North Norfolk District Council
SUPPLEMENTARY REPORT ON ACQUISITION OF PROPERTIES IN BEACH ROAD
HAPPISBURGH
1. Introduction - The Policy Framework
1.1. This report concerns the proposal of the Council to offer to acquire houses in Beach
Road Happisburgh, a voluntary purchase/sale scheme which has been
recommended for adoption by the Council by officers working on the Coastal
Pathfinder Project.
1.2. The report is written to provide an overview of the proposal together with some
commentary.
1.3. In the first instance it is necessary to consider the context and purpose of the
Coastal Pathfinder Project.
1.4. The grant money given by the government through Defra to NNDC was given (in the
words of Defra) for the purpose of “enabling coastal communities, individuals
and businesses to plan for, adapt to and manage coastal change”. One of the
criteria upon which NNDC accepted the grant money was that it would test
methodologies to achieve the above aim. The current deadline upon which Defra
will start evaluating the Council’s schemes and after which the Council is not to
create new schemes, is 31st March 2011.
1.5. Defra’s policy framework published March 2010 states the following,
1.5.1. “….The long-standing position of successive governments [is] that
compensation is not available for properties or land lost as a result of
coastal erosion or damaged as a result of flooding (whether inland or on
the coast). This includes cases where the decision has been taken not to
defend a particular area. This is because flood and coastal defence
legislation in England and Wales is permissive, which means that
authorities are empowered to provide defences but not required to do so.
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No-one has a right to flood or erosion defences or, if defences are
provided, there is no legal requirement to provide any particular standard
of defence.”
1.6. This is a very important statement as it shows the national policy position which
applies in relation to coastal defences. It shows that a policy of omission, i.e.
changing policy and allowing existing defences to decline does not create any legal
requirement of the government or coastal authority to provide compensation to
landowners affected by such a decision. It also shows that the Council is acting
under “powers” and not “duties”.
2. The Consequence of the Defra Policy Framework
2.1. It is in this national policy framework which Members must consider NNDC’s
schemes under the Coastal Pathfinder Project. It is clear that there is unlikely to be a
change to the policy of “no compensation” at the national level in the foreseeable
future. This means that if the Council was to offer its own compensation scheme
based, for example, on hypothetical “no risk” values, then the purpose of Coastal
Pathfinder Project, which is to devise and pilot potentially nationally repeatable
strategies, would be defeated.
2.2. The properties which are nearest the cliff top in Beach Road are uninsurable,
unmortgageable and the land already has minimal open market value. Further
substantial ongoing devaluation is inevitable. The land will, in the coming decades,
disappear altogether and become foreshore or even seabed in which case the “land”
automatically reverts to the Crown.
3. The EN12 Planning Policy
3.1. Through the adoption of the EN12 Planning Policy in 2008, the Council has already
acted to remedy some of the devaluation of these properties. EN12 is known as the
“roll-back” policy.
3.2. Essentially, the policy states that planning permission for residential development,
which may not normally be available for a particular plot of land (i.e. a plot of land in
the District not subject to coastal erosion), will be given if the development is for the
purpose of replacing a property which is subject to imminent erosion and is to be
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demolished in advance of the erosion. Some of the EN12 value goes with control of
the demolition of the property i.e. it attaches to the affected property. Some of the
EN12 value would attach to the replacement plot. This is a matter for negotiation
between seller and buyer and expert valuation advice.
4. The Beach Road, Happisburgh Scheme
4.1. The Council, through the adoption of the EN12, and now with the proposed adoption
of the Happisburgh Scheme aims to provide a sale option for owners at Happisburgh
and also to achieve one of the central objectives of the Pathfinder scheme which is
to see houses subject to demolition rebuilt in non-risk areas.
4.2. The proposal by which the objectives may be realised is a voluntary sale/purchase
scheme based on real valuations. NNDC will, from the period of adoption of the
policy until the end of the Coastal Pathfinder project, stand as a willing buyer (at
market value) of the properties in Beach Road which are within the 20 year line and
a willing buyer (again at market value) of the EN12 right which goes with the
properties.
