Official Report: Minutes of Evidence

The Chairperson (Mrs Erskine): I welcome Mr Emmet McDonough-Brown, senior public affairs officer from the Royal Institution of Chartered Surveyors (RICS) in Northern Ireland; and Mr Garrett O'Hare, Northern Ireland regional board member from the Royal Institution of Chartered Surveyors. Thank you for coming.

As usual, I seek agreement that the evidence be recorded by Hansard. Are members agreed?

The Chairperson (Mrs Erskine): You are here today because the Committee is interested in the A5 road infrastructure project. There are a number of landowners along that route. The Committee has been asking questions and looking to ensure that the landowners are fairly treated in that process. There are a lot of landowners along that route. Obviously, we are looking at it in the context of all road infrastructure projects. There will also be learning from other road infrastructure projects. That is the focus of our Committee session today.

I will allow 10 minutes for your presentation. You have given the Committee extensive information, which we have had a look at. I will step in after 10 minutes for members' questions, if you are happy with that.

Mr Garrett O'Hare (Royal Institution of Chartered Surveyors): Thank you very much, Chair. I will take a few minutes to deliver my opening statement, and I will be happy to take questions after that. Chair and members, thank you for the invitation to give evidence today. We are delighted to contribute to the Committee's important work on the topic.

The Royal Institution of Chartered Surveyors is the professional body for chartered surveyors in Northern Ireland and globally, including those who work in the areas of land, construction, infrastructure and property across Northern Ireland. Our work is underpinned by a public advantage remit. Everything that we do is designed to effect positive change in the built and natural environment. We are here to help the Committee understand how proper professional advice, especially in complex areas such as compulsory purchase, ensures that your constituents are treated fairly and achieve the best possible results when their land is being acquired. We are also committed to supporting Governments in achieving outcomes that are not just legally sound but socially and economically fair. We understand that members are focused on the progression of the upgrade to the A5 western transport corridor and understanding the role and qualification requirements of those who act as the land agent, where a landowner is subject to a vesting order for the compulsory purchase of land.

I will take a few minutes to discuss the role of the land agent in a compulsory purchase and provide an overview of the approach delivered by chartered surveyors. Compulsory purchase, as we know, is a legal mechanism by which certain bodies, known as "acquiring authorities", can acquire land without the consent of the owner to support the delivery of a range of development, regeneration and infrastructure projects in the public interest. As part of that mechanism, landowners who are subjected to a compulsory purchase order have a right to compensation, which can be claimed under the following categories: the value of the land taken; disturbance payments; loss payments; and severance and injurious affection in relation to retained land.

The principal approach to determining the compensation is to calculate the market value of the land taken at the time. Chartered surveyors follow a mandatory set of valuation standards, practices and procedures, known globally as "the RICS red book", to establish the estimated amount for which an asset or liability should exchange on the valuation date between a willing buyer and a willing seller in an arm's-length transaction after proper marketing and where the parties have each acted knowledgeably, prudently and without compulsion. Effectively, that is about establishing the amount that someone would reasonably be expected to pay for the property on that date. However, not all cases relate to agricultural land only. In some instances, there will be dwellings, buildings, businesses and development potential to consider. In the calculation of market value, the chartered surveyor will determine the value of any existing planning permissions or potential opportunities for planning permission where zoning or planning policy would reasonably have been permitted, had the subject scheme not been undertaken. Where part of an owner's land is subject to a compulsory purchase that adversely impacts on the remaining landholding, compensation can also be sought in respect of the depreciation in the value of the land; for example, where it becomes inaccessible, unusable or less desirable on the open market.

The overarching principle of compulsory purchase is known as "equivalence", which states that you should be in the same monetary position after acquisition as you were before it: no better and no worse off. Land and Property Services (LPS) is the largest employer of chartered surveyors in Northern Ireland, and it will act on behalf of the public authority in determining the value and compensation that is due in respect of the land and property that is being purchased. Without similar advice, landowners risk being outmatched, both technically and financially. The Government note in their documentation that landowners:

It is important that constituents are guided properly to obtain the right advice so as to not jeopardise their interests in the process.

I am happy to take any questions that you have and expand on how professional qualifications, standards and regulation can support that aim. Thank you.

