Utilities: Constraints or Opportunities?

Posted on 29 March 2021

Utilities: Constraints or Opportunities?

If you are a landowner, a commercial or residential developer or a residential property owner, and your land or property is affected by any of the following constraints:

  • Overhead electricity lines
  • Water mains
  • Sewers
  • Gas mains and oil pipelines

It may be possible for you to have them diverted or to claim compensation for their presence.

If the utilities have yet to be installed it may also be possible for you to negotiate with the utility company to change the route of the utility. You could also claim compensation for its impact and the works carried out on your property or land.

Overhead Electricity Lines

Most people are aware that the presence of an overhead line will have an adverse effect on the value of a property on the land affected by it, but few people realise that they may be entitled to compensation, even if the land or property was purchased after the line was installed or if the property was built at a later date.

Overhead lines can seriously devalue a property due to their visual impact and public perception of the health risks associated with them (regardless of the lack of scientific proof).  This loss in value can vary considerably (from 0% up to 30% of a property’s value) depending on the distance of the line from the affected land/property (up to 350 metres for the largest pylons – 400kV for instance – and 200–250 metres for the smaller ones). The loss in value will also be determined by the size of the line and its orientation relative to the affected land.

There are number of criteria which must be satisfied before a claim for loss can be made:

  1. The line must pass over the boundaries (even if the cables only swing over them in times of strong winds)
  2. There must be an existing terminable wayleave agreement[1] on the line (a specialist surveyor will be able to confirm this).
  3. The line must be close enough to the property to be causing a loss in value (see above).

Unfortunately almost every ‘owner occupier’ claim has been made over the past fifteen years or so. This means that there will be fewer opportunities for home owners to claim. From the point of view of ‘Buy to Let’ landlords however, there may well be an opportunity for them to claim for as much as a year’s rental income, and therefore it would be worth contacting a specialist surveyor to look into this.  

In terms of commercial property, residential development and agricultural land, there may also be strong grounds for claiming compensation.

Developers of residential schemes, for instance, can claim for the material loss of housing plots on land beneath overhead lines, as this land cannot be built on and has effectively been ‘sterilised’. They can also claim for visual impact and public perception of health risks (as mentioned above) and the adverse effect these are likely to have on sale prices of future properties).

Claims can also be made by farmers with lines affecting their farms or estates. Providing an overhead line is within 200 metres of a farmhouse (or 250 metres if it is a large line) a five figure settlement may be achievable. For pylons running close to farmhouses the compensation sum could potentially reach six figures.

Water Mains and Sewers

According to Section 159 of The Water Industry Act 1991 the water industry and the Environment Agency are legally entitled to lay pipes in private land. This can only be carried out once reasonable (defined) prior notice has been given to the owner and occupier but no consent or approval is otherwise required from the owner. If the owner objects, the provider can exercise the right to use compulsory powers to lay the pipes. Unlike the process of installing overhead lines, there is no right to object and there is no procedure in place for dispute resolution.

The rights required for water, sewerage or drainage pipes are usually set out in a legal deed of easement, by lease or by sale of the subsoil in which the pipe is to be placed. An agreement reached through negotiation will often afford the landowner better protection than if compulsory powers  have been used.

Pre-existing pipes are usually covered by a formal deed setting out the rights of the parties, or otherwise they are protected by statute.  In most cases, no payment will be due for an existing water or sewer pipe.

However, Schedule 12 of The Water Industry Act 1991 also states that:

If the value of any interest in any relevant land is depreciated by virtue of the exercise, by any relevant undertaker, of any power to carry out pipe-laying works on private land, the person entitled to that interest shall be entitled to compensation from the undertaker of an amount equal to the amount of the depreciation

As well as depreciation, it is also possible to be compensated for damage and disturbance sustained during works undertaken. Again, a specialist surveyor could advise you on this.

Gas Mains and Oil Pipelines

Unlike water mains and sewers, gas and oil pipelines are covered by the Compensation Code. This means that compensation will automatically be payable if compulsory powers are used. 

National Grid has a national agreement with the Country Land and Business Association (CLA) and the National Farmers’ Union (NFU) in which it has agreed to pay more and offer more advantageous terms than those available under the compensation code.

Other commercial operators (oil and gas) are governed by the Pipelines Act 1962 and must therefore negotiate with landowners before using compulsory powers to enter land. In general, they tend to offer better rates than those payable under statute or by National Grid Gas as, from their point of view, this will usually speed up the process and they will gain access to the land more quickly.

Although the Compensation Code exists, gas and oil companies usually prefer to obtain their rights to land via negotiation, which generally results in a better payment for the landowner and better protection than would otherwise have been provided under statute. However, if neither party can reach an agreement, the utility company will resort to using compulsory powers and the compensation code will apply.

When it comes to the agricultural industries, the installation of a pipeline can be a major operation, and can significantly disrupt a farming business. In such cases, utility companies will have a duty to compensate the farmer for loss of crops, damage and loss of development potential, as well as paying for the easement they are acquiring.

In terms of pre-existing pipelines, which may be present in land due to be developed (for commercial or residential purposes) the use of mechanical excavators is not permitted within 3 metres of a high-pressure gas pipeline. National Grid Gas for instance, require a strip of land on either side of the pipeline, which will vary in width according to the diameter of the pipe.

A claim for loss could be made if:

  • The pipeline's presence is restricting development and therefore affecting the land’s development potential
  • The pipeline’s presence has severed one part of the development from the other
  • The land required to either side of the pipe has been rendered sterile and therefore its development potential has been lost

Pipelines can also have an impact on public open space provision (all local authorities require a certain proportion of POS when considering planning applications for residential schemes) as trees are not permitted within 6 metres of a pipeline and only hedges with shallow roots are allowed. This could adversely affect the design of a scheme and it may be possible to claim compensation for this reason.

Regardless of the type of utility, it is worth considering seeking the advice of a specialist. Rather than seeing the apparatus as something to be endured, there may be an opportunity to seek compensation, or to argue for diversion or removal. If you are a developer, this could mean the difference between a rejected planning application and planning approval. It could also help to substantially increase the value of your land or property.


[1] An electricity wayleave is a legal right commonly agreed over land ownership for overhead lines and cable apparatus. Over 95% of all overhead lines in the UK are held on wayleaves which can be terminated.

Development Land Value Calculator

Uncover the full potential of development land using our Development Value and Land Profit calculator.

Land Value Calculator