mean that the LDA would not pursue a regeneration scheme if it could not acquire the reference land, especially as the claimant’s avowed intention at the CPO inquiry and its case in these proceedings was that it would have developed the reference land for a mixed use scheme complementary to, or together with, redevelopment of the order lands.
13.	Dr Bather’s evidence was that if acquisition of the reference land were cancelled the LDA would continue with its proposals to acquire the rest of the order lands. Many of these sites had already been acquired by the valuation date and the LDA would acquire the remainder by agreement or through the CPO.  The LDA would continue to bring forward the order lands for a mixed use regeneration scheme in accordance with the Canning Town and Custom House Masterplan (the Masterplan).  We did not understand Mr Robinson to dissent from this, indeed at one stage he said he would not expect the LDA or the local planning authority’s commitment to regeneration to fall away.  In the light of the strong policy support for regeneration of the whole of the order lands through a mixed use development, we accept Dr Bather’s evidence.
14.	The claimant’s case is that the reference land and the site of the larger scheme formed part of a site known as m7 in the UDP which is allocated for mixed uses.  There is no specific policy which underpins the ‘m’ sites, which appear in the Urban Regeneration chapter of the UDP.   The sites are listed after the Major Opportunity Zones (MOZ’s) under the heading ‘Mixed Development Sites’ and m7 is  described as follows:
Proposal
No.	Location	Policy Ref.
No.	Proposal	Comments	
m7	Silvertown Way, Hallsville Road, E16	Relevant policies in the Plan
SH5
H13-H17	Mixed development including B1, Live/work and Residential.	Planning permission for a mixed use redevelopment comprising 50 flats, 41 live/work units and B1 office use was granted in 2001	

