The purpose of the NPPF is to streamline planning bureaucracy, by condensing 44 planning policy statements and guidance notes (and thousands of pages) into a single 59-page document. It also:

1. Contains the economic, environmental and social planning policies for England;

2. Sets out the Government’s planning policies for England and how they are expected to be applied; and

3. Must be taken into account in the preparation of local and neighbourhood plans.

The central theme of the NPPF is the “presumption in favour of sustainable development.”

The definition of “sustainable development” has been expanded so that it now includes reference to the social and environmental benefits of development. It includes five “guiding principles” of sustainable development, as set out in the UK Sustainable Development Strategy: living within the planet’s environmental limits; ensuring a strong, healthy and just society; achieving a sustainable economy; promoting good governance; and using sound science responsibly.

The NPPF lists 12 key planning principles that should be taken into account in both plan-making and decision-taking. Planning should:

1. Be genuinely plan-led;

2. Not simply be about scrutiny;

3. Be pro-actively driven and support sustainable economic development;

4. Always seek to secure high quality design and a good standard of amenity;

5. Take account of the different roles and character of different areas;

6. Support the transition to a low carbon future in a changing climate;

7. Contribute to conserving and enhancing the natural environment and reducing pollution;

8. Encourage the effective use of land by re-using brownfield land;

9. Promote mixed use developments;

10. Conserve heritage assets;

11. Actively manage patterns of growth; and

12. Take account of and support local strategies to improve health, social and cultural wellbeing.

Some key points

1. The NPPF encourages the effective use of land by re-using land that has been previously developed (i.e brownfield land), provided that it is not of high environmental value;

2. Planning policies should be positive, promote competitive town centre environments and set out policies for the management and growth of town centres. The NPPF retains the “sequential approach” to planning applications for main town centre uses. This requires most central town centre sites to be developed for shops, leisure and offices before out-of-town sites. However, an exemption to the sequential approach is included for small scale rural offices or other small scale rural development;

3. Local Planning Authorities (LPAs) should identify and annually update a supply of sites sufficient to provide five years’ worth of housing against their housing requirements, with an additional buffer of 5 per cent to ensure choice and competition in the market. Where there has been a history of persistent under-delivery of housing, LPAs should increase the buffer to 20 per cent to provide a realistic prospect of achieving the planned supply and to ensure choices and competition in the market for land. However, there is recognition that housing land supply can best be met through new settlements or extensions to existing towns and villages;

4. The NPPF continues to protect land designated as green belt. As with previous green belt policy, inappropriate development should not be approved except in special circumstances. New buildings within the green belt, subject to a limited number of exceptions, are inappropriate. It should be noted that renewable energy projects will often be inappropriate development, and in such cases, the developer will need to demonstrate very special circumstances if projects are to proceed; and

5. Transitional provisions have been introduced to give local authorities a 12 month reprieve (until 26 March 2013), provided that the local development plan does not conflict too much with the NPPF.

The future

It is absolutely clear that we have entered a new planning era, although it will be some time before we see its full effect. There will undoubtedly be a period of uncertainty while LPAs try to interpret and then apply the transitional provisions.

Through the NPPF, the Government is attempting to support employment and growth, whilst serving the interests of local communities and the environment by keeping the relevant checks and balances in place. Development powers have been transferred to local authorities, and local communities will be able to decide where new homes (and the infrastructure to support them) should be built.

The note provides an overview of what Build Now, Pay Later is, the advantages it brings to housebuilders, and the terms which government departments will ask developers to bid on when they are disposing of their land.

The Build Now, Pay Later scheme is intended to make it easier for developers to manage their development cash flow, as they do not have to pay upfront for the government-owned land. Housebuilders will pay for the land after they have started work on the new homes, meaning that they can start building immediately.

The scheme has been launched in conjunction with the Government’s decision to release public sector land for housebuilding, with the aim of building 100,000 new homes by 2015. The need for new homes is urgent, as recent figures have revealed that housebuilding is now at its lowest levels since the 1920s (click here for more details.)

In its note, the Government has admitted that Build Now, Pay Later is not appropriate for all sites, and will tend to be more beneficial on larger more complicated sites which will require significant capital investment to unlock.

There are two Build Now, Pay Later models: Phased Payments and Risk Sharing.

The Phased Payments model is where the land value or base price is apportioned across a number of phases with specified dates for when payments will be made. The housebuilder bears less initial risk, as payments are linked to completed or sold phases. The timing of payments and percentage of land value paid on completion of each phase can be varied to suit the risk characteristics of the site.

The Risk Sharing model allows housebuilders to share the risk and reward from the movement in house prices and the subsequent revenue generated. However, the risk of fluctuations in development costs will be borne by the housebuilder.

