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 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.

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.

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.

The ICO’s consultation document can be found here: http://www.ico.gov.uk/about_us/consultations/our_consultations.aspx.

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.

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.

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.

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.

Having made the first serious mistake, the Council was criticised by the ICO for then failing to implement sufficient training and procedures before two further mistakes occurred. One involved distributing confidential personal data to people who had subscribed to the Council’s newsletter, and in the other a family support worker sent an email with sensitive personal data to the wrong email group.

This is the largest fine since the ICO acquired the right last year to fine data controllers up to £500,000 for serious breaches of the Act.

Under the FOIA a person can request details from a public authority as to whether the public authority holds certain information and, if so, to have that information disclosed to them. Under the FOIA such information is exempt from disclosure if disclosure would contradict any of the data protection principles.

In this case, the All Party Group asked for information from the Ministry of Defence regarding treatment of people detained at war in Afghanistan and Iraq. The Upper Tribunal ruled that the disclosure of anonymised personal data could not for the purposes of FOIA be considered the processing of personal data as the recipient would not be able to identify any of the persons to whom the data related, and as such the data protection principles did not apply. This was despite the fact that the discloser still owed the people whose data was anonymised duties as data controller under the DPA.

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.

Four years (from the date of substantial completion) in respect of unauthorised building, engineering, mining or other operations in, on, over or under land (section 171B(1), Town and Country Planning Act 1990 (TCPA 1990));

Four years (from the date of the breach) in respect of the unauthorised change of use of any building to use as a single dwelling house (section 171B(2), TCPA 1990); and

Ten years (from the date of the breach) for any other breach of planning control (section 171B(3), TCPA 1990). This includes:

1. A material change of use (other than a change of use to a single dwelling house); and

2. A breach of a planning condition (except a condition relating to use as a single dwelling house

In this case, a landowner (L) obtained planning permission to erect a barn on green belt land subject to a condition that the barn be used only for the storage of hay, straw or other agricultural products. The building was constructed between January and July 2002 and looked like a barn externally, although internally was fitted out as a house. L moved into the building on 9 August 2002 and applied for a Certificate of Lawfulness of Existing Use or Development (CLUED). A CLUED would be conclusive as to the existing use and any works that have been carried out on the land being lawful. The council refused on the basis that the building was not a house and L had not lived there for 4 years.

L confirmed to the planning inspector that he had deliberately deceived the council when applying for planning permission and he had always intended to use the building as a house. The planning inspector granted the CLUED.

The council appealed and the High Court overturned the planning inspector’s decision.

L appealed to the Court of Appeal who allowed L’s appeal.

The council appealed to the Supreme Court.

Decision

The Supreme Court allowed the council’s appeal on the basis of the following:

1. There had been no change of use because the building was not constructed as a barn but as a house. The court doubted whether there could be a change of use under section 171B(2) where there was a departure from the permitted use without there being any actual prior use.

The court also rejected the idea that there was a change of use from ‘no use’ to ‘residential use’. The building had been built to live in and L was about to move in. The court had to consider how a building was used long term in order to establish if  a building was in use;

2. L could not rely on section 171B(2) because of his dishonest conduct. The court looked at the principle that statutes are construed to the effect that no one should be allowed to profit from his own wrongdoing, unless there is a contrary intention in the statute. The court considered that it would frustrate the policy of section 171B(2) if the time limits for enforcement were to apply, where the owner has made a deliberate misleading statement. Parliament would not have intended such outcome; and

3. L’s deception did not at the time constitute a criminal offence; however, it would now be an offence under the Fraud Act 2006. L’s deception undermined the planning process and the council could seek to enforce not only on the basis of section 171B(2), but also 171B(1) by invoking the public policy argument.

Comment

The court found that there was no relevant change of use; however, the case also highlights the principle that statutes should be construed to the effect that no one should be allowed to profit from his own wrongdoing. The Localism Bill proposes a new section 171B to deal with issues of concealment such as in this case.

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.

However, the Information Commissioner – the regulator in charge of regulating data protection issues in the UK – has criticised the move. He argued that there would be confusion caused by the overlap between his role and the new regulator. He also queried why the new code would only apply to local authorities and police rather than the private sector, especially when so many of the car parks are monitored by private companies that provide services for the public sector.

