Housing Act 1985

Site value compensation for unfit houses and related matters

585 Site value compensation for unfit houses.

(1) The compensation payable for—

(a) a house purchased compulsorily under section 192 (unfit house found to be beyond repair at reasonable cost),

(b) land purchased under section 290 as being comprised in a clearance area, except as mentioned in subsection (2), or

(c) a house purchased compulsorily under section 300 (purchase of condemned houses for temporary housing use),

is the value at the time when the valuation is made of the site as a cleared site available for development in accordance with the requirements of the building regulations in force in the district.

(2) Subsection (1)(b) does not apply to the site of a house or other building properly included in a clearance area only on the ground that it is dangerous or injurious to the health of the inhabitants of the area by reason of its bad arrangement in relation to other buildings or the narowness or bad arrangement of the streets, unless—

(a) it is a building constructed or adapted as, or for the purposes of, a dwelling, or partly for those purposes and partly for other purposes, and

(b) part of it (not being a part used for other purposes) is unfit for human habitation.

(3) The provisions of this section as to site value compensation are without prejudice to any further payment falling to be made under—

• section 586 and Schedule 23 (well maintained houses),

• section 587 and Schedule 24 (houses which are owner-occupied or used for business purposes), or

• section 589(2) (minimum compensation in certain cases),

and have effect subject to section 589(1) (maximum compensation in certain cases).

586 Payments in respect of well maintained houses.

The provisions of Schedule 23 have effect as regards payments in respect of well maintained houses purchased at site value or demolished or closed under this Act.

587 Payments in respect of houses which are owner-occupied or used for business purposes.

The provisions of Schedule 24 have effect as regards payments in respect of houses purchased at site value or demolished or closed under this Act, as follows—

• Part I: Payments in respect of owner-occupied houses.

• Part II: Payments in respect of houses used for business purposes.

588 Avoidance of double compensation.

(1) Where a payment falls to be made in respect of an interest in a house under Schedule 24 (payments in respect of houses which are owner-occupied or used for business purposes), no payment shall be made in respect of that house under Schedule 23 (payments for well maintained houses) unless the other payment relates to part only of the house, and in that case such part only of the amount which would otherwise be payable in accordance with Schedule 23 shall be payable as may reasonably be attributable to the remainder of the house.

(2) In Schedules 23 and 24 references to a demolition order do not include such an order in respect of a house already subject to a closing order so far as it affects any part of the house in relation to which a payment under either of those Schedules has fallen to be made in respect of the closing order.

589 Maximum and minimum compensation where s. 585 applies.

(1) Subject to the following provisions of this section, the compensation payable in respect of a compulsory acquisition in relation to which section 585 applies (site value compensation) shall not in any event exceed the amount which would have been payable if—

(a) that section did not apply, and

(b) in a case where any of the relevant land is in a clearance area, that area had not been declared to be a clearance area,

but in all other respects the acquisition had been effected in the circumstances in which it actually is effected.

(2) Where section 585 applies in relation to a compulsory acquisition of land which consists of or includes the whole or part of a house and—

(a) on the date of the making of the compulsory purchase order the person then entitled to the relevant interest was, in right of that interest, in occupation of the house, or part of it, as a private dwelling, and

(b) that person either continues, on the date of service of the notice to treat, to be entitled to the relevant interest, or if he has died before that date, continued to be entitled to that interest immediately before his death,

the amount of the compensation payable in respect of the acquisition of that interest, together with any amount payable under Schedules 23 or 24 (payments for well maintained houses and houses which are owner-occupied or used for business purposes), shall not in any event be less than the gross value of the dwelling.

(3) The gross value of the dwelling for this purpose shall be determined as follows—

(a) if the dwelling constitutes the whole of the house, its gross value is that shown in the valuation list in force on the date of service of the notice to treat as the gross value of the house for rating purposes;

(b) if the dwelling is only part of the house, its gross value is the amount certified by the district valuer as being properly attributable to the dwelling on an apportionment of the gross value of the house as determined under paragraph (a).

(4) The gross value of a dwelling whose rateable value is by virtue of subsection (1) of section 19 of the [1967 c. 9.] General Rate Act 1967 to be taken to be its next annual value, as ascertained in accordance with subsections (2) to (4) of that section, shall be taken to be its corresponding gross value.

(5) The corresponding gross value means a gross value which would be equivalent to the net annual value of the dwelling as shown in the valuation list if there were deducted any amount that by virtue of an order made or falling to be treated as made under section 19(2) of the General Rate Act 1967 would be deducted from the gross value of the dwelling if it had been required to be assessed to its gross value instead of its net annual value.

(6) If more than one value is so ascertained to be the corresponding gross value, the highest value so ascertained shall be taken.

590 Repayment on revocation of demolition or closing order.

(1) Where a payment in respect of a house has been made by a local housing authority under Schedule 23 or 24 in connection with a demolition or closing order and—

(a) the demolition order is revoked under section 274 (revocation of demolition order to permit reconstruction of house), or

(b) the closing order is determined under section 278 (determination of closing order on premises being rendered fit),

then, if at that time the person to whom the payment was made is entitled to an interest in the house, he shall on demand repay the payment to the authority.

(2) In subsection (1) “interest” in the house does not include the interest of a tenant for a year or any less period or of a statutory tenant.

