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.

Option 1

You can elect to make a stamp duty payment on completion – at the relevant rate – on the whole value of the property (i.e. the current rate on a £250,000 property is 1 per cent and therefore a payment on completion of £2,500.) This option means that should you purchase further shares in your property, usually known as staircasing, you will not have to make any further stamp duty payments.

Option 2

Your other option is to elect to make a stamp duty payment – again at the relevant rate – on the share you are purchasing (i.e. the current rate on a purchase of a £100,000 share is 0 per cent and therefore no stamp duty would be payable on completion.) This may seem the more attractive option to take but if you have plans to purchase further shares in your property, those transaction(s) may attract stamp duty at the relevant rate in the future.

As we know, the first-time buyer stamp duty tax relief comes to an end on 24 March 2012 and consequently many first-time buyers are hurrying to take advantage of electing option number 1, as they can still seek the relief at 0 per cent up until this date.

It is always essential that you ask your solicitor about all the options open to you, so that you ensure you choose the best option for you!

The statement included further details of the NewBuy Guarantee scheme, which was initially announced as part of the Government’s Housing Strategy, and is expected to become available from Spring 2012. Further details on the scheme are available here.

The NewBuy Guarantee scheme, which has been developed jointly by the Home Builders Federation and Council of Mortgage Lenders, aims to assist buyers to buy a new-build home if they have a deposit of at least 5 per cent. The scheme will allow eligible borrowers to secure up to a 95 per cent Loan-to-Value mortgage on new-build houses and flats from participating builders in England. All mortgage lenders and house builders have been invited to sign up to the scheme. Further details are here.

The Government is supporting the scheme to help those home buyers who are unable to purchase a property because they do not have a large enough deposit.

The scheme applies to new-build residential properties (priced up to £500,000) that are being sold for the first time or for the first time in their current form. The scheme is for primary ownership only and is not available for shared ownership, shared equity purchases, second homes, investors, or buy-to-let. To be eligible for the scheme, purchasers must be UK citizens or have a right to remain indefinitely in the UK.

The Government anticipates that the scheme will help 100,000 households buy a new home.

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.

Following on from the Government’s recent introduction of a new-build indemnity scheme to help purchasers of new-build properties who are struggling to obtain a mortgage, the Council of Mortgage Lenders has said that over the past few months it has received a “steady trickle” of enquiries from local councils who want to be able to offer mortgages to local residents.

But are local councils really able to offer mortgages?

Well, actually yes. Despite what most people may think, local councils are able to offer mortgages without having to register with the Financial Services Authority, which regulates mortgage lending.

And they used to be popular.

During the 1960s, 1970s and early 1980s, thousands of homeowners had mortgages with their local councils. Local councils were able to offer cheap mortgages, mainly because they could borrow money at rates that were only slightly higher than those available to the UK Government; however, by the mid-1980s these loans became less attractive when mortgage finance became more readily available from banks and building societies.

And it also appears that established lenders are prepared to work with local councils in offering mortgages.

In March this year, fifteen local authorities across the UK agreed to put money into a Lloyds TSB scheme – entitled Local Lend a Hand – to increase the deposits of first-time buyers trying to buy a home in their areas; in some cases, first-timers have been able to buy a home with a deposit of as little as 5 per cent.

Borrowers can be rest assured that if they take out a mortgage with their local council and fall into arrears, the local council must uphold the FSA’s Treating Customers Fairly requirements (as any bank or building society would have to.)

Whether the local council mortgage makes a full national comeback remains to be seen, but for homebuyers in certain parts of the country it could be a viable option.

The introduction of a new-build indemnity scheme, aimed at increasing the supply of affordable mortgage finance for new-build homes will be welcomed by cash-strapped first-time buyers with little savings. The scheme will be available to all potential buyers, subject to appropriate mortgage underwriting criteria, except buy-to-let investors and second home owners.

Under the scheme, homebuyers will be able to purchase a new-build house or flat with only a five per cent deposit. Housebuilders and the Government will contribute up to 95 per cent of the cost of the home to an indemnity fund, which will be used to pay out to a lender if a buyer defaults and where there is a shortfall if the property is repossessed.

The scheme is open to all housebuilders and all lenders operating in England. Mortgages will be available under the scheme from March 2012.

According to the Government, the following lenders have agreed in principle to participate in the scheme: Barclays, HSBC, Lloyds Banking Group, Nationwide, RBS, Santander and Yorkshire and Clydesdale Banks.