Paul Gershlick, a Partner at Matthew Arnold & Baldwin LLP and editor of Upload-IT, comments: “It is clear from the fines that the regulator has issued since the introduction of their new powers to fine £500,000 for serious breaches of the Data Protection Act, that they are looking to clamp down on unencrypted laptops, even if they are password-protected. This happens a lot. What should concern anyone that processes data about people is the way in which the regulator also seems happy to dish out fines to organisations that use other service providers to help with the processing of their data. This may apply to anyone who has a website hosted, outsources payroll, or any other outsourced service.”

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 High Court ruled against Amberley. The Court of Appeal (CA) has now dismissed Amberley’s appeal. The CA considered whether the parties intended to grant Amberley such a unilateral right, and noted that unilateral variation clauses are enforceable, even if they are detrimental to the other party. However, those clauses had to be clearly drafted in order to be enforceable. In this particular clause, the CA took a narrow interpretation as the wording was not clear enough for what Amberley had wanted. The CA ruled that Amberley only had the right to ‘review’ the rents as costs increased and not impose a unilateral increase. The contract gave no indication of what such a review would involve, who would perform it, how often or on what basis. The CA thought the contract meant that Amberley would conduct the review but if it wanted to increase rents following the review, it needed to get a resident’s approval before doing so.

This is an important case for businesses to be aware of. If a unilateral clause is intended, then the clause should state this specifically. Otherwise, there is a risk the courts will give the clause a narrow interpretation and rule that it is not unilateral.

This decision follows months of uncertainty. In August 2010, Cala Homes launched a legal challenge to the Government’s decision, and in November 2010 the High Court ruled that the abolition of the Regional Strategies was unlawful. Despite this ruling, the Communities and Local Government Secretary, Eric Pickles, and the Government’s chief planning officer wrote to all local planning authorities, informing them of the Government’s intention to still abolish the Regional Strategies in the Localism Bill, and that planning authorities should regard this as a material consideration when making planning decisions. This stance was subsequently legally challenged by Cala Homes and although the High Court granted a temporary stay on this government guidance, Mr Pickles contested the decision. A compromise was reached, with the Department for Communities and Local Government having to formally publicise the existence of Cala Homes’ second legal challenge.

The High Court has now rejected Cala Homes’ second legal challenge.

The Court ruled that Cala Homes’ challenge was “based on an incorrect understanding of what the Secretary of State has actually done.” It said that Mr Pickles had “not enjoined local planning authorities to assume that Regional Strategies have already been revoked”, but had in fact “advise(d) authorities, when making decisions to which such regional policy is relevant, to take into account the fact that the Government intends to promote, through legislation, a reform of the existing planning system in England, the effect of which would be to remove Regional Strategies as an element of the development plan.”

This ruling means that planners can take into account the Government’s intention to abolish the Regional Strategies. However, this may not be the end of the saga… Cala’s solicitors have said that they will be seeking permission to appeal the ruling at the Court of Appeal.

A developer, Millgate Homes (M), had applied for planning permission from Wokingham Borough Council (W) to build 14 homes. W refused the planning permission after an Officer’s Committee Report concluded that the proposed development was inappropriate to the character of the surrounding area and would attract financial contributions to local infrastructure.

M entered into a unilateral undertaking, pursuant to s.106 of the Town and Country Planning Act 1990, agreeing to make the necessary financial contributions. It then appealed the decision to the planning inspectorate.  

M’s appeal was successful and conditional planning permission was granted. However, the planning inspectorate noted that W had failed to show that financial contributions were necessary in order to satisfy planning policy. Consequently, M requested that W discharge the unilateral undertaking, but W refused, stating that the opinion of the inspectorate did not affect the enforceability of the undertakings. M sought a judicial review of W’s refusal to discharge.

The High Court, ruling in W’s favour, stated that M’s universal undertaking was legally enforceable: it had been entered into voluntarily, without any condition that the obligations should only take effect if a planning inspector indicated that the financial contributions were necessary to make the development acceptable.

