This is good news for residential property owners.

Section 144 of the Act creates a new criminal offence of squatting in a residential building. Under the Act, a squatting offence will be deemed to have been committed if a person does all of the following:

1. Is in a residential building as a trespasser, having entered it as a trespasser;

2. Knows or ought to know that he or she is a trespasser; and

3. Is living in the building or intends to live there for any period of time

Although section 144 has not yet come into force (and no definite date has been given at the time of writing), if a person enters a residential building as a trespasser before or after the section’s enforcement, that person will have committed an offence under the Act. Offenders face up to one year in prison and/or a fine of up to £5000.  Some further background information is here.

There are a number of exceptions to this new offence, where an offence will not have been committed – for example, when a legitimate tenant or occupier who has occupied a property with permission refuses to leave following a disagreement with the landlord.

Importantly, the Act does not extend to commercial properties, so commercial property owners will have to continue to evict squatters through the civil possession procedure.

The Act is expected to come into force in September 2012, but we are awaiting confirmation.

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 new online system will provide conveyancers with instant Buildmark cover information and access to all the associated documentation. This is good news for purchasers of new homes as it should help to speed up the conveyancing process.

Conveyancers will be able to:

1. Check whether a property is covered by Buildmark prior to exchange of contracts;

2. Complete the acceptance form online; and

3. Check and download all of the NHBC documentation, including the Insurance Certificate, policy documents, warranty status, and the CML Cover note.

The new process will allow any amendments to be made directly on to the system, thus avoiding the delays and costs associated with having to issue revised paper-based documents.

The change is good news for both homeowners and housebuilders.

As well as generally speeding up the conveyancing process, there should also be fewer cases where contracts are exchanged for the purchase of new homes where cover is not in place. In the event that there is a problem with the cover (e.g. if cover is not available as the builder or developer is no longer registered with NHBC), then that information will be available to view immediately. Builders and developers will also benefit because there will be no acceptance-related paperwork to store or send.

The Government is asking for opinions on regulations that affect the private rented sector, social housing, construction, and the building regulations. Full details are here.

In the Government’s press release on the issue, Communities Minister Baroness Hanham said:

“For years builders, businesses, landlords and residents have had to navigate an increasingly complicated set of rules and regulations to do things by the book. Now we’re giving them the chance to tell us what they would like us to change so that building a new home or property is a smoother ride.”

Interested parties have four more weeks to put forward their views and this can be done on the Red tape challenge website. This website has full details of the challenge and you can also read the opinions of those who have already commented (and respond to those comments if you so wish.)

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.

The HBF’s New Housing Pipeline Q3 2011 report also said that planning permission was granted for only 29,059 homes across England in the same period – a 50 per cent drop in the average number of home approvals in 2006 and 2007.

The report went on to state that the number of homes being built is now lower than at any time since the 1920s and called on the Government to continue with its proposed planning reforms in order to address the current housing crisis.

However, the Government’s planning reforms may be facing a serious challenge. In its review of the draft National Planning Policy Framework (NAPF) this week, the parliamentary Communities and Local Government Committee said that the Government’s proposals to reform the planning system should be re-written to give greater protection to the environment and to ensure that developers build on brownfield land and within town centres. The Committee also said that an adequate definition of “sustainable development” was missing from the proposals and put forward its own alternative definition. Full details of the Committee’s report are here.

The Committee claimed that the default answer of “yes” in the planning reforms, which gives the go-ahead to development unless the adverse effects “significantly and demonstrably” outweigh the benefits, should be removed as it could lead to poorly planned, unsustainable development.

The Government has said that it will “carefully consider” the new definition of sustainable development offered by the Committee, so we shall see what happens.

The Government is due to implement its final version of the NAPF in early 2012.

The Act includes measures to reform the planning system, to ensure decisions about housing are taken at a local level, and to generally increase the power of local government and local communities. David Marsden, Head of Real Estate at Matthew Arnold & Baldwin, looks at the particular implications for planning here.

The Government has produced a ‘plain English’ guide to the Localism Act, which clearly summarises all of the main ideas contained in the Act and what effect they will have on local communities.

Over the coming weeks and months, the measures laid out in the Localism Act will begin to come into force. Many of the measures are expected to be in place by April 2012, although there is no definite timetable yet.

The Bill, which was introduced to Parliament in December last year, will devolve more power from central government to local councils, so that communities have more control over housing and planning decisions in their areas.

Once Royal Assent is received (which should be a formality) and the relevant sections come into force, the Bill will, amongst other things:

1. Abolish the Regional Strategies;

2. Force local planning authorities (LPAs) to co-operate with each other on issues which cross council boundaries, particularly in relation to sustainable development and the use of land for strategic infrastructure.

3. Make changes to the Community Infrastructure Levy, so that LPAs will have greater control over the setting of their charges;

4. Introduce Neighbourhood development orders and plans (so local communities can specify where they think development should take place and how the local area should be planned);

5. Require developers to consult local communities before submitting planning applications for certain developments;

6. Introduce new enforcement measures for LPAs, including the power to reject retrospective planning applications; extend time limits on taking enforcement action against people who conceal unauthorised development; set new financial penalties; and increase powers to deal with unauthorised advertisements;

7. Abolish the Infrastructure Planning Commission, so that its functions can be transferred to a new unit in the Planning Inspectorate and decisions can be made by democratically elected (and accountable) government minsters; and

8. Reform the delivery of social housing.

Royal Assent could be given as early this week, but, if not, certainly before the end of the year; the Bill is then expected to come into force in April 2012 (although confirmation is still awaited.)

UPDATE: The Localism Bill received Royal Assent on 15 November 2011.

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.

There is some parliamentary opposition to parts of this Bill and an amendment to clause 26, which would have watered downed proposals to criminalise squatting in residential property, was recently defeated in Parliament. The amendment would have meant that no offence would have been committed if a building has been empty for six months or more.

Squatting is a form of trespass which involves a person or persons occupying land or property without the consent of the owner; however, at present, squatting is not a criminal offence in England and Wales (although section 7 of the Criminal Law Act 1977 does make it is an offence for a squatter to fail to leave a residential property when required to do so by, or on behalf of, either a displaced residential occupier or other occupiers whose interest in the property is protected under the legislation.)

Under the current Bill, squatters could face one year’s imprisonment and/or £5,000 fine if found guilty of squatting in a residential property.

Unfortunately, the new offence will not criminalise squatting in commercial and other non-residential buildings, as, according to the Government’s response to a recent consultation on the issue, “there does not appear to be the same level of concern about squatting that occurs in those premises.”

The Bill (and defeat of the amendment) is to be welcomed by property owners and occupiers who have borne the cost of evicting squatters and the associated property repair and clean-up costs, which can be a lengthy and expensive process. However, it is a shame that  the criminal offence of squatting will not currently be extended to commercial property, although it is very possible that this may happen in the future.

The Bill is expected to be enacted in spring 2012, with it coming into force shortly after.

E accepted that, by a literal reading of the commission agreement, commission was not payable. Instead, he argued that the purpose of the share sale was to achieve the same result as was intended by the initially envisioned but aborted property sale, and the agreement should be read as such – that the share sale was the effective sale of the property. The High Court had initially rejected his claim.

The Court of Appeal has now agreed with the High Court’s ruling on the basis that, whatever the purchaser and L intended to achieve by the share sale agreement, it was not relevant to the construction of the commission agreement. The key to understanding the commission agreement was to look at its language, and by that interpretation, the literal meaning was clear – L did not need to pay any commission to E. Neither E nor L had considered the sale of the property by means of a share sale, so they cannot have intended the commission agreement to deal with such a situation.