The Government has also confirmed that more than 25 homebuilders have agreed in principle to participate in the scheme: Barratt Developments, Crest Nicholson, McCarthy and Stone Retirement Lifestyles, Bellway, Fairview New Homes, The Miller Group, Bloor Homes, Galliford Try, Persimmon, Bovis Homes Group, Gladedale Group, Redrow, Taylor Wimpey, Antler Homes, Grainger, Stewart Milne, Aquinna Homes, Jones Homes, Places for People Group, Banner Homes Group, Morris Homes, Strata Homes, CALA Group, Nicholas King Homes, Urban Renaissance Villages Ltd, Croudace Homes Group, Octagon Developments, William Davis, and Heyworth Developments

Also, social housing tenants will encouraged to buy their homes after the Government offered them up to a 50 per cent discount under the Right-to-Buy scheme.

However, as expected, the Government confirmed that the stamp duty land tax relief for first time buyers will end on 24 March 2012, as planned. The loss of this relief is disappointing. Although the Government said that the relief had been “ineffective” in increasing the number of first-time buyers entering the property market, it is highly probable that there would have been fewer first-time buyers if it hadn’t been in place.

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.

New figures show that government-owned land could be used to deliver 83,500 new homes, instead of the previously announced number of 50,000.

Earlier this year, the Government announced that it would build up to 100,000 new homes on public land by 2015 under the ‘build now, pay later’ scheme. Under this scheme, developers do not have to pay for the government-owned land they are building on until the homes are complete, thus easing pressure on cash flow. Click here for further details of this scheme.

A further announcement on brownfield site release is expected to be announced by the Government in its housing strategy, which is due to be published later this month and before the Chancellor of the Exchequer’s Growth Review on 29 November 2011.

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.

In the consultation paper, entitled Technical reforms of council tax, the Government sets out a number of practical proposals which it believes will help local councils keep overall council tax levels down for ordinary people. One of these proposals suggests giving local councils the flexibility to remove council tax relief on second homes and empty homes.

At present, council tax discounts on second homes range from 10 to 50 per cent, depending on where the property is situated. There are a range of discounts of up to 100 per cent for empty homes. However, the Government has made it clear that it has no plans to change the rules on council tax relief for homes that are left empty due to “special circumstances” (e.g. because a person has moved into a hospital or care home, has died, or has moved out to provide care to another person.)

The consultation also includes proposals to review the “double taxation” of self-contained annexes to family homes (e.g. ‘granny annexes’.) Currently, council tax inspectors treat such annexes as a separate property, meaning families get charged twice for the same single property they occupy.

The consultation closes on 29 December 2011.

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.

Well, the county of Cornwall will shortly launch a scheme of its own.

Their scheme is similar to FirstBuy, but is tailored to Cornwall only. Rather than seeking contributions from developers through section 106 agreements, Cornwall Council will offer the developer the option to sell homes at a discount of up to 40 per cent. This discount will then be passed over to the Council as an equity loan to the purchaser. (First-time buyers would have to take out a mortgage to cover the rest of the cost.) When the home is eventually sold, the Council would be repaid this percentage of the market value by the homeowner. This money will then be used to help other purchasers in the county.

The Council has said that the new scheme will also enable small and local developers to get involved (rather than just volume housebuilders, who are predominantly used in the FirstBuy scheme.)

Any scheme to help first-time buyers and housebuilders should be supported, and Cornwall Council is showing that local authorities can get involved in helping local people.

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.

In the paper, the RICS suggests that a home’s sustainability features should be reflected in its market value. Consequently, when assessing a property, residential property valuers will need to be fully aware of both sustainability policy and each building’s “sustainability characteristics”, such as its energy efficiency rating; the materials used in its construction; its energy-efficient features; its proximity to public transport links; and its potential to be adapted to occupiers’ changing needs in the future.

The launch of the paper indicates that sustainability is likely to become an increasingly important factor in residential property valuation.

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.

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.

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.

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.

Through FirstBuy, the Government and housebuilders will jointly offer a 20 per cent equity loan to eligible first-time buyers to help them purchase a new-build property. The first-time buyer will then have to provide a five per cent deposit and obtain a 75 per cent mortgage on the rest of the property. The loans will need be repaid on the resale of the property.

Mr Shapps has now confirmed that over 100 housebuilders will take part in the FirstBuy scheme, by offering their new-build homes for sale to first-time buyers. A full list of these housebuilders is available here (Excel Spreadsheet.) The Government has also confirmed that the Halifax, Nationwide, Barclays, and The Melton Mowbray Building Society will be offering loans on these purchases.

This scheme is to be welcomed by both first-time buyers and housebuilders who have struggled in the recession. It will particularly benefit those buyers who can afford the monthly mortgage payments on a property, but who have been unable to purchase a house because they simply haven’t saved enough money to put down a 10-20 per cent deposit. To find out if you are eligible to take part in the scheme, please click here.

