Bank of Scotland PLC v Burnley County Council
[2024] UKUT 328 (LC)
Lloyds Banking Group Plc v Burnley Borough Council
22 January 2024
[2024] UKUT 20 (LC)
Upper Tribunal
A house was taken by the council, but it was worth less than the bank loan on it. The bank and homeowner couldn't agree on the value. A judge decided the house was worth £70,000, and that's what the bank got.
Key Facts
- •Compulsory purchase of 28 Spenser Street, Padiham, Burnley.
- •Property owned by Mr. David Geoghegan, mortgaged to Lloyds Banking Group plc.
- •Property in disrepair; value less than outstanding mortgage debt (£80,363.24).
- •Mortgagor did not participate in proceedings.
- •Valuation date: 13 September 2022.
- •Two valuations submitted: one by the bank (£70,000) and one by the council (£45,000 initially, then agreed to £60,000).
- •Comparable sales considered.
Legal Principles
Where a mortgaged property's value is less than the outstanding mortgage debt and the mortgagor doesn't participate, the Tribunal determines compensation.
Compulsory Purchase Act 1965, section 15
Outcomes
Compensation of £70,000, plus statutory interest, awarded to Lloyds Banking Group plc.
The Tribunal found the bank's valuation of £70,000 to be sound, based on comparable sales and the market for properties requiring refurbishment. The most comparable sale was a property in similar condition that sold for £73,500.