Simon Weinberg, a solicitor at Matthew Arnold & Baldwin LLP and assistant editor of Upload-IT, comments: “When the High Court decision came out, we helped a number of estate agents update their terms and conditions to seek to avoid the effects of the Estafnous case. The appeal court’s decision to uphold the lower court’s ruling further emphasises the need for estate agents to make sure that their terms and conditions allow them to get commission if the shares in a company owning the property are sold rather than the property itself.”

We have a further example of how courts can interpret simple words like “use” and “a” in conflicting ways.

In the recent case of Parsons v Thatchers Wood Residential Company Ltd, the claimant (P) claimed a declaration as to the meaning of a restrictive covenant in the title deeds to their property, which was situated on a small residential estate. The defendant (T) was the management company for the estate; it owned and looked after the common parts of the estate and was a beneficiary of the restrictive covenant.

T’s articles of association provided that (1) each house-owner on the estate was issued a share in T, and that (2) shares could only be issued to home owners on the estate, who had to transfer their share when they sold their house. The articles were later amended to allow shares to be issued to purchasers of new houses added to the estate. The covenant was entitled “User” and provided that, unless T’s permission was given, the property was not to be used for any purpose other than “as a private dwelling-house in single family occupation”.

The issue was whether the “User” restrictive covenant prevented P from building a second house on their property without T’s permission.

In the absence of a contrary indication, the words of a heading could be taken into account. In this case, some guidance on the meaning could be gained from the heading, which indicated that the covenant was about the permitted and non-permitted “User” of the property. The subject matter was the whole of the property. There was no need for numbers to be used to limit the number of dwelling-houses, and use of the indefinite article, “a”, was not necessarily determinative. Two aspects of the covenant connoted that it was intended to limit numbers: the wording suggested that the draftsman had in mind that density was a purpose, and the covenant was applicable to the whole property.

The Court considered the 2004 ruling in Martin v David Wilson Homes Ltd. This case stated that the words “use as a private dwelling house” meant that the word “use” was definitive, not the word “a”. Therefore, more than one house could be built.

However, the High Court determined in Parsons v Thatchers Wood Residential Company that the context of the restriction on use was materially different to that in Martin v David Wilson Homes. The covenant prevented the building of a second house on the property, without T’s consent. That conclusion was supported by T’s articles of association which, in unamended form, appeared to provide that only purchasers of the houses originally built could be issued shares.

All cases are judged on their own particular facts and it is difficult to draw conclusions from this case alone. However, this case adds uncertainty to the interpretation of restrictive covenants, and developers and landowners need to consider the effect of covenants carefully before committing to a development.

What conclusions can you draw from cases such as this?  Simply do not assume that your understanding of the “law” is correct.  It might have changed.  Please check with us.

These changes could affect all commercial property owner-occupiers and investors.

HMRC intends to do the following:

1. Require all taxpayers to claim capital allowances within one or two years of when the money was spent, or no capital allowances claim will ever be allowed for any current or future owner. This will apply to all new construction expenditure (e.g. new-builds, extensions, refurbishments, etc) as well as purchases of second-hand property. Historic expenditure made before April 2012 is also likely to be subject to the new rules.

2. Require the buyer and seller of a second-hand building including fixtures to submit a formal ‘Record of Agreement’, showing how much of the purchase price is attributable to the fixtures (and notify this to HMRC within one or two years.)

If these changes do go ahead, buyers of plant and machinery fixtures will need to ensure that they notify HMRC of the expenditure within the required time limit in order to claim capital allowances. Also, the buyer and the seller will have to agree on the sale value of the fixtures within the requisite time period if the buyer is to be able to claim capital allowances in relation to the fixtures.

Draft legislation will be included in the Finance Bill 2012, with the changes expected to take effect from April 2012.

As a matter of urgency, if you have not yet claimed for fixtures, or believe that capital allowances might have been under-claimed, please contact either me at david.marsden@mablaw.com, or our property tax specialist Shimon Shaw at shimon.shaw@mablaw.com, as any additional claim should be made before the rules change in April 2012.

EPCs provide information on how energy-efficient a building is and make recommendations on how to reduce that building’s energy use and carbon dioxide emissions.

Subject to Parliamentary approval, the Government intends to make the following changes:

1. The duty to commission an energy performance certificate (EPC) before marketing a property will be extended to the sale and rent of residential and non-residential buildings;

2. The current 28-day period within which an EPC should be obtained using “all reasonable efforts” will be reduced to 7 days. (However, there will be an additional 21-day period during which the EPC can be obtained if it has not been secured within the initial 7-day period);

3. The requirement to include an EPC with written particulars will apply to all residential and non-residential buildings, whether offered for sale or rent. It will not be possible to only include the asset rating;

4. The powers of Trading Standards Officers (TSOs) will be increased so that they can force estate agents and letting agents (and not just landlords or building owners) to prove that an EPC has been commissioned and to produce a copy of it for inspection. This will mean, for example, that TSOs will be authorised to require estate/letting agents to produce evidence that an EPC has been commissioned in circumstances where they are marketing a building without one;

5. An air-conditioning inspection report (if required) will have to be lodged on the central EPC register. (This will no longer be voluntary); and

6. Regulation 5 of the Energy Performance of Buildings (Certificates and Inspections) (England and Wales) Regulations 2007 will be amended to make it clear that the provision of the EPC cannot be delayed until shortly before the parties enter into a contract for sale or rent.

These changes were supposed to have been implemented in two stages – on 1 July 2011 and 6 October 2011, so we will have to wait and see whether the Government sticks to its new April 2012 date. It certainly seems strange that the Government is pressing ahead with these changes in spite of their stated intention to reduce the burden of red tape on businesses.

The decision is important because it was Cala’s planning application that led to it launching a judicial review at the High Court against Eric Pickles’ decision to effectively abolish the Regional Strategies in 2010. Click here for full details.

Neither Cala Homes nor its lawyers have yet to make an announcement on the decision, but it could launch a challenge under section 288 of the Town and Country Planning Act 1990.

The guidance applies to high street and online estate agents, property auctioneers, buyers’ agents, and solicitors and online property sites which offer services that count as estate agency work.

The new guidance focuses on two important pieces of legislation: (1) the Consumer Protection from Unfair Trading Regulations 2008, which prohibit traders/estate agents from engaging in commercial practices that are unfair to sellers, buyers, potential sellers and potential buyers of residential property, and (2) the Business Protection from Misleading Marketing Regulations 2008, which prohibit traders/estate agents from using misleading marketing when they advertise services to potential business clients or market commercial property for sale.

The draft guidance seeks to clarify how these two Regulations apply to estate agency work. It contains examples of trading practices that could breach the Regulations, and offers practical steps that businesses can take to comply with the law when they do any of the following:

1. advertise for new business, including through flyers, websites, newspaper advertisements and verbal discussions;

2. provide advice to new clients and take new instructions;

3. market properties, including when property details are put on the Internet;

4. negotiate and make sales; and

5. deal with complaints.

Currently, if you are convicted of committing a criminal offence under the CPRs or BPRs, you could face a fine not exceeding the statutory maximum , which is £5,000 (if convicted in the Magistrates Court), or an unlimited fine and/or imprisonment for up to two years (if convicted on indictment in the Crown Court.)

Also, under the Estate Agents Act 1979, if the OFT deems a business to be unfit to engage in estate agency work, it can issue a prohibition order banning the business from doing so.

The deadline for responding to the consultation is 9 December 2011. After this date, the OFT will publish its final guidance and a summary of the responses received.

The National Housing Federation (NHF) has warned that over the next ten years, home ownership in the UK will fall to its lowest level since the mid-1980s.