Site m7 is shown coloured and edged grey on the proposals map.  It is not part of an MOZ but it is within the town centre, shown by a continuous line of small circles. It also lies within a Priority Development Node. These are not shown on the proposals map but in an indicative way only on a small map 5 in the UDP.   It is agreed that the policy references relate to general issues and do not assist on the section 16(3) question.
15.	The LDA’s case is that the m7 site covers a wide area and the proposal does not indicate what uses would be acceptable on what sites or the balance or quantum of uses overall. The UDP envisaged that this would be undertaken through a detailed development framework. Thus m7 does not allocate land, and even if it does, the allocation is not ‘primarily for a range of two or more uses specified in the plan.’ It is similar to the SSDEA designation in Urban Edge Group Ltd v London Underground Ltd [2009] RVR 361 where policies stated favourable consideration would be given to a range of employment uses.
16.	Section 16(3) of the 1961 Act provides:
“If the relevant land or any part thereof (not being land subject to comprehensive development) consists or forms part of an area shown in the current development plan as an area allocated primarily for a range of two or more uses specified in the plan in relation to the whole of that area, it shall be assumed that planning permission would be granted, in respect of the relevant land or that part thereof, as the case may be, for any development which –
(a)	is development for the purposes of a use of the relevant land or that part thereof, being a use falling within that range of uses, and
(b)	is development for which planning permission might reasonably have been expected to be granted in respect of the relevant land or that part thereof, as the case may be.”
Although this provision was introduced at a time when the requirements as to the content of development plans were different from today, it is common ground that it applies in principle to today’s development plans, see Urban Edge, paragraph 20.   In Urban Edge the Tribunal also made the point that difficulties can now arise in deciding whether land is “allocated” for the purposes of applying section 16(3) (paragraph 23) and that this falls to be determined by examining how the relevant land is shown on the proposals map and relating this to the policies and other provisions of the plan (paragraph 24).
17.	At the time of the 1961 Act development plans were dealt with in the Town and Country Planning Act 1947, section 5(1) of which required every local planning authority to submit to the Minister a development plan “indicating the manner in which they propose that land in [their] area should be used (whether by the carrying out thereon of development or otherwise) and the stages by which any such development should be carried out.”  Under subsection (2) it was provided that
“... any such plan may in particular 
(a)	define the sites of proposed roads, public and other buildings and works, airfields, parks, pleasure grounds, nature reserves and other open spaces, or allocate areas of land for use for agricultural, residential, industrial or other purposes of any class specified in the plan...”
This indicates that land could be ‘allocated’ for a type or class of use rather than a specified development, and that allocations could relate to an ‘area’ and not just a ‘site.’
18.	When the UDP was adopted, section 12(4) of the Town and Country Planning Act 1990 required the plan to contain “a written statement formulating in such detail as the authority think appropriate… their proposals for the development and other use of land in their area or for any description of development or other use of such land” and a map showing those proposals on a geographic basis.  Now, section 17(3) of the Planning and Compulsory Purchase Act 2004 simply provides that “local development documents must (taken as a whole) set out the authority’s policies (however expressed) relating to the development and use of land in their area.” There is no reference in either Act to the defining of sites or the allocation of land for particular uses. Guidance as to what plans should contain was given in PPG12. The 1999 edition of PPG12 in force when the UDP was adopted distinguished between criteria based policies and site specific proposals which identify sites for development (paragraph 3.12).
19.	In our judgment proposal m7 allocates land for the purposes of section 16(3). It proposes development of a specified area for specified uses. Whilst most of the ‘m’ sites are relatively small, proposal m7 happens to be one of the larger ones. It does straddle a number of roads and pre-existing development blocks and does not specify more precisely the specific location or quantum of development. However, this is perhaps understandable given that the proposal is intended to perform a regeneration function rather than to provide a specific quantum of floorspace or residential units in order to meet a strategic target. We do not consider that an ‘allocation’ must necessarily be confined to a site such as a pre-existing development block, it may relate to an ‘area’ which includes or amalgamates a number of existing physical features and development. The ‘m’ sites can be contrasted with the MOZ areas which are much larger and, for example, the EMP4 sites which are also larger and are the subject of a policy which seeks to control development rather than propose development.
20.	Given that section 16(3) refers to allocation of an area for a range of uses, the original context of which was a requirement for plans to allocate areas for the purposes of a class of use, we do not consider it necessary for a proposal to specify a quantum of development as opposed to a particular use.  Further, section 16(3) envisages that the area may be allocated “primarily for a range of two or more uses specified in the plan” (emphasis added), indicating that the specified uses need not be exhaustive. Therefore the fact that m7 starts “Mixed development including…” followed by specified uses does not conflict with section 16(3), and in our judgment the reference to “B1, Live/Work and Residential” means that the site is allocated primarily for those uses but does not exclude others which may be appropriate.  The fact that the reference land lies within a much larger town centre area where retail and leisure are other appropriate uses does not detract from the allocation in m7.  We note that before section 16 became an issue the LDA described the order lands as being allocated for mixed uses by m7, see paragraph 11 of the Inspector’s Report (IR) (B2/299) and the LDA’s statement of case to the CPO inquiry and a report prepared for the LDA by GVA Grimley on the claimant’s section 17 proposal paragraph 4.10 (B3/813). 
21.	We consider the m7 proposal to be quite different from the SSDEA area referred to in Urban Edge.  This covered a very large area (over 100 acres) which included many different uses. The policies sought to protect and enhance the mixed employment and special land-use character of the area, there was a presumption in favour of B2 uses, B1 development was supported in principle and favourable consideration was given to employment-generating development.  In addition, within the SSDEA, there were smaller sites which were listed on a proposals schedule and subject to a policy stating they would be safeguarded for B1, B2 or B8 development.  The policies which applied to the SSDEA sought to control development which might come forward, rather than specifying that the land should be put to a particular use or uses.  By contrast, m7 is a proposal that the land should be developed for particular uses, not a development control or criteria based policy.
22.	Finally, we do not consider that the UDP envisages that the ‘m’ sites would necessarily be the subject of development frameworks that would identify in more detail how much development of what type would go where on the site.  There is no policy in the UDP requiring a detailed development brief or framework to be prepared to guide development of the ‘m’ proposal sites as opposed to the MOZ areas.  Even the reference in the text at paragraph 2.28 refers to Priority Development Nodes generally, which are shown in an indicative way only on map 5 of the UDP, rather than individual ‘m’ sites which are specifically delineated on the proposals map. There is no evidence that the local planning authority proposed to prepare a development framework for m7 beyond the updated Masterplan.  Insofar as Mr Robinson considered this was because of the CPO, we disagree. The March 2008 updated draft Masterplan (B3/801) clearly envisages that planning applications will now come forward rather than further development frameworks being prepared, and this part of the guidance covers the whole Masterplan areas not just the order lands. We also note that planning permission was granted for the site on the other side of Silvertown Way (The Sphere), which is also within m7, without the need for a development framework.
23.	The LDA submitted that planning permission could not reasonably be expected to be granted for the notional scheme on the grounds that development of the reference land alone would be piecemeal development prejudicing the development of the remainder of the order lands for a comprehensive regeneration scheme.
24.	Mr Robinson’s evidence was also that planning permission would be refused in the absence of a further development framework or brief which would have determined the critical overall key requirements for the order lands such as pedestrian and cycle links, open space, community facilities and structural landscaping.  However, this point was not put to Dr Bather in cross examination, nor pursued by the LDA in its submissions.  Mr Robinson accepted in cross examination that if the claimant co-operated with an overall scheme for the order lands so as not to compromise the benefits of regeneration an application for planning permission might have been acceptable. Thus the LDA appears to accept that if a scheme came forward on the reference land which was otherwise acceptable, permission would not be refused merely because there was no development framework. We agree, and have already outlined our reasons for that conclusion in paragraph 22 above.  We also note that the reasons for refusal of the claimant’s planning applications in 2006 did not include that a framework plan was required, and neither did the local planning authority’s Statement of Case opposing the section 17 appeal.
25.	By the time of the hearing it was agreed that a planning obligation requiring £6,500 per residential unit for the notional scheme would be sought. During the hearing affordable housing was agreed at 35% of the residential units at a 50:50 tenure split.
26.	In our judgment the key issue, which was formulated by the claimant and accepted by Mr Robinson, is whether the notional scheme would prejudice the development of the rest of the order lands in an acceptable way.  The context in which acceptability is to be measured must be the applicable planning policies in the development plan and supplementary planning guidance. In general these emphasise high quality design, making the most efficient use of land, maximising intensity of use compatible with good design and local context, promoting a mix of uses and enhancing the quality of the public realm. These policies accord with national guidance in PPS1 and PPS3.
27.	More specifically, the order lands lie within the Lower Lea Valley identified by the London Plan as an Opportunity Area capable of accommodating significant residential development, policy 5C.3 and table 5C.1, where development will be optimised (emphasis added), policy 5C.1 (B2/411-8).  The Lower Lea Valley Opportunity Area Planning Framework 2007 (the LLV Framework) sets out the Mayor’s detailed guidance for the Opportunity Area including sub-area 13, Canning Town, in which the reference land lies. In short, the LLV Framework endorses the regeneration proposals of the Masterplan which it recognised was being updated. The Masterplan takes forward the UDP strategy to maximise regeneration benefits and improve the environment in Priority Development Nodes, one of which is Canning Town (paragraphs 56 and 2.28) (B2/328 & 353).  In addition, the UDP identifies MOZs, two of which (part of MOZ6 and MOZ7) lie within Canning Town Priority Development Node, as does the mixed use proposal site m7.
28.	The Masterplan is intended to promote the local planning authority’s ambition for quality mixed-use development around the Canning Town interchange and town centre (paragraph 1.1), and the overall vision is to create an expanded and vibrant town centre surrounded by prosperous and vibrant communities where people choose to live, work and invest (paragraph 1.3) (B2/554).   Key general themes of the Masterplan include improving the quality of the built form, open space, street scene and private amenity space (paragraphs 3.7 & 3.8) (B2/158). Although the Masterplan seeks to increase the density of housing  “this will only be acceptable where high quality buildings relate well to high quality streets and open spaces” (paragraph 3.5). The quality of private amenity space should be exemplary (paragraph 3.8).  Guidance is given in paragraph 4.16 on the type, disposition and scale of uses for the order lands which comprise Area 8 in the Masterplan with which the claimant’s designs generally accord (B2/570).
29.	The LDA’s objections focused on impact on the form of development of land to the north and south and impact on the street scenes.  It is important to recall the factual context in which the LDA’s objections to the notional scheme must be considered. This is described in paragraph 13 above.  By the valuation date the LDA already owned a good deal of the order lands, and on that date acquired most of the remainder by General Vesting Declaration (B1/178-184).  The LDA and the local planning authority would both have anticipated that the order lands (excluding the reference land) would be brought forward for a mixed use regeneration scheme.  In those circumstances the fact that, for example, a proposed development of the reference land had blank facades facing north and south would not be of much consequence as land to the north and south would also be developed, and in the interim the facades could be decorated.  Similarly, any industrial uses to the north and south would cease, avoiding any conflict with new uses on the reference land.
30.	Mr Carr designed the notional scheme for the reference land alone and produced further drawings showing how the land to the north and south could be developed if the notional scheme were built.  This involved replicating approximately the design for the reference land onto the other two areas of land.  In cross examination Mr Carr denied that his design of the notional scheme would commit the adjoining owners to a similar development.  However, in his Rebuttal (paragraph 2.5) he stated that one of his intentions was to design a scheme which could be replicated on adjoining land, presumably because development of the land to the north and south may not come forward for development at the same time as the reference land.   He also said in evidence that he was asked to design a scheme that could come forward on its own (on the reference land) or together with adjacent sites.  Further, he said that any wing at right angles to a building fronting Silvertown Way would affect the adjoining site and the notional scheme has two such wings. We consider that if there were a better way of developing the reference land or the land to the north and south it is likely Mr Carr would have at least described such a design.  Put another way, there is no evidence that any scheme other than the notional scheme would be acceptable on the reference land, nor that, if the notional scheme were built, the land to the north and south could be developed to any design other than that put forward by Mr Carr.  Therefore the issue is whether Mr Carr’s design for the reference land and larger site, the larger scheme, is acceptable.
31.	In our judgment the notional scheme would prejudice development of land to the north and south of the reference land in an unacceptable way. While an active frontage at street level is important, we consider the inclusion of so many residential cores within the buildings to be an inefficient use of the larger site. The residential entrances are mean and narrow, and sandwiched between a plethora of bin stores which would make for neither an attractive residential environment nor street scene.  Mr Carr indicated that details could be addressed at a later stage, but we did not understand that to include the layout and he stated that in his view the entrances and bin stores were in the right place. The fact that three separate retail and office units are provided also limits the scope for flexibility in the provision of commercial floorspace which would be important as this site lies towards the edge of the town centre. 
32.	Improving the environment of Victoria Dock Road presents a significant challenge given the narrowness of the order lands and the presence of the wall to the west separating the road from the railway line. There is no highway objection to the provision of 3 separate ramps to underground car parking but these would be difficult to make attractive features and coupled with the many cycle and bin stores would present an unattractive environment at street level for pedestrians and cyclists. The service lay-bys exacerbate this but we accept these could be omitted.
33.	The provision of amenity space on such a constrained site will always involve the need for a raised garden area and balconies and such an approach is not precluded by the Residential Planning Guidelines SPG (B2/583).  However, replicating the notional scheme three times involves the provision of three modest amenity areas instead of one (or possibly two) larger areas which would be more attractive and useful.  Acknowledging that any amenity area of this sort will involve some overlooking, the larger it is the more opportunity there is for privacy. Although the individual patio areas at garden level are narrow and shallower than the 3m depth recommended by the Residential Planning Guidelines SPG page 24 (B2/608), we noted on our site visit that not dissimilar patio areas had been permitted at the Sphere. However, in the case of the two flats fronting Silvertown Way, the areas are so small that we question whether they provide any benefit in terms of private amenity area. 
34.	We accept the evidence of Mr Robinson that if one were designing a scheme for the larger site from scratch it would not look like the larger scheme as proposed. There would be an opportunity to make more efficient use of the site in terms of access and service cores, pedestrian and vehicle access and parking.  In our view, a more attractive frontage to both Silvertown Way and Victoria Dock Road could be provided, including pedestrian access to the residential development and more flexible commercial space. A larger and more attractive amenity area could also be provided for residents.  Finally, Mr Robinson’s view, which the claimant was happy to accept, was that there was scope for more intensive use of the larger site if it was being designed from scratch and which would make more efficient use of the land. 
35.	In the context of the policy requirement that development be optimised, we consider that the notional scheme would constrain development of the land to the north and south in a way which would make an inefficient use of land, fail to maximise density, provide unattractive frontages to Silvertown Way and Victoria Dock Road and inadequate amenity space.  It would thus prejudice development of the land to the north and south in an unacceptable way. Regeneration through redevelopment of the order lands is an important theme of planning policies in the development plan and supplementary planning guidance and this would be a strong objection. We do not consider that the reasonable local planning authority would be persuaded to grant planning permission for the claimant’s enhanced notional scheme because of the need for redevelopment of the reference land, especially as there is no dispute an acceptable scheme encompassing the whole of the larger site could be designed which would not be significantly different in quantum, see paragraph 39 below. 
36.	We do not think that Mr Robinson’s other objections to the overall notional scheme would prevent planning permission being granted. Although the density of 1186 habitable rooms per hectare (hrha) (or 1286 hrha for the 49 unit scheme) exceeds the maximum of 1100 in table 3A.2 of the London Plan and paragraph 5.1 of the Masterplan, if the proposals were otherwise acceptable the density would not justify refusal. The Masterplan envisages that the footbridge linking land to the west and the public open space would be provided elsewhere on land owned or to be acquired by the LDA, and section 106 monies could contribute towards the cost of these. Neither party argued that the building line on the frontage to Silvertown Way should be uniform and it would be undesirable to build in a straight line southwards because of the ramp and retaining wall to the flyover.  None of the illustrative designs for development of the order lands envisage an alteration in the street pattern which development of the reference land or larger site would affect, and Mr Robinson’s Appendix 1 fig 3 (B6/2111) clearly shows that geometry of the urban grain and potential for viewing points would not be affected. The claimant’s sunlight and daylight analysis shows that the residential units achieve adequate standards (B3/901) and the sketch of the amenity area (B2/658) shows that direct overlooking between flats can be avoided by altering the window locations. Any structural landscaping would have to be provided on the public highway rather than the site and could be addressed through a planning obligation. 
37.	Therefore, we find that although the reference land forms part of a site allocated primarily for a range of two or more uses specified in the plan for the purposes of section 16(3) of the 1961 Act, neither the claimant’s notional scheme nor its enhanced notional scheme is development for which planning permission might reasonably have been expected to be granted because it would prejudice development of the land to the north and south in an unacceptable way.  
38.	Turning to whether planning permission might reasonably have been expected to be granted for development of the larger site, in accordance with the claimant’s larger scheme, it follows from our conclusions above that neither could planning permission reasonably have been expected to be granted for this development for the purposes of section 16(3).
39.	However, the LDA accepted that “There is no dispute that planning permission might reasonably have been expected to be granted on the valuation date in the absence of compulsory purchase for development of the reference land with additional land” but not for the claimant’s larger scheme as proposed (LDA’s Skeleton Argument paragraph 45). In evidence when asked specifically about the larger site in the context of section 16(3), Mr Robinson agreed that planning permission might reasonably have been expected to be granted for a scheme on the larger site subject to delay and the precise form of the scheme, that there would be no significant difference in quantum compared to the overall notional scheme and that there could be more development.  In consequence, in its Closing Submissions, the claimant stated that it could be assumed that planning permission might reasonably have been expected to be granted for a scheme of broadly the quantum of the overall notional scheme on land between George Street and Brunel Street. It was submitted that so long as the broad quantum of development could be identified and was acceptable, the section 16(3) assumption would apply in respect of such development.
40.	The 1961 Act does not specify the level of detail at which a development must be described for the purposes of section 16.  However, in our judgment it must be particularised to the extent that (1) a view can be formed as to whether planning permission might reasonably have been expected to be granted for it, and (2) the value of the land can be identified. The whole point of making the section 16 assumptions is “for the purpose of assessing compensation” - section 14(1) of the 1961 Act.
41.	We do not consider that Mr Robinson’s evidence is sufficient to enable us to conclude that planning permission might reasonably have been expected to be granted for a development of the larger area which is sufficiently particularised for the purposes of section 16(3).  We start by observing that neither Dr Bather nor Mr Carr gave evidence on behalf of the claimant that, should the overall notional scheme be considered unacceptable, planning permission might reasonably have been expected to be granted for a development on the larger site of broadly the same quantum as the larger scheme.  Mr Robinson was quite specific that any expectation of planning permission would be ‘subject to delay,’ which we take to be a reference to the need to agree a detailed scheme as he also said ‘subject to the precise form of the scheme.’ His agreement to the broad quantum of development was also qualified.  He said there would be no ‘significant’ difference between an acceptable scheme and the claimant’s larger scheme, not that there would be no difference.
42.	It follows that there is no evidence as to any alternative detailed planning permission which might reasonably have been expected to be granted. Further, we do not consider that the local planning authority would be prepared to grant outline planning permission without being satisfied as to a maximum quantum of development for the proposed uses, particularly residential, which would need to be identified and specified in the description of development and/or a condition. In order to be so satisfied it is very likely the local planning authority would require an illustrative plan showing how this level of development could be satisfactorily accommodated. In the absence of such evidence we do not consider that the development which might be granted planning permission has been sufficiently particularised for us to conclude that planning permission might reasonably have been expected to be granted for the purposes of section 16(3). 
43.	Therefore we do not consider that planning permission might reasonably have been expected to be granted for the purposes of section 16(3) for a scheme of broadly the quantum of the claimant’s larger scheme.
44.	We now turn to the alternative, namely whether there is a hope that planning permission may be granted for the notional scheme or a development on the larger site for the purposes of section 14(3) of the 1961 Act.  It follows from our conclusions on section 16(3) that we do not consider there would be any realistic hope of planning permission to develop the reference land on its own on the grounds that it would prejudice development of the land to the north and south in an unacceptable way.
45.	However, following on from paragraph 39 above and in the light of the evidence we consider that there would be a good prospect of planning permission being granted for development of the larger site for a scheme with broadly the same quantum as the overall notional scheme. Planning policies were wholly supportive of the principle of redevelopment. The scale of the buildings proposed in the overall notional scheme complied generally with the Masterplan and densities of up to 1100 hrha would broadly be acceptable, subject to detailed design. Mr Robinson accepted that there could be more development than the overall notional scheme and both valuers adopted the enhanced notional scheme in their final residual appraisals. Therefore we think a purchaser would consider there to be hope of obtaining planning permission for the quantum of the enhanced notional scheme. The mix of uses proposed was wholly in accordance with the UDP and Masterplan which helpfully sets a clear framework for redevelopment of the area in which the larger site lay. The appropriate level of affordable housing was also clearly identified in the Masterplan as 35% with a 50:50 tenure split between rented and intermediate housing in order to rebalance housing tenures in the area, see NJB7 (B3/798) and the Masterplan paragraph 2.3 (B2/556). The level of section 106 contributions would have been determined by reference to the London Tower Gateway Docklands Corporation’s (LTGDC) Planning Obligations Community Benefit Strategy which identified a standard charge of £10,000 per unit. This is the figure which has also been agreed between the parties as would apply to development of the larger site.
46.	In his written evidence Mr Robinson mentioned the possibility that there could be objections to development of the larger site based on concerns about how the development would be integrated with the wider UDP m7 site and Masterplan area 8 lands (paragraphs 4.41 & 5.15 B6/2033 & 2039). However, these concerns fall away in the light of his acceptance in cross examination that planning permission could reasonably be expected to be granted for development of the larger site, subject to the question of delay and the precise form of the scheme.  
47.	For all these reasons we reject Mr Robinson’s evidence that there is only a 50:50 prospect of planning permission being granted, which we also consider to be at odds with his evidence that planning permission could be anticipated in 4 years. The prospective purchaser could have every confidence that planning permission would be granted, subject only to the time needed to design an appropriate scheme, negotiate with the local planning authority, formally submit an application and for it to be approved.  Dr Bather’s evidence is that this could take about two years. Mr Robinson considered it would take at least 4 years, but in making that assessment he took into account the need to reach agreement with the owners of the adjoining lands. This raised the question as to the assumptions which should be made when considering this issue.
48.	In Newell, the Tribunal held that for the purpose of considering whether there was a hope of planning permission being granted by virtue of section 14(3), the same assumptions should be made as to cancellation of the CPO as for the purposes of section 16(3). These are (in this case) that the acquisition of the reference land is cancelled on the valuation date but the rest of the LDA’s proposals are undisturbed. The claimant in this case was content to adopt that approach, as was the LDA subject to one matter.  It submitted, relying on section 6 of the 1961 Act, Pointe Gourde Quarrying and Transport Co Ltd v Sub-Intendent of Crown Lands [1947] AC 565 as interpreted in Waters v Welsh Development Agency [2004] 1 WLR 1304 and Cedar Rapids Manufacturing and Power Co v Lacoste [1914] AC 569, that when considering what hope there might be of any planning permission in the future it would be wrong to have regard to the prospect of development coming forward more quickly because the LDA had already acquired some of the order lands or carried out any physical works.
49.	In our judgment there is a distinction between what hope there might be of a planning permission and when land could be developed. In the light of the clear steer provided by planning policies and in particular the Masterplan, we accept Dr Bather’s evidence that a prospective purchaser would anticipate getting to the point where the local planning authority was in a position to issue a decision notice granting planning permission in two years. For the same reasons we also consider that the prospective purchaser would expect the main terms of any planning obligations to be agreed with the local planning authority within the same period. This identifies the interest to be valued. Although we reach this conclusion on the assumption that the acquisition of the reference land is cancelled on the valuation date but the rest of the LDA’s proposals are undisturbed, in the light of the favourable planning policies we do not consider that any different conclusion would be reached if the LDA’s proposals, including their land acquisitions by the valuation date, were disregarded in their entirety.
50.	However, the execution of the deed of planning obligations would depend on the agreement of the landowners and in our judgment this is a factor relevant to implementation rather than what hope there might be of planning permission. When deciding how much to bid for the reference land the prospective purchaser would take into account when he would be in a position to implement the development.  In order to do this he will have to reach agreement with the owners of the adjoining land forming part of the larger site, either for the sale of their land or a joint venture development, and that agreement will have to include execution of the deed of planning obligations.  His conclusions on that issue will enable the value of the interest to be identified. Although the assumptions to be made for the purpose of arriving at those conclusions are a valuation rather than planning matter, it is convenient to deal with them at his point.
51.	When considering how long it would take to implement the development for the purpose of deciding how much to bid for the reference land, section 6 of the 1961 Act applies.  That provides that no account may be taken of any increase in the value of the reference land which is attributable to the development or prospect of development on other land in the CPO which would not have occurred if the LDA “had not acquired and did not propose to acquire” any of that land. The acquisition by the LDA of most of the order lands by the valuation date undoubtedly advances the prospect of development of the order lands as that was the purpose of their acquisition.  Therefore such acquisition must be left out of account when valuing the reference land and in this respect we consider that section 6 is a statutory embodiment of the principle set out in the Cedar Rapids case.  It follows that the prospective purchaser must have regard to the time which may be taken to reach agreement with the owners of the adjoining land before the CPO. There is no evidence that any physical works had taken place on any of the order lands at the valuation date so it is not necessary to consider whether these should be disregarded.
52.	There were five separate ownerships as described in Mr Cottage’s report paragraphs 6.8.9 and following (B7/2135). In its closing submissions the claimant stated that Mr Cobb’s evidence that, absent the CPO, there is good reason to suppose that landowners would have been in discussions well before the valuation date, was unchallenged (paragraph 128).  This is incorrect as he was asked about it in cross examination, although he did not resile from his position. However, we do not consider the evidence supports his opinion.
53.	The UDP which identifies site m7 for mixed use development was adopted in 2001. In October 2003 the London Borough of Newham began consultation on the Silvertown Way Planning Brief which relates to the order lands (B3/773).  As well as setting out guidance for redevelopment of this area it states that the Council is prepared to consider use of CPO powers and is working closely with the LDA to secure comprehensive development (B3/776). The Masterplan was adopted in October 2004 following consultation which started in February 2004. Paragraph 6.8 states that the Council has not considered whether it will exercise CPO powers and the Masterplan should not be taken as indicating that it might do so (B2/576).
54.	Despite this, there is no evidence of any landowners within the order lands attempting to reach agreement with each other or make any proposals for development of any of the order lands until the claimant’s applications for planning permission on 28 November 2005. Although it is not clear when a CPO became a definite proposal as opposed to a possibility, paragraph 32 of the Inspector’s report following the CPO inquiry states that the LTDGC’s Planning Committee resolved to support the LDA’s CPO proposals on 29 September 2005 (B2/303).  It follows that the claimant’s planning applications were not made until shortly after the LDA proposed a CPO.  Further, at the CPO inquiry, the claimant’s case was not that development of any of the rest of the order lands would come forward in any event without the CPO, only the reference land. Although other objectors referred to discussions between 4 owners of land in the southern part of the order lands with a view to redevelopment (IR81 B2/312), the Inspector pointed out that they had not put forward any proposals for redevelopment (IR108 B2/315a).  Thus, despite a favourable planning policy context since at least 2001 and the fact that the claimant is a development company, there is no evidence that any owner of the order lands had made any attempt to put forward redevelopment proposals until just before the CPO was about to be made (and then only the claimant) or that any owners had made any attempt to negotiate with each other until after the CPO had been made (and then only objectors relating to the southern part of the order lands).  On the evidence, therefore, we find that, absent the CPO, it is unlikely that any discussions between owners would have taken place before the valuation date and that a prospective purchaser would be starting from scratch in this respect. 
55.	We accept that there is no reason why negotiations with the owners of the immediately adjoining sites to the north and south should not take place contiguously with the planning and design exercises.  Dr Bather says 2 years, and Mr Robinson says four, although that allowed for the need for negotiations with owners over the wider area, which we have rejected.  We have already concluded that the planning and design exercise could be completed within 2 years, but in our view, bearing in mind the number of owners to be consulted and negotiated with on the immediately adjoining land, we think a further year should be allowed to make three in all.   For valuation purposes, therefore, we conclude that there was a very high likelihood indeed of planning consent being obtained (in other words, virtually no risk), and that a prospective purchaser would estimate that the land acquisition and planning exercise could be completed within 3 years.   There would, as Mr Cottage said, be an element of risk on the question of land assembly (which he puts at 25%), and this factor, at whatever percentage we think appropriate, will need to be reflected in the valuation, to which we now turn.         