The first homes are expected to become available in September 2011.

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.

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 Zero Carbon Homes standard will apply to the building of all new homes that are started after 2016. However, the Housing minister Grant Shapps has made clear that housebuilders will only have to ensure that emissions from the homes themselves (e.g. those from heating, ventilation, hot water, fixed lighting and building services), as covered by the Building Regulations, are reduced to zero; housebuilders will not be responsible, as had been suggested in the past, for emissions from household appliances used in the house  - or, as Mr Shapps said, housebuilders “should not be responsible for the amount of television the families who buy their homes watch or the number of cups of tea they make each day.”

Mr Shapps also said that in order to “deliver a realistic and effective approach to zero carbon”, the Government would:

1. Include “tough” standards for fabric energy efficiency (e.g. insulation, glazing) in any future changes to the Building Regulations;

2. Consult on the Zero Carbon Hub’s recommendations on the levels for other on-site carbon reduction levels; and

3. Work with the housebuilding industry on options for a regime for off-site measures (e.g. community energy schemes.)

Mr Shapps concluded his announcement by saying that the Government had succeeded in “nail(ing) down a definition for zero carbon homes”, whilst not “piling unfair costs on housebuilders.” 

Although there is still more work to be done on the definition of “zero carbon homes”, it is thankfully becoming clearer. Housebuilders will welcome the Government’s decision to exclude emissions from domestic appliances.

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.

The covenant stated that:

“….for the benefit of the adjoining land of the vendor on the west and south sides of the land conveyed, that no building shall be erected on the [land]….”

In October 2006, the Local Authority granted detailed planning permission for residential development in the area. Wimpey commenced works on the land and in May 2007. Wimpey received a letter from the solicitor acting for various people claiming the benefit of the covenant, asking them to stop works on the land on the basis of the covenant.

Proceedings were commenced in 2008 on various grounds, including loss of value and privacy  to properties, risk of flooding, the proposed use was not reasonable even though planning permission had been granted, and it would set a precedent for further modification of the covenant. Wimpey claimed that the practical benefits of the covenant were not of substantial value and that money would be an adequate compensation for the loss and any disadvantage suffered by those with the benefit of the covenants. In addition, Wimpey claimed that the character of the area would not change as a result of the development.

Decision:

The Lands Tribunal decided that it had no power to modify the covenant as Wimpey had failed to make out the grounds in section 84(1)(aa) LPA 1925 (i.e. the covenant impedes some reasonable use of the land and either does not secure any practical benefit of substantial value or advantage, or is contrary to public interest, and money would not be adequate compensation to anyone suffering loss or disadvantage from the discharge or modification of the restriction.)

The Lands Tribunal said:

1. The proposed development was reasonable since the proposed density of the development was only slightly more than the local authority planning inspector’s report;

2. The practical benefits to the objectors were of substantial value and advantage, as their properties were currently overlooked only in a limited way and now enjoy outstanding views over open land to hills in the distance. If the development proceeded  the properties would become suburban in character with the attendant loss of views and privacy;

3. Wimpey had failed to show that increased flooding was not due to their other developments in the area; and

4. the objectors were justified in objecting on the basis that the proposed modification would prove to be a precedent for further modification of the covenant and would allow further development

As such, the covenant was of practical benefit to the objectors by allaying their reasonable fears about increased flooding and high density development. Such benefits were of substantial value.

Comment:

Developers should note this decision, since even though the Land Tribunal’s power to modify a covenant is discretionary, the developer in this instance failed to show that the covenant impeded a reasonable use of the property. Indeed the Lands Tribunal made it clear that they would not have exercised their discretion even if the developer had successfully claimed under section 84(1)(aa) LPA 1925. The developer had ignored the covenant and the objections of the locals in the hope that by altering the character of the land, the Lands Tribunal would allow the development, and it would have been unreasonable for the developer to benefit from ignoring their legal obligations.

The consultation paper, Relaxation of planning rules for change of use from commercial to residential, includes proposals to amend the Town and Country Planning (General Permitted Development) Order 1995, so that it will be permissible to allow a change of use from Class B (business and industrial uses) to Class C3 (dwelling houses) without having to obtain planning consent.

Under these proposals, more land would become available for housing, by permitting empty commercial buildings to be converted into new homes. This move follows the Chancellor’s announcement in his recent Budget that the Government would consult on proposals to increase the categories of changes of use that can be made without the need to apply for planning permission.