The NHF’s prediction follows the publication of the Oxford Economics’ ‘Housing Marketing Analysis’ report in July 2011, which paints a pretty bleak future for the housing market.

Owner occupation rates are predicted to drop to just 63.8 per cent over the next decade – the result of high property prices, strict lending requirements by banks and building societies, and the need for large deposits from borrowers. This, combined with rising rents (forecasted to increase by 19.8 per cent by 2016), long social housing waiting lists (currently standing at 4.5m people) and fewer new homes being built, all suggests a difficult future for a whole generation of people.

So, how can we avoid this bleak future for housing?

With only 67 per cent of the UK population owning their own home, an increase in the construction of new houses is required. In 2011, only 105,000 new homes were built in England – the lowest level since the 1920s – and residential planning permissions are dropping. Thing have got so bad that last week Grant Shapps, the housing minister, said that local authorities should encourage their residents to live on boats! He even said that new moorings could be eligible for the New Homes Bonus.

With so many property organisations calling for more housebuilding, for more unused public land to be made available to housing associations, and for more residential planning permissions, it will be interesting to see whether the Government sticks to its proposed planning reforms, particularly in the face of opposition from anti-growth organisations and, according to a survey by the ConservativeHome website, even a majority of Conservative Party activists.

Under the Regulations, statutory sewerage and water undertakers take ownership of all private sewers and lateral drains that are connected to the public sewerage system. A lateral drain is the part of a drain that serves a single property and which is outside of the property boundary.

The transfer of ownership will take place on 1 October 2011 – provided there are no appeals by homeowners – and will apply to residential and commercial properties. From this date, water and sewerage undertakers will be responsible for the upkeep and maintenance of such sewers and drains. Private drains that serve individual properties and which are situated within a property’s boundary will remain the responsibility of the property owner. Property owners will continue to be responsible for connections that do not drain into the public drainage network (e.g. systems that drain into private treatment facilities or to septic tanks are excluded.)

The transfer will, in the main, benefit property owners, as it should remove the possibility of a property owner being asked to pay for the repair of pipework. However, the sewerage element of water bills will probably increase to reflect the increase in the amount of pipework that the water companies will be responsible for maintaining from 1 October. Also, there are other consequences of the transfer of ownership: water companies will have a right of access to any sewers or lateral drains situated on a private property, and homeowners may find it more difficult to build on top of sewers and lateral drains.

All property owners must consider whether the transfer of their private sewer system is detrimental to them. If an owner wants to appeal to Ofwat, he or she must do so within two months of receiving the transfer notice or of it being published (whichever is later.)

A ‘right to light’ is an easement that gives a landowner the right to receive natural light through defined apertures (e.g. windows) in buildings on their land. These rights are valuable, as they give landowners (and their purchasers) certainty that they will continue to enjoy natural light.

The review will look at whether the current law on how rights to light are acquired and enforced provides an appropriate balance between those landowners who benefit from the rights and those who want to develop in the vicinity of the land. It will also examine the inter-relationship between the planning system and rights to light, and whether the remedies available to the courts are “reasonable, sufficient and proportionate.”

The announcement of the review is good news for developers.

Developers have faced a lot of uncertainty since the September 2010 ruling in HKRUK II (CHC) Ltd v Heaney, when the High Court awarded an injunction against a developer who had infringed the right to light of a neighbouring commercial property, despite the development having been completed. The Court held that the payment of damages was not necessarily an appropriate recompense for interfering with a landowner’s right to light; consequently, the removal of a structure, or part of a structure, is now possible. The ruling highlights how important it is that developers resolve any potential rights of light issues before commencing their development. 

However, it should be noted that the ruling didn’t change the law and, therefore, the decision in each case will always be dependent on its own facts. Further details of the ruling are here.

Whilst the review is welcome, any change to the law is some way off.

The review will begin in 2012, with a consultation paper expected to be published in 2013. A final report and draft legislation could be available by late 2014 or early 2015.

Greyfort Properties (G) had submitted an application for a Certificate of Lawful Use or Development that would allow it to carry out the development of 19 flats on the site under a permission granted in 1974, without submitting a fresh planning application.

G had obtained planning permission in 1974 for the development. However, the planning permission included a condition that “before any work is commenced on the site, the ground floor levels of the building hereby permitted shall be agreed with the Local Planning Authority in writing.” The planning permission stipulated that work had to begin within five years. In 1978 – four years from the date of the permission – G carried out some access work, and argued that this work amounted to commencement of the development, meaning that the planning permission remained in force (and therefore a fresh application would not be needed.) However, the planning inspector said that the access works had been carried out in breach of the planning condition, and that the works did not amount to commencement of the development. The planning inspector’s decision was upheld by the High Court.

G appealed this ruling at the Court of Appeal.

The Court of Appeal held that, although preparatory works relating to access for the development were carried out on the site in 1978 within the five-year time limit, these works did not implement the planning permission because the ground levels’ condition had not been satisfied.

The usual rule is that development must commence within three years of the grant of planning permission. Typically, if a developer didn’t want to actively proceed with a development, but wanted to ensure that the planning permission did not expire, they would dig a few holes, maybe lay some foundations and ask the planning officer to write a letter stating that development had commenced.  They could then ‘mothball’ the site until there was a good commercial reason to proceed.

During the recession, I expect some developers have been delaying commencement of developments. This decision reminds us that it is not just a matter of physically commencing development before the end of the three-year period that is important, but that the pre-commencement conditions must also be dealt with before commencement of building works. It can take some months to have the pre-commencement conditions approved, so any developer sitting on a planning permission should not leave it until the last minute to look into this.

Stevenage Borough Council’s expansion plans, which were part of the East of England Plan, were rejected because its housing targets were dependant on housing growth by North Hertfordshire District Council. However, following the Government’s announcement that it intended to abolish the Regional Strategies, North Hertfordshire District Council suspended work on the joint project. Further details are here.

During the inquiry into Stevenage Borough Council’s housing plans, North Hertfordshire District Council informed the planning inspector that its new plans would not provide for Stevenage’s planned growth, meaning that the growth of the town would be undeliverable.

However, in the long-running Cala Homes case, the Court of Appeal ruled that local councils cannot take into account the Government’s intention to abolish the Regional Strategies when formulating planning policies (although abolition was capable of being a “material consideration” on certain occasions.) This has formed the basis for Stevenage Borough Council’s legal challenge to the planning inspector’s decision.

Organising utility connections is often cited by property developers as the main reason for delays in construction projects. A 2008 survey by National Federation of Builders showed that 87.9 per cent of development sites had experienced problems with utility companies.

Whilst more efficient working practices by utility companies are required, the BPF believes that developers and contractors can do more to help themselves, and this new guide sets out to provide more information on the framework governing utility connections and the pitfalls that need to be avoided. The guide intends to:

1. Explain the current system for obtaining new connections to gas, electricity and water services;

2. Describe the role of the major players involved in the connection process; and

3. Set out the problems most commonly experienced by developers, and the ways in which developers can seek to mitigate them.

The problems highlighted by the guidance (and the aforementioned 2008 survey) include poor communication; lack of competition in the provision of connections; lack of transparency in costs; the length of time it takes utility providers to issue quotations (an average of 12 weeks) and then to agree a supply; failure by the utility companies’ contractors to adhere to agreed programmes; and the use of outdated procedures by many connection providers.

However, the guide also recognises that developers are not faultless in the process and can help themselves by improving the lines of communication; ensuring that they complete application forms correctly; ensuring that site personnel are available when site visits are arranged with utility providers; and improving their planning, by finding out what infrastructure already exists, carrying out feasibility studies, allowing for complexity in large schemes, and not hugely overestimating loads by using data that takes no account of load coincidence and diversity.