Valuation
56.	We have concluded that planning permission for a mixed use development could not be assumed at the valuation date under section 16(3), but that there was a high expectation that, in accordance with section 14(3), consent for a mixed use development, in conjunction with the sites to the north and south only, could be anticipated within two years of the valuation date.  As we have said above, a further year should be allowed, in valuation terms, for the land assembly exercise to be completed   It was common ground between the valuation experts that the site should be valued by reference to the price per habitable room (phr) and in terms of habitable rooms per acre (hrha), and that the commercial space would not materially add to the land value.  We have proceeded on that basis.      
57.	Mr Cobb and Mr Cottage approached the valuation on the basis firstly of a detailed analysis of 20 comparable site sale transactions (12 introduced by Mr Cobb, and 8 from Mr Cottage), broken down into 4 main categories, and helpfully produced, in their statement of agreed facts, schedules indicating areas of agreement and disagreement in respect of each of them.   They also undertook residual valuations, based upon the accommodation that would be provided under Mr Carr’s enhanced notional scheme (49 units) as “back ups” to the conclusions they had reached on the comparable evidence.  A revised and updated “Scott Schedule” setting out their final positions on their residual inputs was produced at the end of the hearing, together with, at our request, their “final” residual calculations which incorporated our conclusions on the development costs.  In the scenario that we have determined, Mr Cobb’s final valuation for the claimant’s enhanced scheme as part of the larger development was £3.2 million.   He had adopted a rate of £25,250 per habitable room for a total of 128 habitable rooms at 1,286 hrha.  He thought that the prospects for achieving planning permission were equally as good, if not better, for the larger development site and that if section 16(3) did not apply, the discount to be applied to allow for risk and time would be minimal: 5% for each year of delay beyond the first 12 months which had already been allowed for.  This valuation was not materially different to his primary valuation of £3.25 million on the section 16(3) assumption, and that the reference land could be developed individually. 
58.	Mr Cottage’s final residual appraisal on the claimant’s enhanced scheme for 49 units on the reference land as part of the larger site under the section 14(3) scenario produced a figure of £2,549,731 before the adjustments he considered necessary to reflect site assembly and planning risks. In his view the reference land should only be valued at 55% of what it would have been worth as an assembled site with planning consent.  There should, he said, be a deduction of 20% to reflect planning uncertainties (although it was subsequently accepted that the risks, as part of the larger site, were minimal), and an additional 25% for risks and uncertainty on land assembly.   After those adjustments, the figure became £1.401 million, but he said he was still of the view that “£1 million was the right valuation in all the circumstances.”   That was the same as his original valuation (paragraph 6.4 of his first report) which reflected that fact that at the valuation date there was clear evidence that the property market had slowed during the summer of 2007, and there was a trend of falling values.  A developer would therefore be exercising extreme caution, and whilst Mr Cottage acknowledged that some land sales were still occurring (as pointed out by Mr Cobb), his bid would need to take into account the state of the market and concerns that he would have about what was going to happen to it in the future.  He also said that it was likely that, in the circumstances, a purchaser would take an option rather than buy the land outright.  As we are required to decide how much the land would have sold for at the valuation date, we do not think that this is an option we can consider.   We also bear in mind that the agreed adjustments to the comparables reflect the market at the valuation date, as do the agreed resale values and other inputs into the residual appraisals, and therefore it is not appropriate, in our view, to make any further deduction for such risks.    For the sake of completeness, although nothing turns on it in this decision, we record that although it had previously been disputed, the expert valuers agreed the existing use value of the reference land at 29 April 2008 during the hearing at £662,500.  Whilst they had concluded that due to the development potential, the land was worth more than that, they acknowledged that it was a figure that was certain and constituted a minimum or base value. 
Comparables