Comment

It is common for a developer to submit a s.106 unilateral undertaking to the local authority as part of a planning application. This case shows that there can be some unintended consequences. Here the application was appealed. The Inspector was of the view that the s.106 undertaking was not needed and granted planning permission. The developer was still held to be liable to comply with the s.106 undertaking. 

This could lead to a Catch 22 situation: if the developer submits a s.106 unilateral undertaking before an appeal, then it may help in the grant of planning permission. However, if they do not submit one, they may still get planning permission without it and therefore be in a better position. Developers should satisfy themselves that what a council suggests should go in a s.106 undertaking is lawful; if in doubt, then they may like to consider having a s.106 unilateral undertaking prepared and signed, but not to actually submit it until the views of the Inspector are known.

Even last night (17 January), Labour MPs launched a motion to halt the Bill’s parliamentary progress. The motion was inevitably defeated and the Bill has now passed to the Committee Stage in the House of Commons - but the Bill is causing quite a stir and splitting opinions everywhere.

Local Government and Communities Secretary Eric Pickles has called the Bill “a triumph for democracy over bureaucracy”, but, on the opposition benches, his opposite number Caroline Flint calls it a “massive missed opportunity.”

Opinion is certainly divided, inside and outside of Parliament.

Matthew Arnold & Baldwin’s head of Real Estate, David Marsden, has written extensively about the controversy surrounding the abolition of the Regional Strategies and the Bill’s implications for planning.

For those people who are wondering what all the fuss is about, the Department for Communities and Local Government has now published a useful plain-English guidance to the Bill, which summarises all of the main measures proposed in it under the following headings:

1. New freedoms and flexibilities for local government;

2. New rights and powers for communities and individuals;

3. Reform to make the planning system more democratic and more effective;  

4. Reform to ensure that decisions about housing are taken locally; and

5. The overall effect of the Bill

The guide translates the often complex legal language used in the Bill, so that everyone (and not just lawyers) can understand what the Bill proposes.

Now, that should be welcomed by everyone.

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.)

PPAs were formally introduced into the planning system in 2008. They provide a framework to assist local planning authorities (LPAs) and planning applicants/developers in reaching an agreement about how a (usually complex) development should be handled. By encouraging LPAs and developers to work together, PPAs enable them to address any problems at a much earlier stage (thus reducing conflict), and manage the process for determining a planning application within an agreed time-frame, without being constrained by the usual time limits.

This guidance was created following a recent national survey commissioned by the Department for Communities and Local Government and ATLAS, which found that more than 95 per cent of LPAs supported PPAs. However, the survey also highlighted that there were still barriers which discouraged the wider use of PPAs (for example, concerns about the legal and complicated nature of the agreements, concerns over the level of staffing and resources needed to meet the demands of a PPA, and the reluctance of some developers and public sector bodies to enter into agreements.) Full details are here.

This new guidance addresses these barriers by looking at the content of a PPA, providing advice on the type of PPA that is appropriate for a development, and looking at what makes a PPA successful.

This is one of a number of recent developments that will affect the planning sector - click here to read about the implications of the new Localism Bill on planning, or here to find out further details about a new consultation on government proposals to create a single national policy framework for planning.

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.

Under the proposals, all existing central policy statements, circulars and guidance documents would be consolidated into a single document – the National Planning Policy Framework.

The Government is concerned that the planning system is very “centralist”, with too many (often contradictory) policy documents, resulting in confusion for local councils, developers and local residents. In light of the Coalition Government’s overarching ‘localist’ agenda, the new Framework is intended to be more user-friendly and will hand power back to local communities.

The new Framework will:

1. Allow local communities (rather than central government) to decide what is right for their area;

2. Make it easier for members of the public to have a meaningful say in planning decisions; and

3. Establish a presumption in favour of sustainable development.

If you would like to send your suggestions on what shape the new Framework should take, you can do so by emailing planningframework@communities.gsi.gov.uk, or writing to Alan Scott, National Planning Policy Framework, Department for Communities and Local Government, Zone 1/H6, Eland House, London, SW1E 5DU

All comments must be received by 28 February 2011.