The Chairperson (Mrs Erskine): Thank you very much. That was super because you came in within the time limit.

In your written evidence, you state that you regulate over 10,000 firms. How many of those are based in Northern Ireland? Can those that are based in Northern Ireland also operate across the UK?

Mr O'Hare: I will have to come back to you in writing after the session to confirm — sorry, Emmet has just confirmed that there are about 30 regulated firms in Northern Ireland. They cover a range of disciplines, including quantity surveying, building surveying, valuation and general agency. Therefore, there is a range of skills that chartered surveyors offer. For example, I am a chartered surveyor, but I am also a registered valuer. That means that my primary area of expertise is in valuation. Across Northern Ireland, there are a number of registered valuers. I can ask Emmet to confirm the exact number for you after the session. In Northern Ireland, you will find that most valuers are general agency-type valuers and work across a range of property classes: commercial, residential and land. Given the rural nature of Northern Ireland, those located outside Belfast will have experience of dealing in agricultural and land-type properties.

The Chairperson (Mrs Erskine): OK. Are you confident that there are enough land agents in Northern Ireland to cater for such a huge road project? How does the RICS ensure that it supports those land agents?

Mr O'Hare: It is important to note that the RICS regulates not just on a Northern Ireland regional basis but on a UK and global basis. The same principles apply. There is nothing to stop a constituent using the skills of a chartered surveyor in England. However, there are quite a number of experienced and qualified surveyors in Northern Ireland. The issue is capacity: the number of cases that need to be dealt with and the time frame for their completion.

The Chairperson (Mrs Erskine): Obviously, we have heard a lot about the A5. In the Chamber last night, there was an Adjournment debate on it. I have heard the phrase, "landowners will be no worse off and no better off", said an awful lot. How can that be quantified? What is your assessment of that? A lot of farms or land will have been in families for generations. It can be hard for landowners to quantify that. How can you ensure that that phrase is exact? It is hard to quantify.

Mr O'Hare: It is difficult. We appreciate that it is stressful and emotional probably for most of the affected parties. The principles of valuation, certainly those used by RICS chartered surveyors, are clear. The guidance on compulsory purchase provided by the Government is also clear: this is about establishing the market value.

That is the market value, regardless of whether the road scheme is to proceed or not.

To establish market value, we generally look at comparable data and try to establish what someone hypothetically would have paid for a piece of land on a certain date on the basis of what neighbouring land or land in a nearby location with similar attributes had sold for within a recent time frame. We use that data to establish what the market value would be: if a "for sale" sign was put up on that piece of land, what might somebody reasonably pay for it? When trying to establish value or compensation beyond that, we use the categories that I noted earlier to determine whether there has been a loss of value as a result of the severance. For example, if the Department decides to take only half of a field, the other half may be of less value as a result if it is an unusual shape, if it cannot reasonably be farmed in the same way or if access becomes difficult and you cannot bring your livestock through to it because you have to cross a road or something like that. Those factors impact on the value. In such cases, you would ask that the compensation include an amount to allow for that.

The Chairperson (Mrs Erskine): OK. You talked about land sales of, for example, neighbouring farms within a recent time frame. What would that time frame look like? This road project has been talked about for so long, and in that area there has been uncertainty about whether to sell or buy land. That has been a bit of a problem. What time frame would you be looking at not just for the A5 but other road projects?

Mr O'Hare: We look at the hierarchy of evidence, generally, within a 12-month period, but, in cases where that evidence is not available, we look further back and make adjustments based on the market conditions at the time and inflationary factors that have impacted on valuations in general. Ideally, when valuing a property, we are looking for a similar property in a similar area that has similar attributes. If we cannot find one, we start looking at other types of property in the same area or throw the net more widely and start looking at, for example, agricultural land in other counties of Northern Ireland. We will then adjust the figure to reflect the attributes or the market conditions in the specific location of the piece that is being valued.

The Chairperson (Mrs Erskine): Sorry, I am being cheeky here, but is it fair for the net to be cast more widely, given that the price of agricultural land can differ so much from one council area to another?

Mr O'Hare: You are absolutely right: values fluctuate across counties and even across towns in Northern Ireland. To clarify, when gathering the evidence, we might look at other areas if we cannot find it in the direct locality of the subject property, but we will then make adjustments to the figure. We will adjust it upwards or downwards to reflect the local market conditions. As you said, a particular area might be more deprived with regard to the market for such a property or asset, and, as a result, we will take that into account.