The Government wants to remove uncertainty from the planning system for local people by ensuring that every planning application is dealt with as quickly as possible.

Under the proposals, local people will be able to see how their councils perform against the ‘guarantee’ by using information provided by the councils. Currently thousands of planning applications are held up in the planning system, leaving local householders, companies and developers “in planning limbo.” For example, between April 2010 and April 2011, approximately 3,200 planning applications took longer than 52 weeks to be decided – a statistic that the Government wants to eradicate.

The Government also intends to create more openness, by requiring councils to publish details of their planning performance on at least a quarterly basis, so that local people can see whether their council is meeting the requirements of the planning guarantee. The Department for Communities and Local Government will also publish a regular report on the performance of individual councils.

The Planning Minister, Greg Clark, has already written to local authorities signalling the Government’s intentions.

The next step

1. The Government will provide full details of how the planning guarantee will work in a consultation paper, which is likely to be published in autumn 2011.

2. The Government will publish a further consultation paper later this year on reducing the amount of information required to accompany all planning applications.

Section 15 of the Commons Act 2006 provides that anyone can apply to register land as a town or village green where “a significant number of the inhabitants of any locality, or of any neighbourhood within a locality, have indulged as of right in lawful sports and pastimes on the land for a period of at least 20 years.” In the past, those who have objected to a development on open land have been able to delay it (or even prevent it) by making an application to have the land registered as a town and village green (TVG application).

Under the proposals, the criteria for registration would remain the same, but new restrictions would be placed on land that can be the subject of a TVG application.

Defra’s proposals include the following:

1. Giving the registration authorities (RAs) the power to reject TVG applications at an early stage if insufficient evidence has been submitted, or if there is strong evidence that the application would fail to satisfy the criteria for registration;

2. Allowing landowners to make a statutory declaration, registrable with the RA and renewable every ten years, that any use of land is with their permission. This would prevent any use of land “as of right”;

3. The introduction of a ”character” test, so that only land which is unenclosed by fencing, open (i.e. not covered in dense scrub, trees and vegetation) and uncultivated would be eligible for registration;

4. Taking into account whether the land that is the subject of the TVG application is in the planning system. Land which is subject to a planning application or planning permission, or which was designated for development (or as a green space) in a local or neighbourhood plan, could not be registered as a TVG; and

5. Requiring applicants to pay an application fee. Each registration authority would be able to set its own fee, subject to a prescribed ceiling of £1,000. Fees could be refundable if the application were granted. This may deter some applications that are simply designed to delay developments.

The proposals in the consultation will not prevent the protection of any existing registered greens, and any changes to the registration system will not bring the designation of new greens to an end. However, the restrictions will be welcomed by landowners and developers, who have had to put up with costly delays when faced with TVG applications.

The consultation closes on 17 October 2011 and applies to England only.

The High Court has agreed with H. In fact, H succeeded on another point, so the decision on the meaning of good faith is only persuasive rather than binding. However, the Court said that the contractual duty of good faith meant that the parties had to disclose all material facts to each other. CAL’s failure to mention that it needed to obtain funding from a third party were material facts and denied H the opportunity to make an informed decision. Although CAL had acted honestly, it still breached the clause. The Court added that it was not actually necessary to decide whether full disclosure would have altered H’s decision. The duty had still been breached and that was enough.

On 1 July 2011, the High Court ruled that developer HelioSlough could build a large rail freight interchange on green belt land in Radlett, despite opposition from the Council and the Secretary of State for Communities and Local Government. Full details of the ruling and background to the dispute are here.

The Council had been set to appeal the ruling, but changed its mind after the Secretary of State announced that he would not seek leave to appeal.

However, this isn’t necessarily the end of the line for this legal dispute. The Council, which has reportedly spent nearly £1m in trying to thwart this scheme, is still opposed to it, and the matter will now be referred back to the Secretary of State who will have to re-examine his earlier findings.

If the Secretary of State’s decision goes against the Council, it may still decide to launch another legal appeal.

This is an important decision for local people affecting a proposed large scale development near Stevenage.

The claimant local authorities challenged the decision of the Secretary of State for Communities & Local Government (SoS) to grant planning permission to build 3,000 homes and the associated infrastructure  on land to the west of Stevenage.

The SoS granted permission subject to a section 106 agreement, including various obligations such as the provision of schools. The developer and the local authorities were unable to reach an agreement on the terms of the section 106 agreement and, as such, the developer submitted a section 106 undertaking which in its view met the inspector’s requirements. The undertaking included provisions concerning a temporary schools accommodation strategy (“Strategy”) which provided education to pupils occupying the first dwellings before the creation of permanent schools.  The effect of these provisions was that there would be a bar on development until the Strategy had been submitted to the local authority, and either this had not been approved within 4 months or it had been approved but subject to conditions which were unacceptable to the landowners.

There was no time limit on the bar, but equally no positive obligation on the developer to submit the Strategy. Where the Strategy was not agreed, a different bar to development came into effect until statutory proposals had been published or approved, although if no proposals were published or approved within 18 months after the grant of planning permission, the bar on development would cease. The SoS granted permission subject to conditions.

The local authorities claimed that the SoS had erred by:

1. Ignoring a policy on renewable energy (ENG1) and which has been included in the East of England Plan (EEP) requiring developments of more than 10 dwellings to obtain 10 per cent of their energy from decentralised and renewable sources; and

2. Considering the developer’s undertaking relating to the Strategy as adequate.

Decision

The local authorities had to prove that the SoS had ignored ENG1 and that the absence of reference to the policy was not sufficient evidence that it had been ignored. There was a general reference to the EEP, but it was clear from the conditions imposed that the SoS had not taken it into account. The terms of the conditions had only been tweaked so that these would not meet the targets of the ENG1 policy. On the evidence, the SoS had ignored ENG1 and this was sufficient basis to quash the planning permission.

Making the date on lifting the bar to development relate to the grant of planning permission rather than the submission of the Strategy meant that there was a gap in which the developer could avoid its obligations (i.e. by putting in a Strategy which was not agreed.) The SoS had misunderstood the effect of the proviso, the purpose of which was to protect the developer from delays  by the local authority. The permission would be quashed on this reasoning also.

Any conditions attached to a lease break clause must have been satisfied before one can successfully break a lease. As seen in various cases, such conditions will be strictly construed.

NYK Logistics (UK) Ltd v Ibrend Estates BV (2011)

The lease permitted the tenant to terminate it on giving the landlord not less than six months’ previous written notice, provided that the tenant paid all the rent up to the break date and delivered up vacant possession of the property on the break date. The break clause also provided for the landlord to waive the conditions if they had not been satisfied, though it was not obliged to do so.

The tenant served a valid break notice. The tenant wanted to do the repairs itself to control the quality and costs, and to avoid a dilapidations claim for damages in excess of its own costs in doing the repairs.

On 1 April 2009, the surveyors for the landlord and tenant attended a site meeting where it was agreed that, although the tenant had substantially completed its repairing and decorating obligations, there were some outstanding matters. The landlord’s surveyor found that the tenant had emptied the property of its fixtures, fittings, furniture and stock, save for a small quantity of items that would fit into a small van.

On 2 April 2009, the tenant’s surveyor emailed the landlord’s surveyor stating that there were a number of relatively minor defects and proposed that the tenant:

1. Pay a security guard for the property for a further week, during which time the tenant’s workmen would be able to deal with these items – the property was in an area that suffered from vandalism and theft.

2. Would not pay rent or rates, but would hand over the keys on the break date so that the landlord would have full access.

