We shall explain the circumstances in which a landowner may be entitled to compensation, how compensation for wayleaves and easements is generally assessed and the factors which influence the amount of compensation due.

When Is a Landowner Entitled to Compensation?

1. Where a Wayleave is Granted Without Consent In many cases, Distribution Network Operators (DNOs) require access to private land to install and maintain electrical infrastructure. While wayleaves are often agreed voluntarily, a landowner may sometimes find that infrastructure has been installed on their land without their express consent.

In such cases, a landowner may have a claim for compensation, particularly if:

• The infrastructure has a negative impact on property value.
• The installation interferes with current or future use of the land.
• The presence of infrastructure makes it harder to sell or develop the property.

Under the Electricity Act 1989, a DNO can apply to have a wayleave imposed if an agreement cannot be reached with the landowner. However, landowners are entitled to compensation even if a wayleave is imposed rather than granted voluntarily.

2. Where an Existing Wayleave is Terminated If a landowner serves notice to terminate an existing wayleave agreement, the DNO may apply to retain its rights through a necessary wayleave application. If the DNO is successful, the landowner is still entitled to receive compensation for the continued use of their land.

Compensation in these cases is usually calculated by reference to the diminution in the value of the land due to the continued presence of infrastructure.

3. Where a Permanent Easement is Created Some landowners agree to grant a permanent easement, which provides the DNO with a lasting right to keep its infrastructure on the land. This typically attracts a slightly higher level of compensation compared to a wayleave, which is temporary in nature.

The valuation of a permanent easement considers:

• The permanent restriction imposed on land use.
• The impact on land value, including any depreciation.
• Sometimes, the potential for additional payments if further infrastructure is installed in the future.

If an easement is granted, the landowner is usually compensated with a one-off payment, rather than periodic payments.

4. Where a Landowner Suffers Additional Losses Beyond the standard compensation for land value impact, landowners may also claim compensation for:

• Crop loss or damage if installation works disrupt farming activities.
• Business interruption if the land is used commercially and the infrastructure affects operations.
• Loss of development potential, particularly where infrastructure restricts future building plans.

How is Compensation Calculated?

Compensation as a Percentage of Property Value

Compensation for wayleaves and easements is generally assessed as a percentage of the unencumbered value of the affected property. However, the precise valuation can vary significantly depending on the circumstances of each case, including the type of infrastructure, the degree of interference, and the location of the property.

We regularly instruct expert witnesses, such as surveyors competent in this niche area of valuation, to calculate compensation. We have learned that there is no fixed percentage that applies universally, as reported decisions and industry valuations show a wide range of outcomes. That said, past cases and valuation assessments suggest that compensation typically falls within a broad range, often between 2% and 11% of the property's unencumbered value.

In some cases, particularly those involving only oversailing lines (where no poles or transformers are present on-site), compensation has been assessed at the lower end of the range. In contrast, where physical infrastructure such as poles or substations is installed within the property, higher levels of compensation are often justified. However, the calculation is always fact sensitive.

Adjustment for a Fixed-Term Necessary Wayleave

A wayleave is usually granted for a fixed term (e.g., 15 years) rather than being permanent and so compensation is generally adjusted as follows:

• Permanent easement: Compensation reflects a one-off payment that accounts for the long-term impact on the property.
• Fixed-term wayleave (15 years): Compensation is typically 52% of the value of a permanent easement.
• Industry benchmarks suggest that some DNOs offer as little as 36%, but expert valuations support the 52% standard.

For example, if a permanent easement is valued at £20,000, the necessary wayleave compensation for 15 years would be:

• £20,000 × 52% = £10,400

This means landowners would usually receive compensation reflecting the temporary nature of the agreement, rather than a full easement payment.

How Can Landowners Ensure Fair Compensation?

DNOs often propose compensation based on industry benchmarks, but landowners are not obliged to accept initial offers. A professional valuation can provide leverage in negotiations and ensure a fair settlement. This is especially important if the land is particularly valuable or subject to approved development plans which will increase the overall value of the land once implemented.

Therefore, obtaining a formal valuation is often worthwhile, particularly where there is significant infrastructure impact. While this represents an upfront cost, a well-prepared report can often result in significantly higher compensation.

Key Takeaways for Landowners

1. Compensation is typically 2% to 11% of the property’s unencumbered value, depending on the type and impact of infrastructure but remember, the calculation will always be fact sensitive and specific to your particular matter.
2. Landowners may be entitled to compensation if a wayleave is imposed, renewed, or terminated, or if an easement is created.
3. Additional compensation may be available for crop loss, business interruption, and legal costs.
4. Fixed-term necessary wayleaves (e.g., 15 years) are compensated at 52% of the permanent easement value, although DNOs may offer less.
5. A professional valuation together with robust legal representation strengthens a landowner’s negotiating position and ensures fair compensation.

Need Expert Advice?

If you are facing a wayleave or easement issue and want to ensure you receive fair compensation, we can help. Our team has extensive experience negotiating with DNOs and securing favourable outcomes for high value properties, commercial properties and significant developments.

Contact Matthew Fletcher, Sam Thompson or Thomas White today to discuss your case.