(3) Where by virtue of section 278 a closing order is determined as respects part of the premises to which it relates and—

(a) a payment has been made by the local housing authority in respect of the premises in pursuance of Schedule 23 or 24, and

(b) if the order and payment had related only to that part of the premises any person would by virtue of subsection (1) have been liable on demand to repay the payment to the authority,

that person shall on demand pay to the authority an amount equal to the appropriate fraction of the payment.

(4) The appropriate fraction of the payment is, except where subsection (5) applies, the fraction obtained by dividing the rateable value of the part of the premises in question by the rateable value of the premises.

(5) If the payment was reduced in pursuance of paragraph 4(3) of Part I of Schedule 24 (reduction where part of premises not occupied for purposes of private dwelling), the appropriate fraction is the fraction obtained by dividing the rateable value of so much of the part of the premises in question as was used for the purposes of a private dwelling by the rateable value of so much of the premises as was so used.

(6) For the purposes of subsections (4) and (5) the rateable value of premises or a portion of them is—

(a) if the premises or portion are a hereditament for which a rateable value is shown in the valuation list in force on the date on which the closing order was made, that rateable value;

(b) if the premises or portion form part only of such a hereditament, or consist of or form part of more than one such hereditament, such value as is found by a proper apportionment or aggregation of the rateable value or values shown;

and any question arising as to the proper apportionment or aggregation of any value or values shall be referred to and determined by the district valuer.

591 Modifications of obligations under mortgages etc.

(1) This section applies where—

(a) a house is purchased at site value in accordance with section 585 (site value compensation for unfit houses), or

(b) is vacated in pursuance of a demolition or closing order under section 265 (unfit houses beyond repair at reasonable cost), or

(c) might have been the subject of such a demolition order but is vacated and demolished in pursuance of an undertaking for its demolition given to the local housing authority.

(2) Where this section applies and a relevant interest in the house is subject to a mortgage or charge, or to an agreement to purchase by instalments, either party to the mortgage, charge or agreement may apply to the county court which may, after giving the other party an opportunity to be heard, make an order—

(a) in the case of a house which has been purchased compulsorily, discharging or modifying any outstanding liabilities of the holder of the interest by virtue of any bond, covenant or other obligation with respect to the debt secured by the mortgage or charge or by virtue of the agreement, or

(b) in the case of a house vacated in pursuance of a demolition or closing order, or of an undertaking, discharging or modifying the terms of the mortgage, charge or agreement,

and in either case either unconditionally or subject to such terms and conditions, including conditions with respect to the payment of money, as the court may think just and equitable to impose.

(3) An interest is a relevant interest for the purposes of this section if—

(a) a payment in respect of it falls to be made under Part I of Schedule 24 (payments in respect of owner-occupied houses), and

(b) it is subject to the mortgage, charge or agreement, at the date when the house is purchased compulsorily or, as the case may be, vacated.

(4) An interest is also a relevant interest for the purposes of this section if—

(a) it is an interest in right of which, at the date of the making of the compulsory purchase or other order, or the giving of the undertaking, a person occupies the whole or part of the house as a private dwelling, and

(b) that person continues to own the interest until the end of the period mentioned in subsection (5), and

(c) the interest is subject to the mortgage, charge or agreement throughout that period.

(5) The period referred to in subsection (4) is the period from the date of the making of the compulsory purchase or other order, or the giving of the undertaking to—

(a) in the case of a compulsory purchase order, the date of service of notice to treat (or deemed notice to treat) for purchase of the interest or, if the purchase is effected without service of notice to treat, the date of completion of the purchase, and

(b) in the case of any other order or of an undertaking, the date of vacation of the house in pursuance of the order or undertaking,

or, if the owner of the interest died before the date specified in paragraph (a) or (b), to the date of death.

(6) In this section—

• “house” includes any building constructed or adapted wholly or partly as, or for the purposes of, a dwelling; and

• “interest” in a house does not include the interest of a tenant for a year or any less period or of a statutory tenant.

592 Factors to be considered in proceedings under s. 591.

(1) In determining what order, if any, to make under section 591 (modification of obligations under mortgage, &c.) the court shall have regard to all the circumstances of the case, and in particular to the following matters.

(2) In the case of a mortgage or charge the court shall have regard to whether the mortgagee or person entitled to the benefit of the charge acted reasonably in advancing the principal sum on the terms of the mortgage or charge; and that person shall be deemed to have acted unreasonably if, at the time when the mortgage or charge was made, he knew or ought to have known that in all the circumstances of the case the terms of the mortgage or charge did not afford sufficient security for the principal sum advanced.

(3) In the case of a mortgage or charge the court shall have to regard to the extent to which the house may have become unfit for human habitation owing to default on the part of the mortgagor or person entitled to the interest charged in carrying out any obligation under the terms of the mortgage or charge with respect to the repair of the house.

(4) In the case of a mortgage or charge securing a sum which represents all or any part of the purchase price payable for the interest, the court shall have regard to whether the purchase price was excessive.

(5) In the case of an agreement to purchase by instalments the court shall have regard to how far—

(a) the amount already paid by way of principal, or

(b) where the house has been purchased compulsorily the aggregate of that amount and so much, if any, of the compensation in respect of the compulsory purchase as falls to be paid to the vendor,

represents an adequate price for the purchase.