Why Have a Ransom Strip?
The most common form is a small strip of land (it may be no more than 150mm wide, sufficient only to be able to show up on a plan) that is retained by a previous owner of the land or by the previous owner of adjoining land. The piece of land is commonly between the boundaries of a property and the highway.
In most cases the intention behind keeping it is to prevent the further development of the property. It may be used to secure an Overage payment by preventing the property owner from having unfettered access to their property. The difficulty comes when the property owner finds an alternative route of access or acquires a right of access over the land by prescription or 'long use'.
An additional purpose is to enable the previous landowner to be able to enforce restrictive covenants (imposed by them) by retaining ownership of land abutting the property sufficient to show loss of amenity in the event that the owner of the property breaches a restrictive covenant.
Developers may use the mechanism of a Ransom Strip when building an estate next to undeveloped land, for example on the edge of 'Green Belt' or 'Agricultural Land'. A prudent developer will always take in to consideration the likelihood of the future development of the adjoining land; even if the land where it is cannot currently be built on due to planning restrictions - that may change in the future. Having installed all of the roads, sewers and other infrastructure for the estate, they need to guard against the future developers of the adjoining land getting free benefit of their hard work and funding. Once the housing estate is developed it is likely that the roads and sewers will be adopted and therefore out of the control of the developer; however if the developer retains a strip of land between the highway and the adjoining land, all future developers will have to obtain the original developer's consent to gain access to the highway and to connect into the infrastructure. Any consents sought, would of course come at a price.
The Value of Ransom Strips
If the Ransom Strip lies between the property and the highway, the owner of the property will need to cross it to gain access to their property. If the property owner does not have the right to cross the Ransom Strip - their property is effectively land-locked and the value of property is negligible.- as there is no way to access it. The property owner then has to turn to the developer (or whoever owns it) in order to obtain the grant of a right of way or to purchase thei strip of land from them.
Ransom Strips are often a cause of litigation, especially in more recent housing estates. Generally it has been held by the Court that the value of a Ransom Strip is one third of the increase in value of the property achieved by the release of the Ransom Strip (either by the property owner buying the strip of land or achieving the necessary grant of a right of way).
An illustration would be a house with a large garden at the rear backing on to a Ransom Strip. With the Ransom Strip being present between the boundary and the highway, there is no way that access can be legally obtained to the property either pedestrian or vehicular. In its original state the land is therefore only good for use as a garden peripheral to the original house. The value of the garden is thus only a few thousand as it cannot be used on its own. Take away the Ransom Strip, and there is scope for pedestrian and vehicular access; the land now has potential for development - a house and a driveway; the value of the property immediately rises to several hundreds of thousands of pounds. The owner of the Ransom Strip can therefore, charge a hefty sum for that strip of land.
In order for a Ransom Strip to be effective, the developer or other owner of the strip of land must keep a vigilant eye on their property. If the owner of the property is able to access their property over the Ransom Strip by claiming a right of way by prescription ('long use') - the value of that strip of land (ransom strip) will be greatly diminished.
How can you avoid a Ransom Strip?
The short answer is by taking great care when purchasing the property. A competent Conveyancer will always check the boundaries and will note if for example there is a piece of land between the boundaries of the property and the highway or neighbouring property, which is not accounted for and may possibly be a ransom strip. If the title to the Property is registered, at the HM Land Registry, this is generally achieved by careful examination of the filed plan.
With land where the title is not registered at HM Land Registry, this can be more problematic - as the Conveyancer will have to rely on old deeds with plans that are generally not drawn to scale. A competent Conveyancer will always obtain an up to date plan of the property from the Ordinance Survey and carry out a Search of the Index Map to check for amongst other things, whether there is any part of the land that has been registered. However, in the case of unregistered land determining the boundaries of the property is not an exact science, and may involve surveyors from the HM Land Registry having to determine the boundaries by visiting the property. With registered land, the matter is more straight forward as the boundaries have already been defined by the HM Land Registry and compensation may be payable if there is any loss due to their error.