59.	Looking firstly at the comparables, of the 7 Category I sites introduced by Mr Cobb, all but two had planning permission in existence at the date they were sold.   They were also small sites with a maximum of 12 units (in contrast to the larger site we are considering here for comparison purposes), would have had similar building costs, negligible section 106 contributions and no affordable housing requirements.   Mr Cobb said they had values ranging from £26,423 to £32,871 per habitable room (if the highest and lowest prices achieved were removed from the equation), and it was submitted that they formed a “solid starting point from which to value the reference land.”  It was said for the claimant that any argument that these sites were not comparable because most of them already had planning permission was unsustainable under both the section 16(3) and section 14(3) scenarios.  Section 16(3) was obvious, but as to section 14(3), the fact that the acquiring authority had now admitted planning consent would be “virtually certain” meant it was only the appropriate allowance for delay that had to be considered.  Mr Cobb had relied upon his appendix RJ (information on sale prices from Newham Information Management Online) to compare property values within different wards, but Mr Cottage said that no weight whatsoever should be given to that because of the miniscule sample size of transactions in some areas, and the fact that the results were skewed by the Western Gateway Development which was a high quality dockside development of several hundred units.  This effectively made Canning Town South appear much more valuable than it really was.   Furthermore, much of the information in that table was generic, and it was not possible to extract values for individual types of property such as 1 and 2 bedroom flats in most cases – although he accepted that that was possible in relation to the Canning Town South figures – which were, effectively, all flats.    However, Mr Cobb said that his revised appendix RJ (B5/1283) had been revised to exclude the distorting factors of Capital East and Western Gateway.  It supported, he said, the figure that had been adopted for the notional flat values of £250,000.  
60.	Mr Cottage said that the Category I sites should not be considered helpful as they would only appeal to small, local developers, although he did accept that site 11, a former builder’s yard at Barrington Road E12 had sold in 2008, by which time the market had hardened considerably, to Breyer Group, a medium sized regional firm.   That site, of 0.195 acres, sold on 1 September 2008 at £630,581 with outline planning permission for a three storey block of 2 bedroom flats.  Mr Cobb’s assessment of that transaction at £22,500 phr needed adjustment downwards to £20,332 phr using the VOA index, Mr Cottage said, and this was accepted.  Mr Cottage calculated the average adjusted price of all the small sites at £28,771 phr.   Bearing in mind deductions would have to be made to reflect the fact that the reference land would need an allowance for affordable housing, section 106 contributions, higher build costs, that it could not be developed out straight away, and there were site assembly issues, he said Mr Cobb’s assessment of £25,250 phr was seriously overstated.  In his 17 years experience of valuing development sites in East London, Mr Cottage said such smaller sites as were listed in Category I would always achieve significantly higher prices than larger sites such as the reference land.  Mr Cobb argued that the sale of the Barrington Road site had attracted 60 expressions of interest, 25 purchasers’ packs were sent out, and there were four selected to bid.   Whilst he acknowledged that values were below those achieved at the peak of the market, he said that developers were still adding to their land banks at the valuation date, and the real slow-down did not come until later, following the collapse of Lehman Brothers.  The Barrington Road site was, Mr Cobb said, far inferior to the reference land. 
61.	The experts acknowledged that the Category I sites were all significantly smaller then the reference land (as part of the larger site), and we accept the conclusions that Mr Cottage reached, through his 17 years experience in the local marketplace, that these comparables were of little overall assistance, other than that the range of values produced are likely to be higher than those which should apply to the reference land.   
62.	Two of the three Category II comparables were introduced by Mr Cobb.  Stratford One (site 2) at 14-26 High Street, Stratford E15 extended to 1.47 acres (0.595 ha) on a corner site and was sold in April 2006 for £18,500,000.   It had just received planning consent for a mixed use development of 301 flats in a tower varying in height between 9 and 22 storeys, together with 654 sq m commercial space and 120 parking spaces.  The sale, adjusted to the valuation date, devalued to £25,273 phr.  Mr Cobb acknowledged that high-rise blocks would have significantly greater construction costs, and said that, in effect, this would give a higher value phr for the reference land.  Adjustments would also need to be made for the different affordable housing and section 106 requirements, but in his view the most significant uplift for the reference land would be due to its location being much better for transport links than Stratford One.   Warton House, 150 Stratford high Street E15 (site 9), was a very large, 3.2 acre (1.295 ha) site a few hundred yards east of Stratford One, sold for £50 million in January 2008 with planning consent for six new buildings of between two and 43 storeys in height together with extension of Warton House to provide community space, hotel, commercial, subsidised workplace units and 655 studio, 1, 2 and 3 bedroom flats.   Mr Cobb had devalued the price, ignoring the hotel element (which he said added no extra value) at £25,332 phr, but Mr Cottage did not agree with this approach.  He built in a value for the hotel, based upon £30,000 per room, of £4.59 million which produced a revised figure of £23,309 phr (B7/2354 10.26), and he said that both of these transactions supported the argument that larger sites achieve lower phr figures than smaller sites as in Category 1.
63.	Mr Cottage pointed out that both sites 2 & 9 were in Stratford, overlooking the Olympic Park and in an area which, since the Games venue had been announced in 2005, had created significant developer interest.  New flats there attracted higher end-values than in Canning Town and adjustments were also needed for the fact that they could be developed out straight away.  Thus, Mr Cobb’s proposed figure for the reference land, which was virtually identical to the breakdown of the price for both of these sites, was simply unsustainable.   Mr Cottage produced a third Category II property: The Prince of Wales, 388 Prince Regent Lane E16 (site 12), which was a site of 0.367 acre (0.148 ha) sold for £2,232,500 in May 2005 with planning consent for a 4, 5 and 6 storey development of 47 residential units with 17 parking spaces and 262 sq m commercial floorspace at ground floor.   It is located in a predominately residential area about 1.5 miles from the reference land, close to Prince Regent DLR station, a small shopping parade and a school.  This site, he said, was closely comparable with the reference land as part of the larger site but it was capable of immediate development and was in a rather better location. No major adjustments would be needed to reflect the higher construction costs applicable to the other two sites.  The analysis of the price paid, adjusted for time on the agreed basis was £20,190 phr, from which a downwards adjustment should be made to reflect site assembly and lack of planning consent at the reference land.   Mr Cobb said that the Prince of Wales site was in a poorer location in terms of property values generally (as indicated in his appendix RJ) and had poorer transport links as indicated by its low PTAL rating of 3.   
64.	Whilst it is difficult to quantify the “Olympic Effect” on development values for the two sites in Stratford, we note from the evidence that the new build units there were averaging sales values of £248,460 which was almost identical to the £250,339 average that the experts agreed for the units to be developed on the reference land, and in our view sites 2 and 9 can therefore be deemed similar in terms of resale values.   We also consider them to be, on balance, broadly comparable in terms of location, although Stratford One is in a waterside location with worse transport links, and Warton House is better for transport but rather less attractive in respect of its surroundings.  Nevertheless, adjustments must be made to reflect the fact that the reference land had no planning permission, and the site assembly issues had to be addressed.   The same can be said for the Prince of Wales’ site which, from our inspection, we consider to be the best of the three comparables in this category.   We accept that property values generally appear to be higher in Canning Town South but this is in our view to some extent counterbalanced by the rather more attractive location of this comparable.   In reaching our final conclusion on value, we have also borne in mind the further adjustments that would need to be made to the Stratford sites, especially Warton House, to reflect considerable differences in terms of size, what is to be constructed on it, the hotel element, section 106 considerations and the like, and for Stratford One to reflect an element of off-site affordable housing.      
65.	Turning to the five Category III comparables: larger sites where no planning permission existed when they were sold, all but one was produced by Mr Cottage.  They showed an average price per habitable room of £16,222 phr according to Mr Cottage’s appendix CCR3 (7/2384).     Mr Cottage said that these were the best comparables as they were sites of broadly similar size and physical characteristics to the reference land and had to go through the planning process, but they were all capable of being developed when such consent was obtained as there were no additional land assembly issues.  
66.	The first in this category was the former petrol filling station at Silvertown Way, Canning Town E16 (site 19) which formed part of the order lands, and was sold two days before the CPO was announced.  The price was £1,400,000 and was shown on Mr Cottage’s CCR3 as equating to £14,988 phr but this was based upon Mr Robinson’ assessment of 900 hrpa.  Mr Cottage said the price per habitable room would reduce to £11,382 if the now agreed density of 1,286 hrpa was adopted – that being the figure appearing in the schedule of agreed comparables (AD 12) (9/3131).  We have recalculated the average of the category III sites, therefore at £15,500 phr.    Mr Cobb said (and Mr Cottage agreed in cross-examination) that there were so many imponderables, including major contamination and the agreed fact that it would be unlikely to be capable of development on its own, and a possible ransom situation from the adjacent owner, that it could not be considered a true comparable.  We also agree, and whilst it is the closest property to the reference land, we do not think that, particularly as there may have been some CPO effect, it can realistically be relied upon.   
67.	Land adjacent to St Margaret’s Convent, Chargeable Lane E16 (site 15), a site of 1.322 acres (0.535 ha) forming part of the convent’s former grounds was sold to a Housing Association on 15 December 2006 for £3.7 million.   It had, at that time, planning consent for sixteen 3, 4 and 5 bedroom houses, but indications had been received from the local planning authority that an application for a significantly more intensive development would be favourably considered.  Subsequently, consent was granted in December 2008 for 75 flats and 5 houses subject to the completion of a section 106 legal agreement for £276,930 which was, at the date of the hearing, still outstanding.    The affordable housing element within the consent was 51% on a 66/34 social/intermediate split.    The adjusted purchase price equated to £16,090 phr.  Mr Cobb said that he thought Mr Cottage was incorrect to base his analysis of the purchase price on a planning consent that did not come along for another two and a half years.  If based on the original permission, the analysis would have been over £47,000 phr; this showing the effect of increased density on this form of analysis.  Furthermore, the high affordable housing element would have reduced the price, and in his view the analysis on a per habitable room basis should come “somewhere between the two.”    We are satisfied from Mr Cottage’s evidence that the purchaser would have been justified in basing his bid upon the indications given by the local planning authority, and that his analysis is appropriate.  We noted that this site was in a reasonably attractive residential area, and would have been much quieter than the reference land fronting, as it does, onto the busy Silvertown Way and having railway lines at the rear.  However it seems that values were generally lower in that location overall and it is poorly served by public transport.   We therefore think that the subject land would be likely to command a higher price.   
68.	84 Leven Road, Poplar E14 (site 13) is, in our judgment, probably the most useful comparable.  It comprised a 0.473 acre (0.192 ha) narrow development strip between Leven Street and Nairn Street which, at the date of sale to Swan Housing Association (16 January 2006), was a former industrial site comprising factory units and a warehouse.  The area generally comprised mixed commercial and residential uses, including a nearby gasworks, and the nearest station was Langdon Park DLR within 0.5 km.    The price paid was £2,800,000 which equated to £15,665 phr.   Planning consent was granted on 12 April 2007 for a four to eight storey L shaped building comprising 66 residential units (2, 3 and 4 bedrooms: 194 hr total) 25 artist’s studios and 774 sq m commercial floorspace including 2 shop units.   Although it was developed as 100% affordable housing, Mr Cobb accepted that the purchase price would not have been reduced as a result because RSLs had to, and did, compete in the same market as private market developers.  He acknowledged that the only reduction in the bid (which would be substantial) would be to reflect the lack of planning consent.   He said that an upwards adjustment to the price would be appropriate to reflect the artist studios element and its associated subsidised accommodation and the fact that the reference land was in a better location and well served by transport links.   We do not disagree, and on the basis of this comparable alone a figure £18,000 phr for the reference land seems to us to be appropriate.  We shall return to that when considering the comparables in the round below. 
69.	Caspian Wharf, Violet Road E3 (site 14) comprised two parcels of land on either side of Violet Road, formerly in industrial use and with one parcel being in a designated Employment Area. The total area extended to 0.892 acre (0.361 ha) and Berkeley Homes completed a contract to purchase that was negotiated at £6,650,000 in July 2006, in January 2008.   The analysis, adjusted from the date of the agreement to the valuation date, equates to £16,482 phr.   Berkeley Homes were already active in the vicinity when they acquired the land, and a shift towards residential uses in the area was underway.  Planning consent for redevelopment to provide buildings of between four and eleven storeys in height containing 142 1, 2, 3 and 4 bedroom residential units with 33% affordable housing on a 75/25 social/intermediate split was granted on 18 July 2008.   Mr Cobb said that the issues here were adjustments for the higher build costs, poorer location (than the reference land) and less certainty on planning.   In our view, this comparable supports the view we have provisionally expressed in the above paragraph.
70.	Land at Lanrick Road E14 (site 18) was introduced into this category by Mr Cobb in his rebuttal report.  He said this site was sold to Telford Homes in two tranches (0.240 acre and 0.395 acre making 0.635 acres total), and the price, which he analysed to £20,067 phr in respect of the 0.395 acre (0.16) ha part or £17,886 phr overall) thus reflected an element of land assembly risk.  However, Mr Cottage produced evidence from Telford Homes (which we accept) to confirm that they, in fact, purchased the whole site in 2006 for £3,300,000 under one contract unconditionally and without planning consent.  Two separate titles were amalgamated, but the Land Registry had made a mistake on its entry.  Planning permission was thereafter obtained in 2009 for a residential development comprising 64 one to five bedroom units totalling 198 habitable rooms.  He said it was therefore appropriate to analyse the site as a single acquisition and agreed that the correct adjusted figure was £17,886 phr.   Although the original planning anticipated 35% affordable housing, the development now taking place is a 100% affordable project.  
71.	Mr Cobb said that he thought the site was in an inferior position to the reference land, being in a former industrial and waste-transfer area immediately adjacent to Blackwall Trading Estate, and that it was overshadowed by an elevated section of the busy A13.  Residential sales values would, in his opinion, be less than in Canning Town.   In our view, this is a very good comparable, but we accept that for the reasons given by Mr Cobb, and the fact that the subject land is closer to Canning Town Station, it would attract a higher value. No adjustment is needed for the fact that a 100% affordable development is being constructed as it does not, as we have said above, affect the price which a developer will be prepared to pay for the land.  We are satisfied that this comparable adds further support to our initial conclusions outlined above – that a figure of £18,000 phr is appropriate for the subject land. 
72.	The City Pride Public House (site 16), 18 Westferry Road E14 is a 0.6 acre (0.243 ha) site between Westferry Road and Marsh Wall, right on the edge of Canary Wharf and in a virtually waterside position.   It was sold without planning consent for £28,000,000 on 16 May 2008 with an additional £4,000,000 to buy out the pub lease.  Permission was obtained in October 2009 for a mixed use development including 62 storey tower comprising 430 apartments, a 9 storey podium building with 203 bedroom hotel and ancillary uses, an amenity area and commercial elements at ground floor.  This transaction was analysed by Mr Cobb in conjunction with another site, Island Point Westferry Road E14 on the Isle of Dogs peninsula (site 17) due to their entwined planning history. These sites were sold without planning consent, but permission was since obtained for intensive developments – a 62 storey 430 unit block and hotel at the former, and 189 residential units at the latter.  The analyses per habitable room equated to £31,564 and £45,480 respectively.    Having inspected both sites (which have yet to be developed) we conclude that they are so different both in terms of their vastly superior locations, and the types of proposed development, as to provide no useful assistance.
73.	Three sites came into Category IV, and were introduced by Mr Cottage.  31-41 White Post Lane, 66-78 Whitepost Lane and 67 Rothbury Road (site 20); Sunshine Wharf, Bradfield Road E16 (site 21) and Manhattan Wharf, Bradfield Road (site 22) were all former industrial sites in employment areas where the planning policies were not nearly as favourable as for the reference land.   Mr Cobb said that for these reasons, and the fact that it was clear these were strategic purchases or investments in sites that may have long term planning potential, they were not of assistance to the Tribunal.   A further site at Brunel Street/Victoria Dock Road was not, Mr Cobb said, even a transaction and should also, therefore, not be considered.  Mr Cottage accepted in cross-examination that there was less certainty of obtaining planning consent on these sites, and the reference land had far better potential.  Other than demonstrating that developers were willing to take a long-term view in buying land with some prospect of residential development, we agree that the locations were less favourable than the reference land, and were subject to entirely different planning policies.   In the light of the evidence and submissions therefore, we consider them to be of little assistance, and do not refer to them any further. 
74.	As to the category V sites – those acquired as part of the scheme, neither Mr Cobb nor Mr Cottage considered them to offer much in the way of assistance to us, other than perhaps to indicate a “baseline” from which to build up a figure.  Again, therefore, we do not consider them further.    
75.	In conclusion on comparables we are of the view that there is nothing to support Mr Cobb’s estimate of value per habitable room of £25,250 for the reference land.  The Category I comparables would, if the reference land had planning consent and there were no land assembly issues, provide some assistance.  According to Mr Cottage’s CCR3 (7/2382) the 7 transactions referred to produced an indexed average of £28,771 phr, but none of them would have more than 36 habitable rooms in total, and we accept Mr Cottage’s view that the evidence clearly demonstrates that prices per habitable room are significantly more for smaller sites. This is demonstrated by the Category II sites which produced an indexed average of £22,824 phr for sites with planning consent.   The experts agreed that the category III sites (larger sites without planning consent) would be of the most assistance, and we concur.   These produced an indexed average of £15,500 phr (see paragraph 66 above), although according to Mr Cottage’s calculation in CCR 3, it was £16,222 phr, which precisely matches his suggested 20% discount to reflect lack of planning consent.  It is clear to us that the adjusted figure for the former petrol filling station site does somewhat “skew” the figures, and if that is removed altogether, the average becomes £16,530 for the four remaining sites in that category (which ranged from £15.665 to £17,886 phr), and we think that more fairly reflects the general level of prices for larger sites without permission. However, in the light of our conclusion that planning consent for the reference land was “virtually certain”, it seems to be likely that the reference land would achieve a price towards, or even slightly above, the highest level in the range.  This conclusion is supported by our findings in paragraphs 68 and 71 above – say £18,000 phr which also make an allowance for the better location of the reference land.  
76.	With regard to the deduction for risk in relation to land assembly (which was not a factor to be considered in respect of the Category III sites), we accept Mr Cottage’s opinion that with a number of separate landowners being involved, a separate deduction should be made, although we think 25% is a little high.   However, in our judgment Mr Cobb’s assessment of 5% per year after the first 12 months is unrealistically low, and we adopt 20%.   This percentage needs to be deducted from the £18,000 referred to above, to leave £14,400 phr. For the sake of clarity, we do not think there needs to be any further deduction for lack of planning consent as our conclusions take this into account based, as they are, mainly on the comparable sites that were also sold without consent, and upon our view that there is little risk.   At the figure of 128 habitable rooms to be accommodated on the reference land under the claimant’s enhanced scheme (49 units), this gives a value of £1,843,200 – say £1,850,000    
Residual valuations