The consultation paper seeks views on a number of areas, including:

1. Whether a change from use class B1 (offices, research and development, and light industry) to C3 (dwelling house) should be allowed without express planning permission (subject to effective measures being put in place to mitigate the risk of homes being built in unsuitable locations);

2. Whether a change of use from classes B2 (general industrial use not within class B1) and B8 (storage and distribution) to C3 should be classed as permitted development (subject to effective measures being put in place to mitigate the risk of homes being built in unsuitable locations); and

3. Whether current permitted development rights that allow a change from class A1 (shops) and A2 (financial and professional services) to a mixed use (including one residential flat) should be widened to allow for more than one dwelling.

The consultation paper also asks for comment on whether the Government has identified all the possible problems/issues that could arise from widening permitted development rights, and what measures might be needed to mitigate against those problems.

The closing date for responses is 30 June 2011.

In the recent Budget, the Chancellor announced that the Government was setting up a new scheme - FirstBuy - which will see the HCA and developers provide loans to eligible first-time buyers, to help them purchase a new-build home and thus get a first foot on the property ladder.

Through the scheme, the Government hopes to help more than 10,000 first-time buyers to buy a new home over the next two years. At the same time, the scheme aims to maintain capacity in the housebuilding industry.

The Prospectus outlines the criteria against which the HCA will assess offers from developers who want to take part in the scheme, including deliverability, the type of property, standards and price. Under the scheme:

1. Eligible first-time buyers will be offered an equity loan of up to 20 per cent of the purchase price. This will be funded equally by the HCA and the developer. The buyers will therefore need to provide at least 80 per cent of the purchase price;

2. The scheme is available to households earning less than £60,000 a year;

3. The maximum property price is expected to be £280,000 (or £300,000 in exceptional cases);

4. The buyer’s mortgage will be secured as a first charge on the property. The HCA and developer will take a second charge over the property;

5. The equity loan will be interest-free for the first five years. From the sixth year, an annual fee of 1.75 per cent will be payable in monthly instalments. This fee will be increased annually in line with the Retail Prices Index, plus 1 per cent; and

6. Each equity loan term is 25 years, but repayment is required on sale of the property.

Full details of the scheme are in the Prospectus.

The HCA is now inviting bids from developers who want to offer new-build properties to eligible first-time buyers. Bidders will be asked to provide anticipated start and completion dates for building schemes and the anticipated dates of unit sales. Developers who offer early build completion dates will score more highly. The Government will not support any schemes which are due to be completed after December 2012. The closing date for bids is 19 May 2011.

The HCA intends to enter into the first contracts with developers by July 2011 and expects the first homes to be available for purchase in August and September 2011.

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.

1. Assistance for first-time buyers

The Government announced that it will provide £250m to support first-time buyers in purchasing new-build properties. The FirstBuy programme will assist over 10,000 households by providing equity loans of 20 per cent of the cost of relevant properties. These loans will be jointly funded by the Government and housebuilders. The purchaser will have to provide a 5 per cent deposit.

2. Reform of the rules governing bulk purchases of residential property

The Government will use the Finance Bill 2011 to introduce legislation that provides stamp duty land tax (SDLT) relief for residential property purchasers who acquire interests in more than one dwelling from the same seller. This means SDLT charges will be based on the average value of the multiple properties, rather than the value of each individual home. A minimum SDLT rate of 1 per cent will apply.

The Government hopes that this relief will encourage investment in residential property and promote the supply of private rented housing.

3. Withdrawal of disadvantaged area relief

The Government has announced that SDLT and stamp duty relief for land transactions in disadvantaged areas will be abolished after 2012. The final date for abolition will be decided following consultation.

4. First-time buyer SDLT relief

The Government will announce the outcome of its review of first-time buyer SDLT relief in autumn 2011. Currently, first-time buyers can claim a relief from SDLT if the amount they paid for the residential property does not exceed £250,000.

5. Extension of the Support for Mortgage Interest scheme

The Government will extend the Support for Mortgage Interest (SMI) scheme until January 2013. SMI is currently available after 13 weeks at 100 per cent of eligible mortgage interest on mortgages of up to £200,000. This benefit was due to end in January 2012.

If you have any queries about the SDLT changes, particularly those made to bulk house purchasing (which will be welcomed by the property industry), please contact my colleague Shimon Shaw, who specialises in this area, at shimon.shaw@mablaw.com.

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.

There are some exclusions to this and the new rate will not apply to purchases after the 6th April where contracts were not entered into before the 25th March 2010, on the proviso that contracts entered into before this date have not been subsequently varied or assigned.

The new rate also only applies to entirely residential property and, for example, would apply in the case of the purchase of part of garden land, but would not apply in the case of the purchase of farm land where there is a farm house on the site.

