National Association of Real Estate Appraisers

6666

Shocking Overheads - Power Lines

Valuers are in for a shock if they do not take into account the deleterious presence of electricity power lines when assessing a property. Colin Gell explains.

The electricity network provides electricity to most homes and businesses throughout the UK. It uses a tiered structure, the National Grid transmitting the power (usually at 400kV) from the generators to the main area of supply, and the regional electricity companies (RECs) transmitting power at 132kV to the main centres and then at 33kV, 11kV or LV to bring the supply to the individual customers.

Generally, 400kV and 132kV overhead lines are constructed on pylons, while lower voltages are on wooden poles. Most of the distribution network was originally constructed over farmland, but as urban areas have expanded, more and more lines are over, or close to, houses.

In June 1996, amendments to the Red Book contained, for the first time, guidance to valuers who undertake valuations of residential premises. Valuers are advised to look at the market for evidence to be used in any valuation and give guidance on the suitability of the property as an investment.

Legal background - The Electricity Act 1989 consolidated previous legislation regarding the installation of overhead lines and underground cables. It states that an REC must have consent from all landowners and occupiers before it can install an electric line. It must also have consent from the Secretary of State for Trade and Industry under section 37 of the Act (except as defined later). If the REC is unable to negotiate all the consents, it has the benefit of compulsory powers (see later).

Most lines over agricultural land were installed under annual wayleave agreements negotiated with the landowners which allowed for annual payments to cover rent and disturbance. The payments are negotiated periodically by the Electricity Supply Industry with the National Farmers' Union and Country Landowners' Association.

Planning for new lines
The Secretary of State grants planning approval for the installation of an electric line under section 37 of the Electricity Act. This requires that:

an electric line shall not be installed or kept installed above ground except in accordance with a consent granted by the Secretary of State.

Such a consent is not required if the supply is to a single customer and is at a voltage not exceeding 20kV: If a section 37 consent is not required, the development is permitted under the Town and Country Planning (General Permitted Development) Order 1995.

For section 37 consented installations, the local planning authority must be advised and it has eight weeks (or such longer period as may be agreed) to indicate whether it objects to the proposal. If it objects, the Secretary of State is required to call a public inquiry into the scheme.

When the REC receives the decision of the LPA, it applies to the Secretary of State, who gives consent under section 37. He will not give his consent unless the REC has obtained wayleaves or easements from all landowners to the construction of the electric line.

Consents from landowners and occupiers
Easements
An easement is usually a permanent right, but it is possible to negotiate one for a set number of years. The easement grant the REC the right to install the line and to retain it permanently. Care should be taken not to prejudice the long-term development of the land because electric lines are expensive to construct and move. As was said in Jones v Pritchard [I908]:

The grant of an easement is prima facie also the grant of such ancillary rights as are reasonably necessary to its exercise or enjoyment.

Wayleaves
A wayleave is a personal agreement between the REC and the landowner to allow the installation of the electric line on payment of a consideration. A wayleave will set out the terms of the agreement and will usually contain a termination clause. However, as a wayleave is a personal agreement, the wayleave will cease to have effect if the owner or occupier disposes of their interest.

Termination of wayleaves
Wayleaves can be terminated in three ways: (1) The period of the wayleave expires. (2) The landowner gives notice in accordance with the agreement. (3) The land ownership changes after the Grant the wayleave and the wayleave ceases to be binding on the new landowner.

Schedule 4 allows an REC to remain in occupation of the land until the owner or occupier has served a notice under Para 8(2). which can be served only as follows:

(a) For (1) above, not more than three months before the expiration of the wayleave;

(b) For (2) after the expiration of the first notice;

(c) For (3) at any time after the change of ownership or occupation.

The license-holder then has three months either to move the line, negotiate a new wayleave, or apply for a necessary wayleave or compulsory purchase order.

Basis of compensation
Easements
In the Lands Tribunal decision of Turris v Central Electricity Generating Board (31/1980:105/1981) LT it was stated:

It is therefore proper in determining the amount of compensation to take into account not only the value of the interest acquired but also the effect of the cables and the pylons on the value of the whole of the subject land and also the effect of the interference with quiet enjoyment which is posed by the possibility of access without notice by the board on to the land.

Wayleaves
Para 7 of Schedule 4 states that compensation is payable for the grant of the wayleave which, following the decision in West Midlands Joint Electricity Authority v Pitt [1932] 2KB1, falls to be assessed as compensation in the same way as for an easement.

The compensation for both the grant of the wayleave and disturbance can be recoverable either as a lump sum or by periodic payment (para 7, section 3). It has been argued that an annual wayleave can be valued only on the basis of the annual loss to the owner or occupier. However, in the decision of Clouds Estate Trustees v Southern Electricity Board (183/1982) LT it was stated:

I find as a fact that although the wayleave consents are by their terms expressed to be terminable, all the board's structures over and under the Clouds Estate are permanent structures unlikely to be removed for the foreseeable future.

In reaching their decision, the Lands Tribunal attempted to quantify the permanence of the line. This situation is even clearer when a necessary wayleave is granted by the Secretary of State for a term of years.

Conclusions
The presence of electricity lines over property causes a reduction in the value of that property because of the perception in the minds of the general public of EMFand the visual impact. The losses incurred by landowners are compensatable by the RECs in accordance with the Land Compensation Act 1961, whether the electric line is secured under a wayleave, necessary wayleave or easement, and the landowner should not be worse off than before the electric line was constructed.

Many electric lines were erected before the existing occupiers purchased the premises. However, para 8 of Schedule 4 to the Electricity Act 1988 provides that, if the line was secured only on a wayleave with the previous owner or occupier they can terminate the wayleave with a view to either seeking the removal of the line or negotiating a new wayleave.

The RECs are required to compensate landowners or occupiers for their loss.