77.	As a cross check of their valuations based on comparables both valuers produced residual appraisals. These were based, as we said in paragraph 11 above, on Mr Carr’s enhanced notional scheme that would have provided 49 residential units on the reference land.  One element of these which was not agreed was construction costs and we heard evidence from an expert quantity surveyor from each party. They identified two different models of procurement for construction of the development: a developer employing a main contractor (main contractor model) and a developer/builder who manages the construction in house and employs individual sub-contractors directly (house builder model).
78.	The surveyors helpfully agreed virtually all the main contractor construction costs as £5,915,000 (claimant) and £6,215,000 (LDA). We indicated that the difference between them was so small we did not consider it profitable to take up time going into it in evidence at the hearing. Mr Smith for the claimant identified the house builder model construction costs as £5 million for the claimant’s notional scheme (an increase of £100,000 from the figure quoted in his report). The reason for the substantial saving was that the house builder could maximise his buying power by using a small number of regular sub-contractors constructing the same product all the time very efficiently to a standard specification and achieving discounts from the volume of work. These savings related to fitting out costs. Mr O’Brien for the LDA did not agree with the house builder model or the costs. He considered that developers using a main contractor, particularly a regional rather than national builder, could achieve similar savings from sub-contractors and that Mr Smith’s costs were out of line with industry standard figures from Wessex and BCIS.
79.	We accept Mr Smith’s evidence that the house builder model could achieve significant savings. Mr O’Brien accepted in cross examination that the house builder model exists: there are house builders who procure their own developments. He also accepted that the reason they do it is to make costs savings and maximise their profit and that this gives them an advantage because they can get land ahead of their competitors. In the light of this Mr O’Brien’s evidence that a house builder would achieve no greater savings than a developer employing a main contractor would achieve, whether national or regional, is undermined and we do not accept it. We were impressed by Mr Smith’s evidence that sub-contractors, ‘flat bashers’ as he called them, working to standard specifications and doing volume business could achieve significant savings over main contractors procuring individual developments with different specifications from a range of sub-contractors.
80.	Mr O’Brien’s report identified a number of issues which would need to be taken into account in construction of the notional scheme such as the 100% site coverage, need for piling and basement support, high ratio of perimeter walling to floor area and a frame which addressed the issue of proportionate collapse. However, to the extent that these impose additional costs they are agreed. The savings Mr Smith identified arise in the fitting out of the building. Mr Smith’s evidence is that these constraints are not unusual for a brownfield site development in London and a house builder of sufficient size would have the management experience, cash flow and confidence to carry out the scheme without difficulty. Although this was challenged in cross examination (unsuccessfully) we did not understand Mr O’Brien to dispute it. Accordingly we accept that the notional scheme, and the enhanced notional scheme could be carried out using the house builder model.
81.	Mr O’Brien took issue with the benchmarking exercise conducted by Mr Smith on the grounds that the three projects he used were a considerable distance away either geographically or in time. He placed more weight on benchmarking using BCIS figures. Although projects nearer in location and time to the reference land and valuation date would be better, we do not accept that Mr O’Brien’s BCIS figures provide a reliable benchmarking exercise which undermines Mr Smith’s figures. The figure relied upon of £121 per sq.ft, equivalent to £1307 per sq.m, is an average of only 25 schemes with a vast range of costs from £771 per sq.m to £2601 per sq.m (B8/2468). The higher figure relates to very large flats with over 125sq.m floor area in the private sector and probably therefore at the luxury end of the market. By contrast, Mr Smith had information about the three schemes he used for benchmarking so was able to make appropriate adjustments to reflect location, time and other factors so that the schemes can be fairly compared to the notional scheme. The mode figure in the BCIS data, i.e. the most frequently occurring number, is £857 per sq.m (£92.24 per sq ft), around a third less than the average, and demonstrates that the average is not a reliable guide to the costs of the notional scheme. In any event, BCIS and Wessex use national data which include projects using the main contractor model and the fact that these produce higher figures than Mr Smith’s is not surprising if, as we accept, using the house builder model can achieve significant savings.
82.	Apart from criticising Mr Smith’s approach Mr O’Brien did not produce any alternative figures of his own for costs using the house builder model. We have rejected his evidence criticising the house builder model, his evidence that significant costs savings could not be made and his benchmarking exercise using BCIS or Wessex figures.   In those circumstances we accept the £5,000,000 put forward by Mr Smith. This sum was based upon the notional scheme, and he said (8/2476 para 9.1) that savings of about 2% per sq m might be achieved on build costs due to economies of scale and enhanced buying power, and also in connection with reduced preliminaries, if the reference land were being developed as part of the larger, scheme which was about 3 times the size.  However, he said that he had not had time to research the point, and in the light of the fact that he produced no re-calculations of the overall cost (the 2% savings only applying to certain aspects) we are unable to apply a specific adjustment. We note also that Mr Smith’s figure excludes developer’s profit on costs which must therefore be included elsewhere in the residual valuation.   
83.	We advised the parties of our conclusions on the building costs issue during the hearing, and this gave the expert valuers an opportunity to re-work their residuals. Although Mr Cobb deducted 2% of the total (£100,000) in his final residual in accordance with what Mr Smith said, Mr Cottage did not, but as we said above, we have adopted the £5 million. The finally adjusted valuations were produced at the end of the hearing and those based upon the development being part of a larger development incorporating the land to the north and south are attached at Appendix 1 (Mr Cobb) and Appendix 2 (Mr Cottage).  These, as we said in paragraph 11 above, were based upon the enhanced notional scheme of 49 residential units, but the £5 million build cost was based upon the 45 unit notional scheme.  As no evidence was adduced in respect of the  costs which would apply under the housebuilder model for the enhanced scheme, and bearing in mind the “secondary” nature of the residual approach, we have not deemed it appropriate to seek further evidence.  We have simply increased the costs by 8.8% (based upon the increase in the number of residential units) to give £5,440,000.
84.	In respect of the other outstanding areas of disagreement, we set out our conclusions below, and our version of the residual valuation is at Appendix 3.   However, we consider it appropriate to reiterate here that both Mr Cobb and Mr Cottage agreed that their valuations were principally reliant upon comparable transactions, and the residual appraisals were only provided to give support to those conclusions.   We are certainly satisfied that the comparables produced have been sufficient to reach a realistic value for the reference land (our opinion of which, on that basis, is £1,850,000) but nevertheless, in the light of the parties’ approach we have produced a residual valuation incorporating the adjustments to which we now turn.    
85.	The remaining areas of  material difference between Mr Cottage and Mr Cobb were as follows:

