Local Authorities And The Disposal Of Land At Best Consideration: When The Valuation Report Is Not The Last Word

Local authorities have a duty not to dispose of an interest in land for less than the best consideration reasonably obtainable, other than in the case of short tenancies, without the consent of the Secretary of State. State aid issues can arise even if consent is obtained.

The advice of a professionally qualified valuer applying the RICS Valuation professional standards ("the Red Book") for determining market value and taking into account any special purchaser, is normally decisive about what is "best" consideration. In the case of Whitstable Society v Canterbury City Council [2017] EWHC 254 (Admin), however, Mr Justice Dove held the City Council had entered into a contract for the disposal of land at less than the best consideration, even after following their valuer's report.

How did this come about and what lessons are to be learned by authorities and developers from this case?

On 11 December 2014 the Council's Executive resolved to authorise its head of property to conclude a sale of the Oval Chalet, a former outdoor roller skating rink. On 21 January 2015 a conditional contract for sale was entered into with a developer of adjoining land for £165,000, together with an overage provision. The developer subsequently sought planning permission for a residential-led mixed-use scheme initially comprising seven self-contained holiday lets, eight town houses, two apartments and one duplex apartment together with a commercial/community building and open space.

On 21 April 2016 permission to apply for judicial review was refused but later granted on 8 June 2016 following an oral hearing. Mr Justice Dove gave judgement on 15 February 2017 finding for the claimant on the issue of best consideration but refusing relief on the grounds of delay, prejudice to the developer and good administration being the need for certainty in the decision-making of local authorities, especially where a commercial transaction is in issue.

The case is nonetheless a timely reminder that engaging a qualified professional valuer and relying on their report does not always mean that best consideration is achieved.

The duty not to dispose of an interest in land, save for tenancies of not more than seven years, for less than the best consideration reasonably obtainable is found in s123 (2) of the Local Government Act 1972 and for land acquired or held by the local authority for planning purposes in s 233 (3) of the Town and Country Planning Act 1990. Mr Justice Dove took as his starting point for analysing this duty the principles set...

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