Development viability, delivery timescales and infrastructure requirements remain key considerations for developers. However, compensation liabilities associated with highway works are often overlooked. Early consideration of Part 1 compensation assessments is essential, as failing to identify these requirements can lead to unexpected costs, delays to highway works and additional liabilities that affect scheme viability.

Most major developments will require either alterations to existing road network or creation of new roads in order to provide access into the development. Where this happens, developers automatically become liable for providing Part 1 assessments of the nuisance impact on neighbours and paying a bond to the Highway Authority (HA) for future liability arising.

Often developers are not aware of this requirement until they are on site, and the HA have confirmed they can only commence works after they have undertaken the Part 1 assessment.

In this viewpoint, we explain the legal obligations, when they arise and how early identification and mitigation can help reduce costs.

What is a Part 1 Assessment and Why Does it Exist?

Part 1 of the Land Compensation Act 1973 came fully into force on the 23 June 1973. It remains a robust and relevant piece of legislation designed to address the impact of new public infrastructure on nearby properties where they suffer a loss in value due to the effect of the highways works.

During the 1960s, the expansion of the strategic road network (including the M1, M4, M5 and M6) brought traffic impacts such as noise, fumes, artificial lighting and vibration much closer to residential areas. Despite clear detrimental effects potentially affecting the property value, homeowners had no recourse. The 1973 Act remedied this by introducing a right to compensation for depreciation in property value arising from seven defined physical factors: noise, vibration, smell, fumes, smoke, artificial lighting and the discharge of substances.

The landmark case of Markham v Leeds City Council (1975) established the valuation basis for such claims, adopting the "before and after" approach (often referred to as the "switched on / switched off" methodology). This remains the accepted approach today.

The Part 1 assessment sets out the impact of these physical factors on nearby properties and the compensation liability that the developer must meet.

Understanding Liability

Ultimately, liability for Part 1 compensation rests with the relevant Highway or Responsible Authority. However, this liability is transferred to developers through Section 106 agreements or other contractual arrangements where the impact arises due to the project works.

When Does the Assessment Need to Be Undertaken?

Whilst compensation claims by affected property owners cannot be submitted until one year and one day after the public works first come into use, the assessment must be undertaken prior to the works commencing. Without this, the HA will not grant permission to complete these works.

Managing the Risk

Early assessment of potential Part 1 liability is best practice. This enables mitigation strategies, such as acoustic barriers or bunding, to be designed into schemes, reducing both environmental impact and financial exposure.

Responsible Authorities will typically require a developer to provide a compensation bond to cover potential compensation claims, ensuring that future liabilities are appropriately secured.

Why This Matters for Developers Today

In many cases, Part 1 liabilities are not identified until schemes are progressing towards implementation. By this stage, opportunities to minimise impacts through design adjustments may be more limited and cost implications more difficult to manage.

Looking Ahead

For developments requiring highway alterations, Part 1 assessments are more than a procedural requirement. They form an important part of managing project risk and ensuring future compensation liabilities are properly understood and accounted for.

Identifying Part 1 liabilities from the outset allows developers to:

• Plan accordingly
• Engage proactively with highway authorities
• Incorporate appropriate mitigation measures
• Avoid unnecessary delays or cost pressures as schemes progress

Our Experience

The Land Assembly & Compulsory Purchase team at Lambert Smith Hampton has extensive experience in preparing Part 1 assessments (commonly referred to as S278 Land & Noise Assessments) for both HAs and developers.

We have been instructed by numerous developers to assess and quantify potential compensation exposure, supporting discussions with HAs and informing project viability. Each scheme is unique, and our role is to deliver robust, evidence-based and fair assessments.

We have long-standing expertise across the full lifecycle, from initial risk assessment through to the negotiation and settlement of claims.

Get in Touch

To find out more or if you require a Part 1 (S278) assessment for proposed highway works near residential properties please get in touch with our experts who can help you navigate through the process.

Nyear Yaseen
Senior Director

NyYaseen@lsh.co.uk

Julie Herbert
Director

JHerbert@lsh.co.uk

LSH provides a comprehensive property service across the full project lifecycle. Please get in touch to find out more. If you would like further information, please see: www.lsh.co.uk.