Profit on build costs 	
Having concluded that the appropriate figure is £5,440,000, it is necessary to add profit on them, which the experts eventually agreed should be 4.5%.  Mr Cottage said that as 3% of that was included in the £5m as OH&P, the remaining 1.5% should be added to the same figure to give a total under that head of £5,075,000.  To add it at the end of the calculation would be inappropriate as that would mean it was also applied to costs other than the build costs.  Mr Cobb allowed  for the 1.5% under professional fees. We agree with Mr Cottage’s approach, and the resultant figure adjusted to take account of the enhanced notional scheme costs is £5,521,600 .
Car parking
Mr Cobb adopted a value of £25,000 per space on the basis of evidence of prices achieved by Galliard Homes on a nearby development in 2007.   Mr Cottage chose £15,000 per space but produced no evidence to support that conclusion.  We therefore adopt Mr Cobb’s figure.
Ground rents
It was agreed that ground rents should be assessed at £300 per unit.  Mr Cobb allowed for this to be applied over all 49 units (£14,700), and produced examples of where this had been achieved, but Mr Cottage said that it should only apply to the private rented units as those relating to the affordable units would go to the RSLs.  He allowed £9,600.  We accept Mr Cobb’s evidence, and apply £14,700 capitalised at 5%.
Commercial element
Whilst the experts have now agreed the commercial income, Mr Cobb said there should be rent free periods of only 6 months, whereas Mr Cottage allowed 12 months.   No specific evidence was produced to justify either approach, and we simply “split the difference” and apply a value of this element of £1,300,724.
Additional revenue
Mr Cobb allowed for continuing rental income from the former tenant for a period of 12 months at the agreed rental value of £50,000 pa, but Mr Cottage said that should only apply for 6 months (£25,000).  However, in his initial report he had assumed that the tenant would remain at least until planning consent had been obtained.  In the light of this, we prefer Mr Cobb’s opinion and apply £50,000.
Remediation costs
Mr Cobb assessed these at £31,600, increased from the £20,000 referred to in his rebuttal report. His figures had been based upon a geo-technical survey report commissioned on the reference land in 2006.   Mr Cottage’s figure of £94,350 was an apportioned sum based upon geo-technical advice obtained by LDA over the entire order lands.  Mr Cobb said that there were undoubtedly some parts of the order lands that required substantial remediation work (for instance the site of the former petrol filling station), but there was no evidence to suggest that such extensive works were needed to the reference land, or the land immediately to the north and south.   We agree with Mr Cobb, and adopt £31,600.
Marketing
Despite our efforts to persuade the experts that they ought to be able to agree this item where the difference between them was a mere £25,000, they were unable to do so.  Mr Cobb said £25,000 and Mr Cottage thought £50,000 to be appropriate.  Again, for the sake of expedience we simply take the middle ground of £37,500.  
Development profit
Mr Cobb said that until about 2007, it had been standard practise for developers to build in a profit on cost of 15%, but since the increased risks flowing from the property market difficulties encountered since then, and those relating to the reference land (planning and assembly aspects) it was appropriate to adopt 17.5%.   Mr Cottage said that his firm undertook more valuations for development finance than anyone else in the area, and they also advise the type of major developer who would be in the market for the reference land, and 20% profit on cost was the figure normally adopted.  That, he said, might only be reduced if, for instance, the developer already held the site within its own landbank.   In the circumstances, and particularly bearing in mind the deteriorating market, we acknowledge Mr Cottage’s particular background and expertise in this sphere, and adopt his figure of 20%.      
Section 106 contributions  
Although it had been agreed that the section 106 contributions should be set at £6,500 per unit, and that was the figure incorporated in Mr Cottage’s residual, Mr Cobb said that, if the site was part of a larger development (which in this scenario it is), the contributions required under the advisory tariff in the draft 2008 Masterplan rose to £10,000 per unit for developments of over 50 units.   That was the figure he used in his final appraisal.  We agree with Mr Cobb, and therefore adopt his section 106 figure of £490,000.
86.	The resultant valuation produces a residual price for the reference land of £2,501,921.    It is necessary to deduct 20% to allow for the land assembly risks that we have referred to above, to leave a net £2,001,536 – say £2,000,000.
87.	It is appropriate, we think, to restate our view here that residual appraisals are very much a last resort, and should wherever possible be used only as a back up, or check against the much more reliable method of comparing recent transactions.  As Mr Cobb said in his rebuttal report, having undertaken an exercise to adjust one of Mr Cottage’s appraisals (CC27) on a step by step basis, the resultant wide range of figures demonstrated the deviation to the land value as a consequence of minor changes to one or more variables in the valuation.  Also, Mr Cottage said (7/2362 para 14.1) that “…the various residual appraisals we have prepared do not reflect the open market value of the reference land at the valuation date, but only as its value as part of the larger development site (once assembled) and assuming the grant of planning permission…”   It is clear that the experts are equally as reticent as the Lands Tribunal upon applying too much weight to this method of valuation.    Having said that, the figure we have reached by the residual method is within 7.5% of that found by considering the comparables, and falls well within the usually accepted valuation margins of error.     
88.	Finally, In its closing submissions, the LDA made the point that, in cases where a developer can rely upon the “housebuilder model” as found by the Tribunal in its interim finding in this case, and thus achieve very substantial savings on build costs, the result, on the basis of a residual appraisal would be that the vendor would receive the whole of that saving in achieving a proportionately higher figure for the land.  This would not, they said, be the case in reality.  The developer would not be prepared to forego all of those savings, and would want to profit from them.   Mr Cobb said that the additional price payable for the land, under this model, is precisely what happens in the marketplace.   If, for instance, there are two prospective buyers who can benefit from these savings, they will be competing on a level playing field.  We agree.  The need, as the LDA put it, for the successful bidder to pay “only £1, or one bid more”, only applies in the case of an auction.  In private treaty or sealed bid negotiations, the buyer will not know what the next bidder is offering, so he must rely upon the calculations that he has made, and if he is relying upon a residual, then that will be the figure he has to offer.   
89.	In the light of the above, we determine that LDA shall pay to the claimant compensation for the compulsory acquisition of the reference land in the sum of £1,850,000, to which should be added pre-reference costs, agreed at £7,500 and costs under section 10(A) LCA 1961 agreed at £46,189 giving a total of £1,903,689.    The parties are invited to make submissions on costs, and a letter dealing with this accompanies this decision, which will become final when the question of costs has been determined.
				DATED	16 September 2010