Increasing housebuilding is one of the Government’s key objectives in its Growth Review, and it is also hoped that the Build Now, Pay Later will create and sustain thousands of jobs in the construction sector.

Under these Regulations, a tenant will have the right to ask their landlord to allow a competitor electricity supplier to distribute electricity to him or her via the cables and electricity system in the building.

Previously, it has been usual practice for landlords of multi-tenanted buildings to choose an electricity supplier and simply recharge the tenants the cost of the electricity supply they use (mainly through the service charge or by measuring use through electricity meters.) Tenants have had no right to demand a change of electricity supplier or to ask for their own individual supply. However, from now on, even if there are several tenants in the building, each tenant can potentially ask for a different supplier rather than agreeing to the one chosen by the landlord.

On receipt of a request by a tenant to change electricity supplier, a landlord must respond in writing within ten working days to either (1) confirm that it will provide the tenant’s choice of supplier with the necessary information, or (2) explain why the tenant cannot have a separate supply (e.g. the cabling within the building has insufficient capacity, or that to increase its capacity would have a substantial adverse financial impact on the landlord). The landlord must obtain approval from Ofgem for any charges it seeks from the electricity company for the use of the electricity distribution system in the building.

Considerations for tenants

1. The cost of physically changing the electrical cabling system (or installing additional cabling) must be met by the tenant or electricity company; and

2. Tenants may be able to obtain better electricity deals than those offered by their landlords.

Considerations for landlords

Landlords do not have to do anything until a tenant makes a request for a separate electricity supply. However, if a request is made, they must:

1. Allow electricity companies access to carry out necessary works and to read meters;

2. Install additional infrastructure, if required; and

3. Cooperate in agreeing a ‘switching’ date and a reconciliation of charges between the outgoing and incoming suppliers.

It is prudent for landlords to look at their current electricity supply arrangements, particularly if they have fixed-term contracts at a fixed price, based on previously assumed levels of electricity consumption. It may also be possible for landlords to improve the terms of the existing supply, so that tenants have less incentive to request their own supply.

On the plus side, if a tenant receives a direct electricity supply, that tenant’s electricity consumption will not count towards the landlord’s requirements under the Carbon Reduction Commitment Energy Efficiency Scheme.

Will these new Regulations result in an army of tenants demanding to exercise their new right to change electricity supplier? Probably not – tenants are likely to be deterred by the prospect of high infrastructure and installation costs, which will probably outweigh the financial benefits of switching to a cheaper electricity supplier.

The first dispute concerned a joint venture between the claimant and defendant to redevelop a property for commercial gain. The claimant, Mr Edmonds, had purchased the freehold of the property, pursuant to a joint venture between the two parties. The joint venture, though, was never formalised in writing. The defendant property developer’s contribution to the purchase price of the property was obtained through a bank loan (and secured by a legal charge on the property.)

The redevelopment, however, did not take place and the property was subsequently sold. However, the two parties could not agree on how the proceeds of the sale should be divided between them. Mr Edmonds alleged that it had been agreed that he would be repaid his cash contribution of £300,000 before the defendant was repaid for the bank loan. The Court rejected this allegation, although it did accept that the defendant had agreed to bear half of the cost of maintaining the property; the Court therefore deducted that sum of money (more than £50,000) from the £300,000 that Mr Edmonds owed.

The second dispute concerned the cost of the defendant renovating Mr Edmonds family home. Again, the contract was never formalised in writing. When the renovation was completed, the two parties could not agree on how much money was payable. The Court, after carrying out a quantum meruit valuation of the works, rejected Mr Edmond’s suggestion that the defendant had agreed to manage the renovation for free and without a mark-up on “all other costs, labour and materials, etc.” Instead, the Court allowed a 15 per cent mark up, plus a percentage for the defendant’s services, although deductions were made after the Court acknowledged that the defendant had not properly advised on planning, building regulations and VAT. The court awarded the defendants £683,512 (less sums already paid.)

Although this case was decided on its facts, it highlights the dangers of proceeding with joint venture projects without a formal agreement between the parties involved.

Apart from the media and general interest created by the celebrity involved, there are lessons to be learned from this case. Many developers and landowners enter into joint venture agreements, particularly when bank finance can be hard to find. These come about in a variety of ways: setting up a formal joint venture company or limited liability partnership with responsibilities and profit shares set out in shareholders’ or members’ agreements, via collaboration or joint venture agreements, or by less formal methods such as a handshake in the local pub. Joint ventures start off with high hopes, but it should always be appreciated that things can go wrong, parties fall out, or the market can fall. Proper legal advice should be taken at the outset, the correct legal structure agreed and all likely scenarios taken into account.

In his Budget, the Chancellor announced that, subject to informal consultation, ”the Government will legislate in Finance Bill 2012 to support good business practices and remove barriers to entry, and investment in, the REITs regime, including removing the REITs 2 per cent conversion charge.”