4.3. The Council has procured professional valuation advice in relation to this voluntary
purchase scheme. Bruton Knowles, the valuers, recommend that the Council offer
an additional financial incentive to the owners called the “Pathfinder Supplemental
Payment”. In doing this, while the scheme is entirely voluntary, Bruton Knowles
have drawn a parallel with compulsory purchase schemes where homeowners are
eligible for a “Home Loss” payment if they are an occupier and “Basic Loss”
payment if they are not occupiers. These payments can be seen as incentives to
co-operate with the acquiring authority in both the voluntary and compulsory settings
so the drawing of a parallel is reasonable. Bruton Knowles have advised that such a
payment is necessary in order that this scheme is viable.
4.4. It is to be noted that even with compulsory purchase schemes, valuation is based on
actual market value of the property at the time of the confirmation of the CPO and
not on an assumed value which does not take into account the condition of the
property, the risks to the property etc.
4.5. By way of emphasis, the Council has had no input at all into the valuations and the
formulation of the scheme beyond the original instruction to Bruton Knowles to
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advise the Council on valuations and sums which should be offered in order to
create a viable voluntary sale scheme.
4.6. By standing as a willing purchaser, the Council will provide an option to the owners
of property at Beach Road affected by coastal erosion which they would not
otherwise have. If they take up the option, the owners will have no need to attempt
to market their property (and to pay costs associated with that) and they will be able
to realise a capital sum which will be more than the current open market value of
their house and EN12 right because of the addition of the Supplemental Pathfinder
Payment.
4.7. The Council should be aware that the sum may be insufficient for the owner to
acquire a replacement property. However, the proposed acquisition scheme is not
and is not intended to be a means tested housing relocation assistance policy. To
reiterate, in combination with the EN12 policy there is an intention to utilise the
scheme so that the properties purchased are replaced with new properties. It would
be preferable that the replacement properties would be in Happisburgh (although the
EN12 policy is not so specific and allows replacement in many areas of the District).
4.8. The Council’s intention in purchasing, beyond providing the market intervention
noted above and beyond making use of the EN12 rights, is merely to create a more
amenable cliff top environment which will benefit the community and general public.
The Council has no commercial or investment purpose for acquiring cliff top land.
The only “use” of the land by the Council will be to demolish the property and clear
the site.
5. Conclusions
•
The Pathfinder criteria established with Defra upon which the Council accepted the
grant monies included establishing methodology to enable the demolition and
relocation of properties at Beach Road Happisburgh.
•
The methodology proposed is a voluntary purchase scheme but is not a needs
based housing relocation assistance scheme nor a compensation scheme.
•
The framework which should be borne in mind is “asset acquisition”. Valuations can
only be justified in that context.
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•
The Council, through adopting the EN12 policy, has provided a substantial additional
value to owners on Beach Road.
•
While it is clear that the total sum of money offered may be insufficient for a
homeowner to acquire another equivalent property inland without additional funding,
the purpose of the acquisition scheme in this regard is to provide an option which
may have some incidental use for owners in housing terms. For instance, the sale
proceeds realised will not be negligible and may cover many years rental or could be
put towards shared ownership.
•
Under this scheme, owners will avoid all marketing costs and difficulties.
•
An EN12 right is an asset which it is proposed the Council offer to acquire. The
Council will be able to sell these assets on or use them itself and Pathfinder money
would then be recycled.
•
It is clear that there is unlikely to be a change to the policy of “no compensation” at
the national level in the foreseeable future. This means that if the Council was to
offer its own compensation scheme based, for example, on hypothetical “no risk”
values, then the purpose of Coastal Pathfinder Project, which is to devise and pilot
potentially nationally repeatable strategies, would be defeated.
•
To depart from professional valuation advice which the Council procured and pay
“overvalue” could be seen as improper financial management and thus risks putting
the Council in breach of its duty to maintain proper financial management under s151
Local Government Act 1972.
•
One of the original criteria of the Coastal Pathfinder Scheme against which the
Council’s performance will be evaluated is to test schemes and methodologies to
achieve the stated aims. If the Council fails to make timely decisions and spends
time considering alternatives which have not been recommended by officers, then
there may be insufficient time left for the recommended schemes to be properly
tested. Thus, having received grant monies the Council may fail to make use of them
at all if it delays for too long.
•
The Council may offer an additional sum to assist with legal and removal costs which
may be drawn from the Council’s demolition grant.
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September 2010
Ian Coupe
Solicitor
North Norfolk District Council
Coastal Pathfinder Team
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