				Her Honour Judge Alice Robinson

			Paul R Francis FRICS		

ACQ/126/2009
APPENDIX 1

APPRAISAL SUMMARY  - G L HEARN LIMITED

Abbey Homes - Development as part of Larger Site
Final Valuation – House Builder Procurement – 12 month Pre Construction Period

Appraisal Summary for Merged Parts 1 2 3				
REVENUE						
Sales Valuation	Units	Unit Amount	Gross Sales			
	Underground Parking	24 units at	£25,000	600,000			
	ft2	Rate ft2	Gross Sales			
	Market Resi – 1 Beds		1,044		£460.00		480,240			
	Market Resi – 2 Beds		14,355		£420.00		6,029,100			
	Market Resi – Studios		2,394		£460.00		1,101,240			
	Afford – 1 Beds – S/R		1,517		£230.00		348,910			
	Afford – 2 Beds – S/R		3,648		£210.00		766,080			
	Afford – 1 Bed – Int		1,033		£299.00		308,927			
	Afford – 2 Bed – Int		3,680		£273.00		1,004,640			
	Totals		27,671			10,039,137		10,639,137		
						
Rental Area Summary		Units		Unit Amount 		Gross MRV			
	Ground Rents 		49 units at		£300		14,700			
	ft2	Rate ft2	Gross MRV			
	Commercial 		6,865		£15.00		102,975			
Investment Valuation						
	Ground Rents						
	Current rent		14,700		YP @		5.0000%		20.0000		294,000	
	Commercial						
	Market Rent 		102,975		YP @		7.5000%		13.3333		
	(6 mths Rent Free)				PV 6mths @		7.5000%		  0.9645		1,324,239	
						1,618,239	
GROSS DEVELOPMENT VALUE					
Additional Revenue						
	Additional Revenue				50,000			
					50,000		
NET REALISATION						12,307,375		
						