On 3 April, the tenant’s surveyor chased the landlord’s surveyor and its agent to make arrangements for the handover of the keys and with regard to its proposals, but received no response.

On 6 April, the tenant’s workmen entered the property to carry out the remaining repairs, where they remained until 9 April. The tenant had arranged security for the property until 10 April 2009.

On 7 April, the tenant emailed the landlord’s agent about the keys as it wanted to know what to do with them. The landlord’s agent subsequently spoke with one of the tenant’s representatives who informed him that there was some minor repairs and cleaning that were in the process of being completed. The landlord informed the tenant that he would send someone round to collect the keys on 8 April.

On 8 April, nobody came to collect the keys on behalf of the landlord. However, the landlord’s agent went to the property and spoke to the tenant’s security guard, but did not go in: the security guard was cautious about granting the agent access and the agent did not insist on its right of entry.

On 9 April, after having received legal advice, the landlord’s agent contacted the tenant to inform it that the conditions of the break clause had not been satisfied.

The landlord sought a declaration that the lease had continued after the break date and claimed payment of the rent due, which in fact had been paid on a without prejudice basis. The landlord argued that the tenant had failed to provide vacant possession because it had:

1. Maintained security at the property after the break date and had allegedly prevented its agent from entering the property on 8 April;

2. Retained a small quantity of its equipment in the property after the break date; and

3. Retained its workmen in the property from 6 to 9 April for its own purposes (i.e. to complete the repairs required by the schedule of dilapidations.)

The tenant counterclaimed and:

1. Denied that the lease had continued and claimed repayment of the rent.; and

2. Alternatively argued that the landlord had waived the requirement to comply with the conditions in the break clause on the grounds that the landlord’s agent’s statement on 7 April that he would send someone round to collect the keys was consistent only with the landlord acknowledging that the lease had been terminated. The landlord was only entitled to the keys on termination of the lease and, consequently, it must have accepted that vacant possession had been given.

County Court decision

The County Court judge held that the tenant had not terminated the lease and there had been no waiver. The tenant appealed.  

Court of Appeal decision

The Court of Appeal found in favour of the landlord.

To satisfy the vacant possession condition, vacant possession had to be given to the landlord by midnight on the break date. The Court stated that the concept of “vacant possession” meant that:

1. The property must be empty of people;

2. The landlord must able to assume and enjoy immediate and exclusive possession, occupation and control of the property.; and

3. The property must be empty of chattels, although this obligation would only be breached if what was left substantially prevented or interfered with the enjoyment of the right of possession of a substantial part of the property.

The tenant knew that its proposal to extend its occupation required the landlord’s agreement. The tenant should have moved everyone and everything out by the break date and then with the landlord’s permission return to the premises to complete the outstanding works.  The tenant had done nothing to demonstrate that it was giving up possession. Although it had offered to return the keys, it had not done so and as such the tenant maintained control of the premises.

The Court also held that the tenant was not entitled to award itself an extension of time for the giving of possession, even though there were concerns about vandalism, as these were rightly the landlord’s problem from the break date. In addition the court decided that the tenant wanted to complete the repairs for its own benefit to avoid a subsequent dilapidations claim rather than it being a condition of the break clause.

The Court found that the landlord had not waived the lease. The landlord’s agent only stated that he would arrange for the keys to be collected, but failed to do so following its solicitors’ advice. The Court stated that if the landlord’s agent had accepted the keys, there may have been a surrender of the lease by operation of law, but that did not happen. The landlord’s agent’s words were not sufficient to end the lease.

Comment

The landlord had no new tenant lined up for the premises and despite the fact that the landlord’s interests were not affected by the tenant’s behaviour, the Court held that the tenant remained in possession for its own purposes. The sensible action to take would have been to have left the premises, return the keys and arrange with the landlord to go back in and carry out the works.

This is a further reminder, if one was needed, that break clause conditions are strictly construed. The tenant was required to pay the rent for the remaining term, but such additional cost could have been avoided by taking early legal advice.

The respondents in this case, on behalf of Clayton Fields Action Group, successfully registered a grasslands area known as Clayton Fields as a village green under the Commons Registration Act 1965, on the basis it had been used for over 20 years for the pursuit of various games and pastimes by local residents of “Edgerton/Birkby”  within section 22(1), class C.

The land in question lay between these two areas. At the time of the application the landowner objected on the basis that the locality had to form a distinct and identifiable community. The evidence supporting the application indicated that the members of the Action Group came from a much wider area than Edgerton itself and that those in Edgerton lived in just two streets. The landowner claimed that the members of the Action Group did not form a distinct and identifiable community because they were too widely dispersed, or that they were concentrated too narrowly. The application, however, succeeded.

The High Court decided that the local authority had not been justified in registering the land on the basis that:

1. Section 22 required the land to be used by the inhabitants of a single locality. Even if Edgerton and Birkby were regarded as localities, the fact that there was an even spread of users over the two localities meant the land should not have been registered.

2. Edgerton and Birkby were not localities within section 22 since they were not administrative districts, or areas within legally significant boundaries. Clayton Fields lay between two parishes and the residents were evenly split between the two. The respondents could not pass the “predominance test” under any one parish.

The delay in bringing the challenge was a significant factor against rectifying the register but this had not prejudiced the respondents, and balancing the factors together, it was held that rectification of the register was just.

Comment

This case highlights that it is possible to successfully challenge the registration of land as a village green, although the basis of this particular challenge would not be successful post-2000. A new section 22(1A) provides that the user of the land in question could be either a significant number of the inhabitants of any locality or of any neighbourhood within a locality, and the term “neighbourhood within any locality” could mean either a neighbourhood or neighbourhoods, and the neighbourhoods concerned do not now need to be located within a single locality.

This ongoing legal battle began in August 2006, when HelioSlough submitted its original planning application to St Albans City and District Council. The Council rejected the planning application in 2007 and again in 2009, citing that the scheme was an inappropriate development on green belt land and that the developer had failed to show that the scheme could be built sustainably.

Although HelioSlough successfully appealed the decision, the Secretary of State for Communities and Local Government, Eric Pickles, overruled the appeal in July 2010 on the grounds that the rail freight terminal could be built at an alternative site at Colnbrook in Slough, which would have less impact on green belt land.

In June 2011, HelioSlough launched judicial review proceedings in the High Court to challenge this decision.

The High Court handed down its decision last week (1 July 2011), ruling in favour of HelioSlough. This means that the decision to refuse planning permission has been overturned, essentially on a “legal technicality.” HelioSlough will now re-apply for planning permission and has publicly urged Eric Pickles to support it.

However, this may not be the end of the road for this long-running legal battle. Eric Pickles and St Albans City and District Council have until 11 July 2011 to challenge the decision.

UPDATE: St Albans City and District Council has announced that it will not appeal the High Court ruling. Click here for more details.

Stevenage is designated as a major housing growth point in the East of England Plan. The Plan, which was adopted in 2008, involved Stevenage Borough Council linking with neighbouring North Hertfordshire District Council to extend Stevenage’s boundaries by building 9,600 homes to the west and north of the town. However North Hertfordshire District Council withdrew from the planned expansion in June 2010 after the incoming Coalition Government announced the abolition of the Regional Strategies through the Localism Bill.

Subsequently, North Hertfordshire District Council began work on its own housing targets, whilst Stevenage Borough Council pressed ahead with its expansion plans.

North Hertfordshire District Council and Hertfordshire County Council submitted a joint legal challenge to quash Stevenage Borough Council’s expansion plans. The councils complained that the Secretary of State had failed to impose conditions that would deliver the requirements of the Government’s carbon dioxide and energy performance policy in the East of England Plan (i.e. that developments of more than 10 dwellings must secure 10 per cent of their energy from decentralised and renewable or low-carbon sources.)

