Who owns the subsoil when assessing compulsory purchase order compensation?
When assessing the value of compensation to be paid following a compulsory purchase order, the market value of the property in question is key. But what about the land underneath the property?
Here, our compulsory purchase order compensation team discusses the relevance of subsoil.
Does the subsoil belong to the owner of the property?
The Latin phrase ‘Cuius est solum, eius est usque ad coelum et ad inferos’, which translates as “whoever owns the soil, it is theirs up to Heaven and down to Hell”, is a principle of property law that establishes that the rights of the property holder extend to the air above and the ground below the plot of land.
Although this doctrine is true in broad terms, there are exceptions. For example, underground treasure and deposits of gold and silver in the UK are owned by the Crown, while rights to coal, oil, and gas are either with the Crown or a privatised corporation (as established in The Coal Act 1994, Gas Act 1986, and the Petroleum Act 1998).
The court has, in the past, distinguished ‘air’ from the ‘ground below’ the property and established that, while the principle can be applied to the airspace in a leasehold context, express words are needed in the lease for subsoil to be included within a demise.
What constitutes subsoil for the purposes of compulsory purchase order compensation?
Subsoil extends vertically to the layer of soil under the surface, and horizontally to the property’s boundaries as far as the landholder is concerned, but with some exceptions.
Where the land is situated next to a highway, the owner owns the subsoil of the road up to the centre point; this is known as the ‘ad medium filum’ rule.
On the other hand, when land is situated next to a railway line – as Network Rail owns the land on which the railways run – the property boundary is not the centre of the track, but the fence of the railway.
Subsoil rights are an important matter for compulsory purchase order compensation experts, because authorities may need to acquire subsoil – for example for the construction of tunnels.
So, the compensation for subsoil rights is not as straightforward as one may think.
Are compulsory purchase order compensation claimants eligible for compensation for subsoil?
When calculating compulsory purchase order compensation under English law, freeholders are entitled to compensation for subsoil, unless specified otherwise in ownership documents, and leaseholders may share these rights if specified in the lease.
How much compulsory purchase order compensation is due for subsoil?
And, as for the amount of compensation, s.5 Land Compensation Act 1961 states that the value should be equal to the amount that the land (subsoil in our case) would be expected to realise if sold in the open market by a willing seller.
Unfortunately, there is no market value for subsoil, as the underground doesn’t have much use, except for railway or highway authorities.
For this reason, in England, regardless of the dimension of the interest acquired, a nominal amount replaces the open market value. As there is not a market value for subsoil, the general rule is that a nominal amount of £50 should be paid to each claimant.
This may seem a very modest compensation to the claimants, but every case is different, and section 7 of the Compulsory Purchase Act 1965 may come to their aid. This section sets the compensation in case of severance and states that the value of the land to be purchased (in our case the subsoil) should be compensated by the acquiring authority, and that compensation should also be given for damage sustained by the landowner. In other words, claimants will be entitled to a nominal amount for the subsoil and may be able to claim for injurious affection as well.
If you are, or might be, affected by a compulsory purchase order and would like to know your rights, contact giovanna.boothby@carterjonas.co.uk, or find out more about our compulsory purchase order compensation team here.