One school of thought is that those buyers purchasing at the high end of the market are not going to put off by the 1 per cent hike and that the increase will make no difference to demand for property at the top end.  Jack Jones of Investec Specialist Private Bank has said that “the high-end property market appears to be quite robust to adverse changes in tax”, whilst others, following the budget in March 2010, have said that the unexpected hike in the stamp duty on more expensive properties would knock confidence in the property market and do very little to assist the Government’s finances.

The Government’s belief is that the move will go a long way in order to fund the deficit created by increasing the stamp duty threshold for first-time buyers from £125,000 to £250,000. It is thought that this incentive will cost the Government £160m over the first three years, as the extra revenue from the 5 per cent tax fails to fund the shortfall from the stamp duty holiday. However, as the stamp duty holiday was proposed to only last for two years and the new 5 per cent tax is indefinite, it is expected that long-term the Government will benefit from the increase in duty.

It is difficult to foresee exactly what will happen and whether the increase in stamp duty will make a material difference to the housing market, as the number of houses purchased in this bracket is somewhat smaller than properties purchased at the lower end of the scale. Some people have predicted that the rise in stamp duty for very expensive properties will lead to an increase in avoidance.  It will certainly be interesting for home buyers, the Government and the economy as to how the housing market will evolve as a whole.

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.

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 publication of the final scheme design follows last November’s consultation on the New Homes Bonus scheme (click here for further details.)

The final scheme design confirms that:

1. The affordable housing definition used for the scheme will be the one set out in Appendix B of Planning Policy Statement 3 (see page 17 of the final scheme design);

2. The New Homes Bonus scheme will apply to homes brought back into use as well as new homes. This fulfils the Government’s pledge in its Coalition Agreement to help bring empty properties back into use;

3. In two-tier authority areas, 80 per cent of the bonus will be paid to the lower tier and 20 per cent to the upper tier, as a starting point for local negotiation. In London, 100 per cent of the bonus will go to the London borough.

4. The New Homes Bonus will be paid alongside the local government finance timetable and it will not be ring-fenced. This means that provisional allocations will be announced in early December and final allocations in early February; and

5. The Council Tax Base Form will be used to calculate increases in housing stock.

However, the final scheme design (and housing minister Grant Shapps in particular) have received criticism from all sides. Developers have complained that the scheme does not go far enough, whilst the Campaign to Protect Rural England has claimed that moves to financially incentivise councils to build more homes could be unlawful. It has suggested that any planning permission given for new housing that is linked to the new homes bonus could conceivably be overturned in a judicial review.

The last thing that developers need is more uncertainty, so it is essential that the Government clarifies the situation as soon as possible.

The Green Deal, which is included in the Government’s Energy Bill, will allow homeowners and businesses to take out loans to improve the energy efficiency of their properties (e.g. through cavity wall/loft insulation, heating and lighting improvements.) The loans will be paid back over a fixed period through the savings that the property owner makes on his or her heating and fuel bills.

However, many people are unaware of this scheme, and a new CBI survey has suggested that three-quarters of the general public do not even consider the energy efficiency of a property when buying or renting a home. The CBI’s concerns and recommendations for making the Green Deal work can be read here.

There have been some other developments in February concerning the offering of greater financial incentives to make the Green Deal more appealing:

1 February: The Housing minister Grant Shapps said that the Government may extend the Green Deal scheme for energy efficiency improvements to new-build homes (rather than just existing homes.) He said that the Government would consult with the housebuilding industry on how the scheme could be adapted to help housebuilders meet the costs of building a zero-carbon home. Housebuilders have indicated that they would be keen to use Green Deal money to make zero-carbon housing developments more viable.

14 February: The Financial Times newspaper reported that that the Chancellor of the Exchequer, under pressure from the Department of Energy and Climate Change (DECC), is considering giving homeowners a rebate on stamp duty in return for them joining the scheme and making their properties more energy-efficient. This move, which could be announced in the spring Budget, has been backed by a number of companies and organisations, including Marks and Spencer and the British Retail Consortium. The CBI has also admitted that changes to stamp duty may be necessary in order to encourage take-up of the scheme.

Further details of the Green Deal scheme (including the financial benefits to property owners) are here.

The Energy Bill does not contain any provisions that force landlords of both domestic or non-domestic properties to sign up to the Green Deal and make energy efficiency improvements; however, the Bill does contain powers for the Secretary of State to create regulations at a future date should it be deemed necessary.

The Energy Bill is currently being debated in the House of Lords, with the DECC anticipating that it will be consulting on draft secondary legislation for the implementation of the Green Deal in autumn 2011.