The informal consultation was launched on 5 April and puts forward a number of issues and questions for discussion, including:

1. Introducing a diverse ownership rule for institutional investors. How should “diversity of ownership” and “institutional investor” be defined?

2. Introducing a fixed grace period for new REITs to meet the non-close company requirement. How long should the grace period last, and what should be the minimum number of shareholders at the beginning of (and during) the grace period?

3. Relaxing the listing requirement for REITs. What are the comparative commercial advantages and disadvantages of alternatives to a full listing, including a listing on AIM or other multilateral trading facilities?

4. Abolishing the conversion charge: To what extent will this incentivise new investment (rather than acquisition of existing property investment companies)?

5. Allowing cash to be a ‘good’ asset for the purpose or the REIT balance of business asset test. Should there be an absolute limit on how much cash can be held under the balance of business test, and what should the time limit be for holding cash?

6. Creating a time limit for complying with distribution requirement. What is the current administrative burden of making a dividend payment outside the regular payment cycle? and

7. Redefining “financing costs” for the REIT interest cover test. Which items should be included as a ”financing cost”?

The Chancellor’s Budget announcement on REITs was warmly welcomed by the property sector, which had encouraged the Government to open up the REITs market to new ventures. This subsequent consultation shows that the Government is now willing to relax the qualification criteria and the cost of entry in order to attract new entrants and investment.

Responses to the consultation are required by 10 June 2011. Draft legislation will then be published in autumn 2011 for inclusion in the Finance Bill 2012.

In a recent decision the High Court emphasised that the articles of association of a company are to be construed in the same way as any other commercial contract.

Background

A company’s articles of association (“articles”) set out its basic management and administrative structure and regulates its internal affairs. They create a contract between the company and each of its members in their capacity as members. Companies have freedom in drafting their articles although they are subject to relevant provisions of the Companies Acts.

Facts of the case

Cream Holdings Ltd (“Cream”) brought a claim against a former director (“D”) in connection with a dispute over the appointment of an accountant to determine the fair value of D’s shares. D, also a shareholder of Cream, had been removed from his position on the board and consequently, pursuant to the terms of the articles, he was deemed to offer his shareholding for sale to the remaining shareholders. The articles specified that D was entitled to a “fair value” for his shareholding, being the:

“price per share as agreed by the board and the transferor or failing such agreement as determined by the third party accountant.”

Third party accountant was defined in the articles as:

“an independent firm of accountants chosen by the transferor and the board.”

At a previous hearing the Court of Appeal concluded that an independent firm of accountants would only be validly appointed if the firm agreed with both Cream and D to act in that capacity and the directors of Cream and D agreed to the terms of the firm’s appointment.

Subsequently D refused to sign the letter of engagement of the nominated accountants unless Cream disclosed various documents first. D also took issue with the nominated accountants’ terms of engagement.

Decision

The High Court was clear – a company’s articles of association should be treated in the same way as any other commercial contract. This meant that the articles had to be interpreted in the context of their commercial purpose and in light of their full text. Applying the legal principle that “a contract should better function than perish” the court decided that an implied term should be incorporated into the articles stating that a transferor could not unreasonably withhold his consent to the appointment of an independent firm of accountants.

The court went on to find that D’s actions, in withholding consent subject to the prior disclosure by Cream of various documents was unreasonable There was nothing in the articles that permitted D make such demands as a pre-requisite to consent. The court concluded that there was no reasonable grounds for the objections raised by D to the appointment of the nominated accountants.

Comment

The drafting of a company’s articles of association requires careful consideration. This case shows how the courts are willing to imply terms into articles to give them business efficacy. However, it is always preferable to ensure that articles expressly state the intentions of the company and its shareholders to avoid an expensive dispute at a later date.

Under the contract, Ericsson was restricted during the wind-down phase from varying contracts and terms of employment, or recruiting or removing employees in relation to the project. It therefore claimed that the terms were damaging to its interests, and that those terms should apply only in the final 12 months of the contract. Hutchison, meanwhile, argued that the measures were needed to ensure the smooth transition of the project back in-house.

In deciding that the provisions should apply only within the final 12 months of the contract, Mr Justice Akenhead said that any outcome of the trial would not hinder either party to any great extent. On that basis, it sounds like this was a fall-out because of entrenched positions, and it could have been resolved…over a phone call?

The justification of this is that the programme will raise awareness among small businesses that they need to keep good records. The show will aim to help Britain’s small businesses improve their all round business knowledge and direction, cash flow, marketing strategy and in some cases even their enthusiasm.

The show will start in March, but if you can’t wait until then the good news is that here at MAB we have a business health check product which might prove even more useful than a TV show….Click here for info on our Business Healthcheck