The Chairperson (Mrs Erskine): I will bring in other members in a moment because this is an important topic. Securing planning permission can be a big problem for affected landowners. What is your assessment of the challenges with securing future planning permission because of increased development in the vicinity of farms? Some farms may seek to replace agricultural buildings. Do you see any challenges there with securing planning permission in those circumstances?

Mr O'Hare: Certainly, with planning, there will be issues from the outset. A farmer whose land is going to be purchased may say, "Well, actually, I am giving away an opportunity that I had to build another dwelling or another farm shed", or whatever it may be. At the outset, we need to consider whether that is the case and whether a planning policy is in place or there is planning permission to allow such development. If so, the farmer will need to be compensated. How planning will work for landowners in the future is, again, very much about what planning policy and zoning allow for. It is difficult to say whether a landowner who loses a piece of land on which they thought they would be able to build an agricultural shed will have an opportunity to relocate their development proposal to another piece of land. That will depend on the relevant planning policies and planning powers.

The Chairperson (Mrs Erskine): OK. I will move to other members.

Mr Stewart: Thanks, gentlemen, for coming along today. It has been really useful so far.

I am interested in your opinions on previous schemes and how they have affected landowners. Take the A8 in my constituency or the A6 as examples. Even after all this time, some of my constituents are still in disagreement with LPS. With that scheme, there was a difference between capital value and market value, even when properties on the same road or street were used in the calculation. Why might that have happened? Is it fair of the LPS to drag the matter out for so long, given how impacted some of the landowners have been?

Mr O'Hare: That is a fair point. Unfortunately, we have experienced such issues with LPS. It is probably fair to say that there are inefficiencies there. I know, from having dealt with road improvement schemes and road widening schemes, that it can take years for clients to be fully remunerated. It is important, if the A5 road scheme is to proceed, that there is willingness in LPS to act efficiently so that difficulties are not created for the property owners in those cases.

Mr Stewart: That is a fair point, Garrett. The schemes that I mentioned are comparatively small —

Mr O'Hare: Absolutely.

Mr Stewart: — and the A5 will be a colossal scheme that will affect so many more landowners. It is hard to be confident on landowners' behalf, given their experience with smaller schemes. I agree that it is incumbent on LPS to get this right. It says that no one will be better off or unduly impacted on, but, clearly, that is not the experience of other people who own land and have been affected by previous schemes. I agree with you on that.

What is your experience of how landowners have been compensated for their time? There seems to be a massive variance in the amounts of money that landowners can invoice for to cover the time that they have spent working with their land agent to get compensation. Have you seen that? How essential is it that there is transparency over how much landowners can claim for their time?

Mr O'Hare: In general, LPS will say that it will pay any reasonable costs that result from a landowner employing the services of a chartered surveyor to act for them. The best advice for constituents is to ensure that they have a terms-of-engagement agreement with their professional at the outset and share that with whomever they are dealing with in LPS. That will mean that it is clear how the professional will charge and how that might look over time. There will then be less opportunity for dispute.

Mr Stewart: Have you seen examples elsewhere in these islands of how valuation and the process of engaging with landowners are done better when a compulsory purchase order is in place, or are we doing it as well as we can, within reason?

Mr O'Hare: In Northern Ireland, we have not had a huge number of road schemes, other than the smaller projects that we have talked about for improvements and widening, so we are a bit green in our approach. However, the fundamentals of the process with regard to the requirements for valuation and the negotiation of compensation are the same across the UK. It is really just about ensuring that we can get the engagement done quickly enough. The number-one issue is, as the Chair mentioned, ensuring that there are enough professionals with the skills to act quickly to take on the number of cases that will come forward and that LPS has the resource at hand to engage efficiently to get the projects over the line, as the compensation will have a time value.

Mr Stewart: I have two final points, if I may. The Chair covered the capacity issues with regard to land agents and surveyors. Has there been any assessment of how many may be required to represent the number of landowners who will be impacted?

Mr O'Hare: I am not aware of one. I am not sure whether that has been carried out internally by the Government yet.