The Court quashed the decision to grant planning permission, agreeing that (1) the conditions were not compliant with the renewable energy policies in the East of England Plan, and also that (2) the permission failed to secure the provision of temporary school accommodation that the then Secretary of State had intended.

The application will now go back to Eric Pickles, the current Secretary of State, for reconsideration. He could decide to re-open the inquiry or refuse planning permission.

Mr Shapps said that by Autumn 2011, every Government department with significant landbanks will publish plans to release thousands of acres of previously-developed land to housebuilders.

And to make sure that these housebuilding projections are met, the Public Expenditure Committee will carefully scrutinise each government department’s plans, to make sure every possible site is made available for housebuilding. The Government will also encourage local councils to also make their unused land available for development.

This announcement follows the launch of the Government’s ‘Build Now, Pay Later’ initiative in March this year. Under this scheme, developers will be able to build homes on Homes and Communities Agency sites without paying for the land in advance. The first six sites being developed under this new scheme are in Hemel Hempstead, Basingstoke, Tower Hamlets, Northampton, Rushcliffe and Telford. It is anticipated that these developments will create up to 3,000 new homes.

The Government’s announcement is to be welcomed by housebuilders. As the Government holds a huge amount of land, it is right that it is now freeing this land up to help alleviate the housing shortage. It is hoped that the ‘Build Now, Pay Later’ scheme will also help struggling housebuilders to get their developments up and running.

After this date there will be a significant reduction in the annual investment allowance for qualifying expenditure which potentially could result in lost 100% up-front tax relief.

Claiming on the balance not covered by AIA at rates applicable to the general, special or short-life asset pools spreads the claim for tax relief over much longer periods.

Here is an example I’ve seen from accountants Smith & Williamson:

Using an example of a 30 June 2012 year end, the table below shows the effect of delaying expenditure until after 1 April 2012 or 6 April 2012 on the maximum amount of AIA claimable for that year.

Businesses need to consider more than just the availability of allowances when incurring expenditure, however this change in allowances is significant enough to justify very careful consideration of when to incur qualifying expenditure.

For more information, please email me on shimon.shaw@mablaw.com.

Cala had claimed that the Government’s intention to revoke the Regional Strategies could not be a lawful material consideration for local authorities when making decisions on planning applications. The Court of Appeal has rejected this claim.

This ruling is the latest in the long-running legal dispute between Cala and the Government, which stretches back to last year. Click here for full details.

Although Cala lost the appeal, the Court of Appeal praised the clarification that the case has brought to this contentious issue. Also, whilst finding that it would be wrong to say that the intention to revoke the Regional Strategies could never be a lawful material consideration when considering planning applications, the Court of Appeal qualified this by saying that it would only be in extreme cases when the intention to revoke would constitute a material consideration.

The ruling, therefore, leaves the door open for housebuilders to launch appeals over some planning decisions.

The 12-month Planning Guarantee, which is designed to speed up development and cut bureaucracy, will cover the “entire planning process”, including appeals made to the Planning Inspectorate.

According to the Home Builders Federation, it took on average 15½ months for housebuilders to be granted planning permission in 2008, so the Government is keen to reduce this timescale.

Mr Shapps also announced yesterday that the final details on the definition for ‘zero-carbon home’ will be made available shortly, and that the Government will not be creating a local standards framework, which would have allowed local authorities to choose their own local planning policies. This decision follows fears that devolving control to local authorities may actually increase regulation – something the Government is actively trying to cut across all sectors.

Cala Homes is challenging the Government’s claim that its intention to abolish the Regional Strategies should be considered by local planning authorities when ruling on planning applications.

Cala Homes, which successfully won a judicial review back in November 2010, was defeated in the High Court in February 2011 (click here for full details), but given permission to appeal the ruling.

The appeal began on 5 May and was expected to conclude today (6 May), with the decision reserved until a later date. I will post full details of the ruling in due course.

This environmental assessment will be “voluntary”, but the Government intends to produce one environmental report per region. It will then be consulted on, in line with the process laid down in the Environmental Assessment of Plans and Programmes Regulations 2004, in order to help local authorities identify issues relevant to their areas and policies or initiatives in the regional strategies which are no longer in effect.

The Government intends to abolish the regional strategies through the Localism Bill, and the environmental assessment process will be carried out during the Bill’s parliamentary progress.

The reforms, which were unveiled in the Localism Bill (click here for more details), are designed to give local people more of a say in the way their neighbourhoods are developed. Through local parish councils or neighbourhood forums, local people will be able to decide which types of development should be given automatic planning permission through a ‘Neighbourhood Development Order’ (NDO). If approved by a local referendum, a council will have to adopt a neighbourhood plan, providing it is line with the council’s wider ambitions for growth in the area.

Local authorities will work with community groups and parish councils in the 17 pilot neighbourhood areas to prepare draft plans and NDOs. These documents will be prepared under the current legal and policy framework, ahead of the new provisions for neighbourhood planning that will be introduced by the Localism Bill when it is enacted. (It is thought that the Bill will be enacted in late 2011 and will come into force in early 2012.)

The 17 ‘front-runners’ include both rural and urban areas. They are:

1. Birmingham City Council – Balsall Heath (Birmingham);

2. Bristol City Council – Lockleaze (Bristol);

3. London Borough of Southwark – Bermondsey;

4. London Borough of Sutton – Hackbridge;

5. North Tyneside Council – North Shields Fish Quay;

6. Wirral Borough Council – Devonshire Park;

7. Allerdale Borough Council – Cockermouth;

8. Blaby District Council – Blaby;

9. Cherwell Borough Council – Banbury;

10. Exmoor National Park Authority – Lynton;

11. Gedling Borough Council – Newstead;

12. Lewes District Council – Ringmer;

13. Northumberland County – Allendale;

14. Shropshire Council – Much Wenlock;

15. Teignbridge District Council – Dawlish;

16. West Dorset District Council – Cerne Abbas; and

17. Royal Borough of Windsor and Maidenhead – Bray.

Each of the 17 pilot areas will receive £20,000 towards developing their plan from a £1m fund.

The pilot areas will not be able to put their draft plans and NDOs into effect until the relevant provisions on neighbourhood planning in the Localism Bill come into force.

To address this, the Government announced in its Budget Report and Plan for Growth, which accompanied the Budget Report, that it will:

1. Introduce a new presumption in favour of sustainable development, so that the default answer to development and planning applications (that comply with up-to-date planning policies at a national and local level) is ‘yes’. The Government is expected to publish details of the presumption in favour of sustainable development in May 2011, including how it will be integrated into national planning policy;

2. Localise choice about the use of previously developed land, removing nationally imposed targets, which specify the levels of development that should take place on previously developed land, while retaining existing controls on greenbelt land, sites of special scientific interest, and areas of outstanding natural beauty. The Government views nationally imposed targets as preventing local communities from exercising choice in respect of local land;

3. Pilot a land auction model, beginning with public sector land. The Budget Report contains no details of the scheme but there are reports that it will involve local authorities asking landowners to submit a binding price at which they would be willing, for a fixed period of time, to sell their plot of land. The local authority would (1) have the right to buy that plot of land at the set price and grant planning permission, as appropriate, and then (2) auction the land to interested developers, whilst keeping any increase in the sale price. The Government intends to pilot the scheme on publicly-owned land within the next 12 months;

4. Introduce measures to streamline the planning applications and related consents regimes, removing bureaucracy from the system and speeding it up. This will include a 12-month guarantee for the processing of all planning applications, including any appeals. The Government will consult in summer 2011 on expanding permitted development rights to include further types of minor commercial development, and consult in autumn 2011 on further measures to streamline the information required to support planning applications. The Government will publish its first annual update on simplifying and streamlining measures in planning and development control in autumn 2011;

5. Ensure a fast-track planning process for major infrastructure applications through the Major Infrastructure Planning system. Major infrastructure applications will be determined within 12 months from the start of the inquiry to the decision; and

6. Consult on proposals to make it easier to convert commercial premises to residential. The Government will consult on a proposal to allow changes of use, without the need to apply for planning permission, to class C3 (residential) of the Town and Country Planning (Use Classes) Order 1987 from class B1 (business); class B2 (general industrial); or class B8 (storage/distribution).

