For indirect planning damage, at least damage in the amount of 2% of the value of the real estate remains for your own account. Often this "own risk" is even higher. Jurisprudence has long applied a threshold of 5% of the value of the property, for example, in the case of residential development on an infill site. This threshold applies if the development is in line with expectations. For that line of expectation, among other things, the spatial policy pursued is important. The ruling of July 1, 2020 once again shows that it is important to distinguish the foreseeability of a planning development from the line of expectation.
Indirect planning damage
Indirect planning damage is the decrease in value or loss of income caused by a planning decision allowing adverse development on a nearby property. An example might be a house with a previously unobstructed view of a nature reserve. If a planning decision is subsequently made that makes it possible to block that view with new houses, then, as a rule, it will be the case that the value of the existing house will decrease simply because of that planning prospect.
A minimum legal threshold of 2% applies to compensation for indirect plan damage. This threshold means that the first 2% of the value of the property is deemed to represent the normal social risk of a property owner. This is considered a fulfillment of the legal doctrine that every property owner has to take into account to some extent that developments may occur in the vicinity that negatively affect the value of that property. Damage amounting to up to 2% of the value thus remains at one's own expense.
Normal social development in line with expectations
For some time now it has been established case law that an "own risk" of 5% applies to normal social developments that are in line with expectations. The best-known example is housing development on an infill site. This case law states that the normal social risk of 2% is only a legal minimum and that the competent authority, often the Municipal Executive, must assess whether there are reasons to set this normal social risk slightly higher. If that planological development must be seen as a normal social development that was in line with expectations and the development fits within the spatial structure in terms of its nature and size, a normal social risk of 5% will in principle be established.
Line of sight is not necessarily foreseeable
Whether something is in line with expectations is judged, among other things, by whether the planological development was in line with the spatial policy pursued over a series of years. Case law shows that this is where things sometimes go wrong.
Colleges, following the advice of planning consultants, quite often consider that the prevailing spatial policy shows, for example, that infill development comes before expansion, but that the policy does not show that this infill development would specifically take place at this location. According to the Administrative Law Division of the Council of State, however, that is an incorrect standard. The July 1, 2020 ruling shows that in that assessment a distinction must be made between foreseeability and normal social risk.
Foreseeability means that planning damage does not qualify for compensation at all because the applicant could have known at the time of the purchase that a planning change was imminent. In that case, it is assumed that this associated decrease in value is factored into the purchase price.
In assessing whether there should be a higher normal social risk, however, the exact location of the planning development need not be clear. What matters is whether the development fits into a more abstract or more general spatial policy. An intention that infill residential development should precede expansion may soon be sufficient to establish a higher normal social risk. The degree of concreteness of the policy might still be a reason not to set the normal social risk at 5%, but for example at 4%.
Furthermore, the Division also reaffirms in this ruling that the small distance between the home and the planning area and the extent of the damage are not reasons not to set a normal social risk higher.
Pay attention to plan damage agreement or plan damage risk analysis
Plan damage risks are often passed on to developers and other applicants for planning decisions through agreements. It is therefore important to be keenly aware that the normal social risk is correctly determined when planning damages are awarded. Point out to the municipality that not only concrete policies should be taken into account, but also more abstract multi-year spatial policies can be reason to set the normal social risk higher. This can end up saving quite a bit of money.
