Landowners risk missing out on thousands of pounds of pylon compensation
(c) Andrew Drysdale/Rex Farmers and landowners with electricity pylons on their land could be missing out on thousands of pounds of compensation.
Landowners who gave permanent rights to electricity providers in exchange for one-off lump sums were often receiving much smaller sums of money than they could because of the way it was calculated, according to research carried out by land and property specialists George F White.
In one case, the research found a landowner would receive £15,697 under one calculation, but £230,164 under another.
Annual wayleave calculation
Most farmers choose to give temporary rights to electricity providers in exchange for an annual payment that compensates their agricultural loss and costs.
This is called an annual wayleave payment and is based on figures agreed annually by the NFU, CLA and FUW with the electricity industry.
Calculations for permanent rights
However, if a landowner gives permanent rights in exchange for a lump sum, there are two methods of calculation. The first capitalises the annual wayleave by multiplying the annual figure the landowner would have received – usually by 100 years.
To take account of the risk that a pylon might have to be removed in that time, a risk factor is applied that divides this, usually by about three to five.
This method is the most common, but does not take full account of the capital loss, warns Robert Moore, rural surveyor at George F White. It does not include the loss in value of nearby dwellings, commercial properties or development land owned by the landowner.
Landowners should therefore insist on compensation that takes account of both agricultural loss and the dimunition in value of properties and development land.
“In simple terms,” explains Mr Moore, “if there are two identical houses – one with a pylon in the garden and the other without – the one with the pylon is clearly going to be worth less. It is this loss in value that needs assessing.”
However, he warned against giving up an annual wayleave too soon. Land with development planned on it would be worth more than land where development might take place in the futre (“hope value”).
The research looked at a four-mile stretch of pylons across seven landowners’ property in north-east England.
Compensation figure depending on calculation |
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| Property details |
Annual wayleave (temporary right, annual payment, takes account of agricultural loss/costs)
|
Capitalise in perpetuity (risk at 3%) (permanent right, one-off payment, takes account of agricultural loss/costs) |
Dimunition in value (permanant right, one-off payment, takes account of agricultural costs/loss and loss in capital value of property/development land |
|
| Property 1 | Arable, residential/commercial/ agricultural buildings, three pylons, 1,600m oversail | £470.95 | £15,697 | £230,164 |
| Property 2 | Woodland and pasture, 40m overasail | £2.10 | £70 | £735 |
| Property 3 | Arable, two pylons, 770m oversail | £530.85 | £17,693 | £47,457 |
| Property 4 | Woodland, 30m oversail | £2.10 | £70 | £1,371 |
| Property 5 | Arable, residential/ agricultural buildings, two pylon, 800m oversail | £294 | £9,799 | £60,931 |
| Property 6 | Permanent pasture, one pylon, 320m oversail | £117.05 | £3,901 | £8,417 |
| Property 7 | Arable/ permanent pasture, 3 pylons, 930m oversail | £470.95 | £15,697 | £49,057 |
| Source: George F White research | ||||