 Also, in the Government’s Plan for Growth, the Government announced that it will:

1. Introduce new powers so that businesses are able to bring forward neighbourhood development plans and neighbourhood development orders, which deem planning permission to have been granted for specific development or specified classes of development within all or part of a neighbourhood area;

2. Introduce, through legislation, a duty on local authorities and public bodies to require them to co-operate on planning issues;

3. Produce a national planning policy framework to attain more development in suitable and viable locations; and

4. Establish up to 21 new Enterprise Zones, where economic growth will be encouraged through financial incentives and a more relaxed planning regime.

We will of course be closely following the implementation of these proposals and will be posting further updates on our website throughout the year.

The three-stage hierarchy in the definition of “zero carbon homes” comprises the following: energy efficiency, carbon compliance and allowable solutions. This Report deals with carbon compliance (i.e. the minimum level of on-site renewable energy generation or directly linked heat networks.)

The Report, which confirms the findings and recommendations of the Zero Carbon Hub’s December 2010 interim report, states the following:

1. Technical issues: The Government’s proposal to reduce carbon emissions for new homes from 2016 by 70 per cent against 2006 standards will not be achievable for many types of dwelling. This is because the main technology for on-site low or zero-carbon electricity generation – solar photovoltaic panels – is not suitable or sufficient for all sites;

2. Commercial issues: Housebuilders will have to meet the additional costs of compliance, and savings will have to be made through reductions in (1) land prices, (2) local authorities’ planning requirements, and (3) regulatory burdens. There are also the problems of new home purchasers being unwilling or unable to pay more for the property, and whether housing development schemes will remain commercially viable; and

3. Other issues: The Report stated the following:

a) It should not be necessary for each individual dwelling on a housing development site to achieve the carbon compliance limit, so long as the aggregate limit is achieved by the development as a whole. This will help to provide more flexibility;

b) The carbon compliance limit should apply to built performance (post-construction) and not designed performance;

c) The Government should take into account the weather assumptions it uses for carbon compliance. This is because regional weather patterns make a significant difference to actual carbon emissions from otherwise identical homes. At present a standard national weather assumption is used to demonstrate compliance; and

d) In the light of the Government’s commitment to ‘localism’, there should be no local power to set a different limit for carbon compliance or to make other related stipulations. However, the Report also provides proposals in the event that the Government decides to allow local powers.

NB: These recommendations do not relate to non-domestic property.

Conclusion

The Report highlights that the housebuilding industry must change significantly in order to achieve the carbon compliance standards. This will inevitably have an impact on all aspects of the housebuilding process, including planning, design, construction and energy products.

The Zero Carbon Hub has called on the DCLG to give a prompt response to its recommendations for carbon compliance, so that the housebuilding industry has sufficient time to prepare to meet the 2016 target for zero-carbon new homes in England.

It is very likely that fashionistas go through the same when column inches get devoted to which shoes go with which handbags and doctors cry into their corn flakes when they read about medicine fads.  However, since I know nothing about fashion (as my wife will confirm) or health (as my Mum will confirm) it just flows over me. 

The story goes that if you purchase property in an overseas company, you can avoid stamp duty.  My comments:

1. For UK resident tax payers buying their homes, they lose out on the capital gains tax relief on the sale of their homes.  They will sell shares and pay tax on the gains.  28% CGT is a lot more bothersome than 4 or 5% stamp tax.

2. It saves stamp duty on the sale but that’s not going to help the company which is purchasing now.

3. This has the potential to make administration a nightmare and there are annual directors fees etc.

4. There can be income tax charges on the use of the property if a market rent is not paid.

5. Most UK based future purchasers won’t want to buy a company so you’ve restricted your ability to market the property in the future.  And if purchasers buy the property from the company - you’ve just wasted time and a shed load of money.

6. If you are borrowing to purchase the property, you’ll have a much harder time and the cost of finance will increase.

etc…..

So who should consider buying a property in a overseas company?

First point – don’t do this without speaking to your tax adviser (or me!).  Second this is mainly of use to wealthy overseas investors.  There is inheritance tax planning which can really benefit from a structure involving an overseas property.  But that’s not stamp tax planning.

What’s funny about the article is that tucked away at the end is a comment from a partner in KPMG with which I mostly agree ” for anyone [other than a overeas investor], it’s a ticking time-bomb”.   If they had spoken to him before writing the article, perhaps they wouldn’t have bothered.

Full details of the High Court ruling and the background to the case are here.

Cala’s solicitors have said that the hearing is expected to take place in early May 2011.

This is a very important case for housebuilders and developers, and we will continue to provide details of any further developments, as and when they occur.

The result is that fewer empty non domestic properties will be able to claim property relief from business rates. With the current economic climate in mind many were hoping that the threshold would not be reduced. Unfortunately this is not the case.

Dom Buckley IRS Ltd v HMRC (2011)

The taxpayer did not account for VAT on the sale of a Ford rally car to a customer in Spain.  HMRC issued an assessment charging VAT on the sale, on the basis that this was a supply to a person in their personal capacity.  The taxpayer appealed, on the basis that the customer was a taxable person (i.e. in business).  On a review of the facts, the tribunal agreed with the taxpayer.

This case highlights the need for care in identifying who your customer is.  This is relevant especially when you are making supplies overseas since the identity of the purchaser will affect the rate of tax you charge.  The easiest way of determining whether or not someone is taxable is whether they are registered for VAT within the EU.  If you want to be sure then it is possible to check VAT registration here.

It is possible to be a taxable person without being registered for VAT so it is important to know the rules if you are involved in making overseas supplies.  The VAT rules on supplies within the EU changed last year and it is important to keep on top of changes to these developments.

On a separate (but connected) point, it seems that VAT fraud is on the rise, and that suppliers who are not registered for VAT are charging VAT e.g. on building works.  Essentially, they are upping the price by 20% and pocketing this as profit.  This is fraud against you and the Revenue.  Customers in doubt are advised to ask for details of VAT registration and either call HMRC or use the above link to check that it is real.

Clauses 94 and 95 of the Localism Bill deal with the proposed changes to the CIL, which allows local authorities in England and Wales to raise funds from developers undertaking new building projects in their area. The Bill proposes that:

1. Some of the CIL funds should be given back to the neighbourhood where the development is located;

2. CIL funds can be put towards the ongoing costs of infrastructure, as well as the provision of new infrastructure; and

3. Local authorities should be given more control over the setting of their own charging levels. However, Independent examiners will still decide whether the charging schedule is unreasonable, though the local authority in question will be able to decide how to make it reasonable.

In order to be selected for the CIL project (dubbed the ‘Front Runners Project’), the DCLG has said that interested local authorities should ideally:

1. Intend to submit their charging schedule for examination no later than Autumn 2011;

2. Have a proven track record of planning policy competence; and  

3. Have secured the necessary buy-in from corporate, finance and planning functions within the council.

The local authorities that are selected to take part will become some of the first to implement the revised CIL and will be expected to do it as soon as possible, though they will receive support from the Planning Inspectorate. These local authorities will then be encouraged to share learning and good practice across the local government sector.