Mr Stewart: OK, no problem.

My final question is about Northern Ireland Water. Have you been able to assess or analyse the impact of the lack of valuation capacity on landowners? How much has developer confidence been affected by the lack of capacity and how is that affecting development across Northern Ireland?

Mr O'Hare: The NI Water issue is a serious one for our industry as a whole but also for the general economy. We see that daily with our clients. I was speaking to a developer yesterday who recently completed three social housing schemes that are ready for handover but cannot get sign-off from NI Water. As a result, he is not able to complete the projects, which means that he has bills outstanding. That puts pressure on his cash flow and on employment. Also, the houses cannot be delivered to those who need them. Generally, we find that the market for development land has reduced because, as you said, developer confidence has dropped significantly. The risks for developers are now higher, and, even if they get planning permission — they may already have it — they cannot be certain that they will get a connection to the water infrastructure and, therefore, be able to deliver the development.

Mr Stewart: That is undoubtedly deeply concerning. Your example is just one of umpteen examples.

Mr O'Hare: Yes, thousands.

Mr Stewart: Absolutely. OK, thank you.

Mr K Buchanan: Thanks for coming along, gentlemen: I appreciate the information.

I have a few questions. First, if I employed one of your members to work on my behalf, who would pay you? Would it be DFI or LPS?

Mr O'Hare: Typically, it comes through LPS. In previous cases, the invoices went through LPS, which released the funds to —.

Mr K Buchanan: Is there a conflict of interest?

Mr O'Hare: In terms of —?

Mr K Buchanan: If LPS is liaising with you to agree a fee for my farm or my constituent's farm but is also paying you, is that not a conflict of interest?

Mr O'Hare: I understand what you say. That is the way it is done UK-wide. Basically, LPS is paying for the fees for the chartered surveyor to act on behalf of the landowner. However, we are a regulated body, so our chartered surveyors are guided by our code of conduct. It is important that that is realised. That is why it is important that landowners use the services of a chartered surveyor rather than those of an unregulated individual: if they felt that there was an issue, they could make a complaint to RICS.

Mr K Buchanan: Do you know what those fees are? Are the fees the same for all individuals, regardless of whether they are members of your body? You may not have seen this, but there is a letter in the Committee papers that states that LPS has used somebody:

Do those individuals get the same fee?

Mr O'Hare: Individuals who are not chartered surveyors?

Mr K Buchanan: Correct.

Mr O'Hare: To be honest, I am not sure how that would work. I would caution against the use of non-professionals. The landowner or constituent could end up losing a lot of time in the process and being outmatched by LPS, which, as I mentioned, will have the skills and knowledge that chartered surveyors are able to equal.

Mr K Buchanan: OK. I want to talk about two hypothetical examples. You talked about four points: value of land, disruption, loss of payment and injurious affection. What is your definition of a loss of payment?

Mr O'Hare: I am not sure whether you have seen the Department of Finance's guide to compensation for owners and occupiers.

Mr K Buchanan: I would like your take on it.

Mr O'Hare: I will refer to that, if that is OK.

Mr K Buchanan: That is fine. If you do not mind, I will put an example to you while you are looking that up. Let us say that a farmer has a poultry house on his smallholding that is in the way, for example, of the A5 upgrade. The poultry house, which provides a substantial income for the farmer every year, has to be taken down. The farmer will get the value of that piece of land, but he cannot replace the poultry house, because of new planning policy.

His or her income is gone. Is that classified as injurious affection for the lifetime of that farmer?

Mr O'Hare: There is an argument to be made there. Obviously, that comes down to looking in more detail at the legislation around that, but that is exactly an example where you would make an argument for loss payments as a result of that.

Mr K Buchanan: Have you seen that happen before, where injurious affection can probably be a larger amount of money than the value of the land? He or she might only lose one or two acres out of 20,000 acres approximately. It is not a lot of money on the basis of two acres, but his or her income is gone and he or she cannot replace that income, so that injurious affection could be millions. Have you ever seen that amount of money on injurious affection?

Mr O'Hare: I personally have not seen that. In that case, where there is a substantial business case like that, you would probably involve the skills of a chartered accountant as well to consider the valuation of the business alongside the valuation of the property that we would be considering.

