Tue 19 Aug 2014

Ransom strips in land development

Following on from Sally Anthony's article on Buying land for proposed development, I thought I'd provide a bit more information on the issue of ransom strips. Developers invest significant sums of money developing land and the last thing that they want to discover is that they don't have title to all of the land that's required e.g someone else owns the thin strip of verge between their development site and the public road from which it will be accessed.

What is a ransom strip?

Ransom strips are strips of land that can be small and appear insignificant, but are nonetheless vital as they separate a proposed development from a public road or they run through a key part of the site e.g. the location of a proposed building.

Ransom strips can be quite apparent on the ground or their existence might only be established by careful measurement or through the detailed study of plans. They can occur by accident or be created intentionally by savvy land owners who sell off land. Those who own such vital pieces of land sometimes demand considerable premiums from developers to allow them to access their development or to build on, or lay vital services across, the strips of land.

Roads authority ransom strips

Local authorities frequently acquire land for the construction of new roads or the widening of existing roads. Often the land is acquired by compulsory purchase. However, occasionally not all of the acquired land is needed and therefore strips of land can be left at the sides of new roads - sometimes obvious, but sometimes appearing to be part of the road verge. If these areas are not adopted for public use, what is their status? Can the local authority demand a ransom price to allow the person who owns the adjacent land to use or take access over the strip?

Two main arguments to prevent these areas being held as ransom strips are put forward - being the equitable argument and the legal argument.

Equitable argument

Although, when the land was purchased by the local authority, there will have been adequate access to the retained land, the local authority has, through the exercise of its compulsory purchase powers, put itself into the advantageous position of being a ransom strip holder by leaving bits of land unused.

Further, in exercising its compulsory purchase powers, the local authority have only had to pay a rate per square metre for the use of the property as at the date of acquisition (eg agricultural land) and not a rate to reflect the importance of the strip as access to the land retained.

Legal argument

Arguably, if the land was acquired for the purpose of constructing a road, then it should be deemed a road, regardless of whether or not it was in fact incorporated into the new road or verge or whether it forms part of the land listed by the local authority as adopted.

Attitude of the courts

In many situations, the decision of the courts very much turns on the particular facts and circumstances. At its most basic, the question faced by the courts is whether a strip of land beside a road has been dedicated to public passage.

In exercising their discretion, the courts consider the particular facts and circumstances of a case. Two of the main cases regarding local authority ransom strips, Elmford Limited v. Glasgow City Council (No. 2) in 2000 and Morston Whitecross Limited v Falkirk Council in 2012 concerned relatively similar scenarios and both were decided in favour of the local authorities.

Essentially, in each case:

  • the local authority had compulsory purchased land for road construction from a previous owner of the development site;
  • it had then built a new road and adopted it but had left significant strips between the adopted area and the development site; and
  • the developer of the adjoining landed needed access across these strips.

If the strips had been adopted the developer would be entitled able to take access. If the strips not been adopted then the local authority could charge a ransom to grant the rights.

Elmford tried both equitable and legal arguments and failed with both. In the court's view, there was no obligation on the local authority to sell the land back to the developer or to grant rights over it, in either case for a reasonable price. Any disposal would be at market value - and, even then, the local authority was under no duty to sell to the developer as it was a successor to the original owner. Also, on the legal argument side, the court decided that the land was clearly not part of the road as it was not included within the list of public roads nor had any prescriptive right of access over the land been demonstrated.

In Morston, the Court considered that:

  • the strip appeared to a reasonable person as though it was being put to no use at all - the verge was available for a wide variety of potential uses; and
  • even if it was to be accepted that the strip had been dedicated to the possibility of construction of a future road, it was doubtful that it could be said to be dedicated to public passage - as a much narrower verge would have served the road purpose in the particular circumstances.

What to do about this?

Local authorities may in the past have been swayed by the moral argument, however the decisions in both the Elmford and Morston cases leave local authorities in a strong position, with the ability to extract a ransom from neighbouring owners to allow passage over the relevant verge to an adjacent development site.

It cannot be taken for granted that a public road extends from one fence to another and detailed legal research is required, both on paper and on the ground, when developments are first proposed. Whilst ransom strips cannot be prevented, if the right investigations are carried out early budgets can be put aside sooner rather than later.


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