Following speculation and numerous delays, the Government has finally announced that the Decentralisation and Localism Bill will be published on Monday 13 December.

The highly anticipated and much-talked about Bill is expected to radically overhaul the planning system and is already at the centre of a legal dispute between the Department of Communities and Local Government and Cala Homes (South) Ltd.   

The new ‘localism’ – that is the shifting of power from central government to local people – will undoubtedly present a host of challenges to the property industry. And whether you love it or loathe it, it is here to stay. Afterall, Communities Minister Eric Pickles commented not long after his appointment that “…my three most important priorities… are: localism, localism and localism” and that ”I will make sure that localism is… wrapped up in the very DNA of the department.” 

The property industry will soon find out whether localism, and specifically the Decentralisation and Localism Bill, will help or hinder development.

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.

Simon Weinberg, a solicitor at Matthew Arnold & Baldwin LLP, comments: ‘The fines send a strong message to anyone handling data that not only do new fining powers exist for breaches of the DPA but also that the ICO is actually willing to use those powers. They highlight two things in particular that the ICO will not tolerate: poor care over particularly sensitive data (such as child abuse in the Council’s case) and the common mistake of failing to encrypt laptops that contain personal data (in A4e’s case).’

Robert Davis, the Deputy Leader of Westminster City Council, has written a letter to the Decentralisation Minister, Greg Clark, calling on the Government to allow local authorities to charge for listed buildings applications. Seven other local authorities from across the UK are signatories to the letter.

The eight local authorities (which have the largest number of listed buildings in the UK) are concerned that the Government’s proposals will exclude the charging of fees for listed building and conservation area consents – areas which they argue require a lot of expertise and take the most time to handle due to their complexity. Faced with having to make significant savings over the next few years, the local authorities have warned that unless they are able to recover their costs from handling such complex planning applications, they may have to make cuts to the historic building maintenance services.

Westminster City Council has claimed that their campaign has won the backing of many leading figures in the property industry, and that developers have said they are willing to pay more money to ensure their developments are not jeopardised by cuts to the planning service and skills shortages.

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.

The New Homes Bonus scheme, which I touched upon in my summary of last month’s Spending Review, is aimed at encouraging local authorities to approve more new homes, and will see the Government match the council tax revenue raised on each new property for six years. The local authorities (with input from local residents) can then decide how to spend the extra funding – this could be, for example, council tax discounts for local residents, extra rubbish collections, or more local facilities such as swimming pools, playgrounds and leisure centres.

The proposals have been broadly welcomed by the housing sector, particularly as the scheme may be extended to financially reward local authorities for bringing empty properties back into use. However, there are some concerns that local authorities could be rewarded for building low quality homes or for giving planning permission to poorly-designed housing schemes. No doubt these concerns will be raised (and considered by the Government) during the consultation period.

Responses to the consultation must be received by 24 December 2010. The Government will then consider the responses and announce the final design of the scheme, probably in early 2011.

Back in December 2009, Adrian Penfold, the head of planning and environment at British Land, was asked to review the regimes for obtaining non-planning consents for property development projects. In July 2010, after considering the evidence submitted by interested parties, he made 12 recommendations that aimed to speed-up decision making, reduce duplication, and reduce bureaucracy in determining non-planning consents. I summarised these recommendations at the time.

In its formal response, published on 3 November 2010, the Government has generally welcomed the Review’s recommendations and plans, amongst other things, to take the following key actions:

1. Set up meetings to allow consenting bodies to share examples of best practice;

2. Encourage local authorities and other public bodies to publish their performance data to promote transparency;

3. Ensure that public bodies co-operate with businesses in their efforts to develop in an environmentally sustainable way;

4. Produce a quality development code by spring 2011;

5. Provide developers with a contact at the Highways Agency who will work with the developer, local planning authority and local highways authority;

6. Improve access to information;

7. Merge conservation area consent with planning permission, when possible;

8. Consider whether any changes to the village greens registration system are required; and

9. Expand the Environmental Permitting regime.

The Government accepts that it needs to clarify the boundary between planning and non-planning consents. It believes that it can achieve this through reforming the planning system (as outlined in October’s White Paper, Local Growth: Realising Every Place’s Potential and the forthcoming Decentralisation and Localism Bill, which will require local authorities to produce local development plans.) The Government will also monitor the operation of development consent orders, and continue to look at options for merging highways consents with planning permission.