Mr K Buchanan: To sum up, my experience of the A32 Magherafelt bypass is that LPS — I will not say the land agents, because that would be unfair — grinds the farmer down until they cannot take it any more. That goes on for years and years, and it is a game of slow tennis, which is totally unfair. In some instances, those businesses are destroyed. They cannot come to an agreement, but they agree with DFI on the ground with respect to concrete posts, types of gates etc. However, that compensation claim might not be made until eight or 10 years after that conversation, and suddenly all those conversations are forgotten about. Farmers do verbal conversations a lot of the time, not emails. My comment to farmers is to get absolutely everything down in black and white, because nobody will know anything in five years, when the claim goes through.

What worries me about the farmers and landowners is that they get a raw deal. They are ground down for years. That is not a reflection on your members or your profession; it is LPS that tries to grind them down to get a deal done in time, and it is unfair. Injurious affection will be a big one, because some landlords on the A5 will lose a small amount of land, but their income will be completely gone and the injurious affection will not be relevant to what they lose. It will be interesting to see what happens in the future. I have learned from the A32 bypass that the farmers get ground down, and some land agents, with respect, are greedy. They take on too many, and they do not give the service that each individual desires.

Final question —.

The Chairperson (Mrs Erskine): Keith, final question.

Mr K Buchanan: I normally do not do a preamble.

The Chairperson (Mrs Erskine): You usually do not, to be fair.

Mr K Buchanan: How many cases can a land agent manage effectively?

Mr O'Hare: It is a difficult question to answer. It depends on the size of each case and the size of the firm how many surveyors they have available and the capacity etc.

To go back to your earlier point, it is important that the landowners probably do not speak directly with LPS without having some representation and keeping good records, as you said, at the very least, because these things can go on. In respect of the timelines for LPS to deliver, that is probably more a political matter. Unfortunately, in fairness to the agents representing the landowners, they also will have to wait for their fees to be paid in a similar way. It would work to everybody's advantage if there were a more efficient process. That is important for encouraging support for any infrastructure projects like this from the local community, rather than having a continued cohort against that.

Mr K Buchanan: Finally, I am happy with the value of the land, the disruption and the injurious affection based on the effect of a portion of land being chopped in half and then the dairy farm, for example, becoming unviable, but I am not so sure about the definition of loss payment. It would be good if you could point me to that some time. I am not going to push you now.

Mr O'Hare: Yes, no problem.

The Chairperson (Mrs Erskine): To be fair, I have read that document, and it is useful. It gives a bit of background.

Mr Boylan: This is an interesting conversation. Thank you very much, gentlemen, for your presentation. I am trying to narrow it down as best I can, because this project has been around for a long time.

This is my first question. There are qualified and non-qualified people, but are there enough agents to deal with this issue or not? Bear in mind that we have been talking about this for a long period and that you have talked about all the experience across the islands. I am sure that there is an example in England or Wales that hits it over the last 15 or 20 years. A project of this size must have come up, or similar. In terms of agents and delivering the project in terms of conversations —.

Mr O'Hare: I understand what you say. I will go back to what I said about being able to draw from professionals across the UK. That will probably be important here. Certainly, if there is efficiency in the process on the part of LPS and it is keen to have quick engagement and to resolve the matters quickly, the more pressure that comes regarding the timelines around that, the more we will probably need to look for professionals across the UK to assist with that.

Mr Boylan: I will move it on quickly, because I am trying to get to the nub of it. In terms of qualified and non-qualified, what is the main reason and what are the main challenges for those people? There are people out there who have great experience of market value, capital value and giving advice and opinions. What is the main difference or the main challenge for a landowner in how they determine whom to go to, and what is the consequence of that? You said that they may seem to be more protected under yourselves as qualified people as opposed to not qualified. What are the main differences?

Mr O'Hare: The main difference between someone who is a chartered surveyor and someone who is not is that we have become chartered surveyors because of our education and because we follow strict procedures and rules around the approach to valuation. That is what we do day in, day out. We have a core understanding. Also, because we are regulated by the RICS, there is protection for clients in the event that they are unhappy, whereas, if they use someone who is not qualified, there is really no redress for them in the event that the outcome is not reasonable.

Mr Boylan: Even though they have been giving advice for 30 or 40 years and know the business inside out, yes?