OUTLAY						
ACQUISITION COSTS						
		Residualised Price (0.25 Acres £13,008,903.00 pAcre)		3,252,226			
	Stamp Duty			4.00%		130,089			
	Agent Fee			1.00%		32,522			
	Legal Fee			0.50%		16,261			
					3,431,098		
CONSTRUCTION COSTS					
Construction	ft2	Rate ft2	Cost			
	Build Costs 
	(All Inclusive)	
	43,335		
	£113,07	
	4,900,000		
	4,900,000		
						
	Contingency			5.00%		246,580				
	Remediation				31,600			
					278,180		

ACQ/126/2009
APPENDIX 1 (Cont’d)

Section 106 Costs						
	Section 106				490,000				
					490,000		
PROFESSIONAL FEES						
	Architect, Engineers, QS etc		10.00%		493,160			
	Building Cost Profit			1.50%		73,500			
					566,660		
MARKETING & LETTING					
	Marketing				25,000			
	Letting Agent Fee			10.00%		11,768			
	Letting Legal Fee			5.00%		5,884			
					42,651		
DISPOSAL FEES						
	Resi Sales Agent Fee			1.25%		106,307			
	Commercial Sales Agent Fee		1.00%		13,242			
	Resi Sales Legal Fee			0.50%		42,523			
		Commercial Sales Legal Fee		0.50%		6,621			
					168,694		
						
Additional Costs						
FINANCE						
	Debit Rate 7.00% Credit Rate 4.75% (Effective)				
	Total Finance Cost					597,078		
					
TOTAL COSTS					10,474,361		
						
PROFIT					1,833,014		
						
Performance Measures						
	Profit on Cost %			17.50%				
	Profit on GDV%			14.95%				
	Profit on NDV%			14.95%				
	Development Yield% (on MRV)		1.12%				
		Equivalent Yield (Nominal)		7.06%				
	Equivalent Yield (True)		7.38%				
	Gross Initial Yield%		7.27%				
	Net Initial Yield%			7.27%				
						
			22.49%				
	Rent Cover			15 yrs 7 mths				
		Profit Erosion (finance rate 7.000%)		2 yrs 4 mths				

ACQ/126/2009
APPENDIX 2

APPRAISAL SUMMARY  -  GLENNY LLP
Silvertown Way CPO
Abbey Investments Limited – Appraisal of the Reference Land as part of the LDS 1,286 habs per hectare
Revision to CCR10

Summary Appraisal for Part I						
REVENUE							
Sales Valuation 	Units	ft2	Rate ft2	Unit Price 	Gross Sales		
	Market 1 bed/studios		8		3,438		£460.00		£197,685		1,581,480		
	Market 2 beds		24		14,355		£420.00		£251,213		6,029,100		
	S/R 1 Bed		3		1,517		£230.00		£116,303		348,910		
	S/R 2 Bed		6		3,648		£210.00		£127,680		766,080		
	Intermediate 1 bed		2		1,033		£299.00		£154,434		308,867		
	Immediate 2 bed		6		3,680		£273.00		£167,440		1,004,640		
	Parking		24		0		£0.00		£15,000		360,000		
	Totals		73		27,671				10,399,077		
							
Rental Area Summary				Initial	Net Rent	Initial	
	Units	ft2	Rate ft2	MRV/Unit	at Sale	MRV	
	Commercial		1		6,865		£15.00		£102,975		102,975		£102,975	
	Ground Rents		32				£300		9,600		9,600	
	Totals		33		6,865				112,575		112,575	

Investment Valuation
	Commercial							
	Market Rent			102,975		YP @		7.5000%		13.3333		
	(1 yr Rent Free)				PV 1 yr @		7.5000%		0.9302		1,277,209	
	Ground Rents							
	Current Rent			9,600		YP @		5.0000%		20.0000		192,000	
							1,469,209	
GROSS DEVELOPMENT VALUE					11,868,286		
Additional Revenue							
	Additional Revenue					25,000			
						25,000		
NET REALISATION						11,893,286		

OUTLAY							
							
ACQUISITION COSTS							
		Residualised Price (0.25 Acres £10,198,922.76 pAcre)		2,549,731			
	Stamp Duty				4.00%		101,989			
	Agents fee				1.00%		25,497			
	Legal Fee				0.50%		12,749			
						2,689,966		
CONSTRUCTION COSTS						
Construction	Units	Unit Amount	Cost				
	Construction Costs		1 un		£5,075,000		5,075,000		5,075,000			
	Contingency			5.00%		253,750				
	S106				318,500				
					572,250			
PROFESSIONAL FEES							
	Professional Fees			10.00%		507,500				
					507,500			

ACQ/126/2009
APPENDIX 2 (Cont’d)

MARKETING & LETTING						
	Marketing				50,000				
	Letting Agent Fee			10.00%		11,258				
	Letting Legal Fee			5.00%		5,629				
					66,886			
DISPOSAL FEES							
		Sales Agent Fee commercial				14,692				
	Sales Legal Fee				0.50%		59,341				
	Market 1 bed/studios				19,769				
	Market 2 beds				75,364				
					169,166			
Additional Costs							
	Remediation				94,340				
					94,340			
FINANCE							
	Debit Rate 7.000% Credit Rate 4.750% (Nominal)					
	Land				593,940				
	Construction				142,024				
	Total Finance Cost						735,964			

TOTAL COSTS				
	9,911,072			
							
PROFIT							
					1,982,215			
							
Performance Measures							
	Profit on Cost %			20.00%					
	Profit on GDV%			16.70%					
	Profit on NDV%			16.70%					
	Development Yield% (on Rent)			1,14%					
	Equivalent Yield% (Nominal)		7.19%					
	Equivalent Yield% (True)		7.53%					
							
	IRR			21.18%					
							
	Rent Cover			17 yrs 7 mts					
	Profit Erosion (finance rate 7.000%)		2 yrs 8 mts					

ACQ/126/2009
APPENDIX 3

UPPER TRIBUNAL (LANDS CHAMBER) RESIDUAL APPRAISAL

APPRAISAL SUMMARY
Abbey Homes – Development as part of Larger Site
FINAL VALUATION – House Builder Procurement – 12 month Pre Construction Period

Appraisal Summary for Merged Parts 1 2 3				
REVENUE						
Sales Valuation	Units	Unit Amount	Gross Sales			
	Underground Parking	24 units at	£25,000	600,000			
	ft2	Rate ft2	Gross Sales			
	Market Resi – 1 Beds		1,044		£460.00		480,240			
	Market Resi – 2 Beds		14,355		£420.00		6,029,100			
	Market Resi – Studios		2,394		£460.00		1,101,240			
	Afford – 1 Beds – S/R		1,517		£230.00		348,910			
	Afford – 2 Beds – S/R		3,648		£210.00		766,080			
	Afford – 1 Bed – Int		1,033		£299.00		308,927			
	Afford – 2 Bed – Int		3,680		£273.00		1,004,640			
	Totals		27,671			10,039,137		10,639,137		
						
Rental Area Summary		Units		Unit Amount 		Gross MRV			
	Ground Rents 		49 units at		£300		14,700			
	ft2	Rate ft2	Gross MRV			
	Commercial 		6,865		£15.00		102,975			
Investment Valuation						
	Ground Rents						
	Current rent		14,700		YP @		5.0000%		20.0000		294,000	
	Commercial						
	Market Rent 		102,975		YP @		7.5000%		13.3333		
	(9 mths Rent Free)				PV 9mths @		7.5000%		  9.472		1,300,500	
						1,594,500	
GROSS DEVELOPMENT VALUE				12,233,637		
Additional Revenue						
	Additional Revenue				50,000			
					50,000		
NET REALISATION						12,283,687		
						
OUTLAY						
ACQUISITION COSTS						
		Residualised Price (0.25 Acres £10,005,164 pAcre)		2,501,921			
	Stamp Duty			4.00%		100,052			
	Agent Fee			1.00%		25,013			
	Legal Fee			0.50%		12,506			
					2,638,862		
CONSTRUCTION COSTS					
Construction	ft2	Rate ft2	Cost			
	Build Costs 
	(All Inclusive)	
	43,335		
	£127.42	
	5,521,600		
	5,521,600		
						
	Contingency			5.00%		277,660				
	Remediation				31,600			
						
Section 106 Costs					309,260		

ACQ/126/2009
APPENDIX 3 (Cont’d)

	Section 106				490,000				
					490,000		
PROFESSIONAL FEES						
	Architect, Engineers, QS etc		10.00%		555,320			
					555,320		
							
MARKETING & LETTING					
	Marketing				37,500			
	Letting Agent Fee			10.00%		11,768			
	Letting Legal Fee			5.00%		5,884			
					55,151		
DISPOSAL FEES						
	Resi Sales Agent Fee			1.25%		106,307			
	Commercial Sales Agent Fee		1.00%		13,005			
	Resi Sales Legal Fee			0.50%		42,523			
		Commercial Sales Legal Fee		0.50%		6,503			
					168,338		
						
Additional Costs						
FINANCE						
	Debit Rate 7.00% Credit Rate 4.75% (Effective)				
	Total Finance Cost					497,832		
					
TOTAL COSTS					10,236,363		
						
PROFIT					2,047,276		
						
Performance Measures						
	Profit on Cost %			20.00%				
	Profit on GDV%			16.73%				
	Profit on NDV%			16.73%				
	Development Yield% (on MRV)		1.15%				
		Equivalent Yield (Nominal)		7.16%				
	Equivalent Yield (True)		7.49%				
	Gross Initial Yield%		7.38%				
	Net Initial Yield%			7.38%				
						
			27.02%				
	Rent Cover			17 yrs 5 mths				
		Profit Erosion (finance rate 7.000%)		2 yrs 8 mths