The deadline for applications is 14 January 2011, with the Project expected to run until March 2011 (although the DCLG has suggested that this may be extended.)

The Bill, which aims to transfer more central government powers to local level, includes proposals to significantly reform planning law (see Part 5 of the Bill.)

This article looks at the Bill’s key proposals to shake-up planning law. Of course, the Bill is subject to parliamentary scrutiny, so these proposals may change.

The main proposals are:

1. Abolishing the Regional Strategies. There has been a lot of confusion and contention surrounding this issue. Click here and here for further details;

2. Amending the Community Infrastructure Levy (CIL). Local authorities will have more control over the setting of the CIL. They will have to allocate a proportion of the CIL revenues they receive from developers back to the local neighbourhoods where the development(s) have taken place. This will allow those most directly affected by development to benefit from it. For a related story on the CIL, please click here;

3. Restricting the role of the Planning Inspectorate. The Planning Inspectorate will be unable to re-write local plans, which guide development in local areas. Instead, the Inspectorate will be allowed to assess plans at a public examination, and will have to rule them “sound” before they can be adopted. Amendments will only be suggested at the request of the local authority. Local authorities will be able to suggest changes during the public examination, and will be forced to publish up-to-date information, so that local people can see what planning documents they are preparing;

4. Introduction of “neighbourhood plans.” The Town and Country Planning Act 1990 will be amended to introduce neighbourhood planning rights (“neighbourhood development orders”) that allow local communities to permit certain types of development without the need for planning permission. The idea is that parish councils and “neighbourhood forums” can come together to decide where new shops, offices or homes should be built in their area and what green spaces should be protected. All such developments will be voted on by local people in local referendums (more than 50 per cent of the vote is required to approve a development);

5. Abolish the Infrastructure Planning Commission (IPC). This will mean that government ministers will take decisions on nationally significant infrastructure projects, such as airports and wind farms;

6. Duty to co-operate. The Planning and Compulsory Purchase Act 2004 will be amended, so that local authorities and public bodies have to co-operate with each other in relation to the planning of sustainable development. This includes the preparation of development plan documents;

7. Pre-application consultation. Developers will be required to consult the local community before submitting a planning application for a large development – the Government has suggested that this could be, for example, a residential development of more than 200 units. Developers will have to take into account any opinions raised during this consultation before submitting their planning applications; and

8. Enforcement. Local authority planning enforcement powers will be improved. The Bill will tackle abuses such as making misleading planning applications, and running retrospective planning applications and enforcement appeals simultaneously. Other enforcement measures include increased financial penalties for planning-related offences, and the extension of time limits for taking action against people who conceal unauthorised development. 

The Bill raises a huge number of issues (and questions) and will have significant implications for local authorities and developers.

Although the Government says that the Bill is not a “Nimbys’ charter”, developers will need to get local people to embrace development in their areas.

In light of the proposed new local referendums and pre-application consultations, developers will need to be able to influence local residents, persuading them of the merits of their schemes and proposals. Developers may also find themselves having to collaborate with third parties on the design of a development.

It will be interesting to see how the definition of “neighbourhood” in the Bill develops, as it could constitute a small or large number of people, meaning that a vote on a potential development may be decided by only a few local people.

The Second reading of the Bill is scheduled to take place in the House of Commons on 13 January 2011. We will update you with any significant developments during the Bill’s parliamentary progress.

In November, I wrote that, following a judicial review launched by Cala Homes (South) Ltd, the High Court had ruled that the revocation of the Regional Strategies was unlawful and that the High Court had put a temporary block on the Government’s guidance – published in a letter to all local planning authorities (LPAs) – that its plans to abolish the Regional Strategies must be regarded as a material consideration when making planning decisions. The temporary block will stay in place until the full legal hearing into the lawfulness of the revocation is heard in early 2011.

In the wake of the High Court ruling, the Planning Inspectorate has issued a statement, informing LPAs and planning inspectors that:

1. The Government is defending the judicial review challenge issued by Cala Homes (South) Ltd; and

2. Until the outcome of the aforementioned judicial review, LPAs and the Planning Inspectorate will need to consider whether the existence of the legal challenge and the basis of it (i.e that the Government’s intended revocation of the Regional Strategies in the forthcoming Decentralisation and Localism Bill is immaterial to the determination of planning applications and appeals before the revocation of Regional Strategies) affects the significance and weight that they should attach to the Government’s statements and guidance.

UPDATE:  The Localism Bill will be published on Monday 13th December. The news was announced on Twitter last night by the Communities secretary Eric Pickles. Mr Pickles tweeted “Localism Bill will be introduced next Monday. Lots of power to Councils.” We will analyse the content (and potential implications) of the Bill in due course.

UPDATE (Feb 2011): Cala Homes (South) Ltd has lost its High Court challenge against the Government’s claim that its intention to abolish the Regional Strategies should be considered by local planning authorities when ruling on planning applications. Click here for full details.

This announcement follows a recent successful legal challenge by Cala Homes (South) Ltd, which resulted in the High Court ruling that the Communities and Local Government Secretary, Eric Pickles, had acted unlawfully when he announced the revocation of the Regional Strategies in England back in May (further details are here.)

Despite the High Court ruling, Mr Pickles and the Government’s chief planning officer wrote to all local planning authorities (LPAs), informing them of the Government’s intention to still abolish the Regional Strategies in the forthcoming Decentralisation and Localism Bill, and that LPAs should regard this as a material consideration when making planning decisions. Cala responded by making a further application to the High Court, challenging the lawfulness of this Government statement and asking for the letter to be withdrawn.

The application has now been expedited, pending a full legal hearing into the lawfulness of the Government’s statement, which will probably be sometime in early 2011. As a result, until the outcome of that hearing, no regard should be given to the Government’s intention to abolish the Regional Strategies.  

The situation remains unclear: the Regional Strategies may have been reinstated, but they are still due to be scrapped (the Decentralisation and Localism Bill is expected to be issued in December.) Also, the current situation increases the possibility that there will be a number of legal challenges to planning decisions that were made on the basis of Mr Pickle’s advice that LPAs should act as though the Regional Strategies had already been scrapped (even though they hadn’t been.)

One thing is clear: confusion reigns.

UPDATE (Feb 2011): Cala Homes (South) Ltd has lost its High Court challenge against the Government’s claim that its intention to abolish the Regional Strategies should be considered by local planning authorities when ruling on planning applications. Click here for full details.

In the consultation paper, the Government proposes to:

1. Decentralise the setting of planning application fees, so that the responsibility is passed to local planning authorities (LPAs); and

2. Widen the scope of planning application fees, so that LPAs can charge for more of their services.

Under these proposals, LPAs would be able to:

1. Set their own fees;

2. Charge higher fees for retrospective applications; and

3. Charge for resubmitted applications following withdrawal or refusal.

But they will not be able to make a profit on fees (though they will be able to recover the actual cost of submitting a planning application.)

The decision to consult on this issue stems from concerns that local authorities are unable to recover the true costs of planning applications because of the fixed fee charging system, which is set by the Government. This has meant that, in a number of cases, taxpayers’ council tax bills have risen, as local authorities try to make up any shortfall.

The consultation closes on 7 January 2011.

If the proposals are taken forward following the consultation, local authorities will be able to set their own fees from April 2011, with a six-month transition period until October 2011. During the transition period, local authorities will be able to use the current fees set by central Government, though these will be withdrawn in October 2011.