Mr O'Hare: Look —.

Mr Boylan: I am only throwing that out to you because I want to get to a point where there are enough agents and enough advice. This is a key project, and it needs to move on for road safety reasons and everything else. I am just trying to tease that out.

This is my final point. What is the main process for appointing an agent to a landowner?

Mr O'Hare: The main process is that, when a landowner has been provided with notification that their land will be compulsorily purchased, it probably notes that they should take the advice of a land agent or chartered surveyor. The first stage is for them to contact a chartered surveyor or, if they do not know one, to maybe reach out to the RICS Belfast office, which will signpost them in the right direction. The next stage is that a chartered surveyor will meet the landowner, assess the requirements and provide them with the terms of engagement, such as what the costs will be and how they will approach that construction, and then it is over to the agent to make contact with LPS and begin that engagement.

Mr Boylan: I asked in the context that it is not your regular thing, because it is a major project. That is the context. By now, will those landowners be familiar with the process that you are talking about for compensation and all the points that you have raised this morning?

Mr O'Hare: The landowners?

Mr Boylan: Yes.

Mr O'Hare: I am not sure. I am sure that the information will have been provided to them, because it is publicly available, but, obviously, everybody's understanding of that might be different, so it is important that their agent is able to talk them through that and say, "This is where we can look for compensation, this is the approach that we have to follow, and this is how we will deliver that".

Mr Boylan: Finally, is there any learning from what happens in the Twenty-six Counties — the South?

Mr O'Hare: Well, again —.

Mr Boylan: Is there anything that we can learn from what they have done there?

Mr O'Hare: The key learning is to use a qualified professional, because we have seen situations before where people who have acted as agents do not understand the process and remit around valuation and have probably created delays for clients in agreeing deals along the way.

Mr McMurray: I will be brief, because it has been quite a detailed discussion so far. On the issue of market value, I presume that, when land is acquired like that, it creates an inflated pressure in that area. Along that stretch, there will be numerous landowners having their land vested. They then need to invest in land, but everybody needs to invest in land. We have already seen the issue of inheritance tax and the undervaluing of land. Was that taken into consideration when the land was being valued?

Mr O'Hare: Yes, absolutely. You are right: it depends on the location, and, as you say, it is a supply and demand matter. If there was a supply and demand issue there, that would have an impact on the market value. However, the market value is considered in isolation of the scheme itself, so you are determining the value regardless of whether the scheme has been permitted and proceeded with.

Mr McMurray: It just seems curious that it is taken in isolation.

Mr O'Hare: That is not my guidance; that is the guidance provided by the Department of Finance on how to approach that.

Mr McMurray: You touched on the issue of complaints. What about complaints? What advice do you have for landowners, if, unfortunately, it is not going as, they feel, it should? It is probably more in relation to your members than anything else, but what would you advise landowners to do?

Mr O'Hare: The first port of call would be to make contact with the RICS Belfast office, which will be able to signpost them to the complaints handling procedures and try to come up with a solution in the event that they are dissatisfied. There will be an investigation process around that.

The Chairperson (Mrs Erskine): In a road infrastructure project — we look at the A5, because it is the most recent one — information packs go out to individual landowners. Has the Department been in touch with the RICS to ask, "What members do you have who we can point to within those packs?"? Obviously, it is a bit difficult because you do not want to direct people to individual businesses, but has there ever been that engagement with the Department, asking you what members you have so that it can provide that information to make it easy for people? I was doing a quick search when the Committee was happening, and it was hard to find where those members are located. You would have to ring up a chartered surveyor and ask, "Are you a member of the institution?".

Mr Emmet McDonough-Brown (Royal Institution of Chartered Surveyors): We would be happy to explore that with Departments and review the correspondence that they send out to make sure that there is adequate signposting for professionals who can assist landowners in this context.

The Chairperson (Mrs Erskine): It is about making sure that people —.

Mr O'Hare: That it is clear.

The Chairperson (Mrs Erskine): That it is clear, and that they have a level of comfort or a mechanism, if they are not happy or feel that they are not being adequately served. I am not saying that that is the case, but you know what I mean.

I do not have any further questions. Thank you for your time in coming to the Committee, which we appreciate.

Mr O'Hare: Thank you very much.