These proposals are encouraging for developers, but the recent spending cuts and lack of detail may contribute to the policy ‘vacuum’ that developers have had to put up with over the past few months. Click here to read about Cala Homes (South) Ltd’s successful judicial review of the Government’s decision to abolish the Regional Strategies.

The next stage

The Government will publish an update to its response in spring 2011, after assessing how much progress has been made in implementing these changes.

Back in August, I wrote about Cala Homes (South) Ltd’s move to seek a judicial review of the Government’s decision to abolish the Regional Strategies in May this year, which it claimed was unlawful. The developer argued that primary legislation should have been introduced, so that MPs could properly debate the issue in Parliament.

Mr Pickles’ decision to revoke the Regional Strategies has been widely criticised in the housebuilding sector for effectively leaving a policy ‘vacuum’ in the planning process, because it removed housing targets and directly resulted in the abandonment of proposals to build tens of thousands of new homes.

So what happens now? Will the Regional Strategies be reinstated?

Well, the ruling may only succeed in delaying the scrapping of the housing targets until autumn 2011, when the impending Decentralisation and Localism Bill is expected to become law. Certainly, initial comments from departmental ministers following the ruling have confirmed that the Regional Strategies will still disappear, calling the High Court’s decision a “technicality” which “changes very little.” The Government is not expected to appeal the decision.

For housebuilders who have been hoping to gain some clarity on the situation since May, it is once again a case of wait and see…

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.

1. Confirmation of the introduction of the Decentralisation and Localism Bill, which will set out significant new freedoms, powers and responsibilities for local councils and communities, and will include reforms to the planning system. The Bill, which is expected to be published in November, was originally announced in May’s Queen’s Speech and it will devolve greater powers to local councils and give local communities control over housing and planning decisions;

2. Further investment in housing supply. This investment will be introduced alongside a major reform of the social housing system;

3. The provision of £4.5bn to invest in the creation of 150,000 new affordable homes over the next four years; and

4. The introduction of a New Homes Bonus, commencing in April 2011. This aims to encourage and reward local authorities who support housing growth in their areas. The bonus will be the equivalent of matching the additional council tax from every new home for each of the next six years. Details of this scheme are expected to be laid out in a consultation paper at the end of November 2010.

The consultation on the New Homes Bonus is eagerly awaited. The Government announced its intention to introduce this scheme back in August 2010, but housebuilders, unhappy at the decision to abolish the Regional Strategies, have been forced to wait for more details about it. It seems that this wait is nearly over.

This case revolves around a landlord’s liability for council tax where the property is a House in Multiple Occupation (HMO), and demonstrates that councils are now more than ever keen to recover unpaid council tax.

The Local Government Finance Act 1992 provides that council tax is payable by either the resident or the owner of a property. The associated 1992 Regulations provide that an owner is liable where the property is an HMO. The Regulations provide that a property is an HMO where either of the following apply:

1. It is a dwelling which was originally constructed or subsequently adapted for occupation by persons who do not constitute a single household;

2. It is a dwelling which is inhabited by a person who, or by two or more persons each of whom either:

(a) is a tenant of, or has a licence to occupy, part only of the dwelling; or

(b) has a licence to occupy, but is not liable (whether alone or jointly with other persons) to pay rent or a licence fee in respect of the dwelling as a whole.

In this case, the landlord owned a detached bungalow with a conservatory attached to the rear, which the landlord had let on a series of six annual furnished shorthold tenancies for the period 21 October 1999 until 31 December 2007 as follows:

 ●        The landlord granted the first three tenancies to four tenants, A, B, C and D.

 ●        These tenants surrendered the last tenancy on 1 January 2002 at which point the landlord granted the subsequent assured shorthold tenancies to only A, B and C. The last of these three tenancies expired on 31 December 2007. However, the landlord allowed the three tenants to hold over until 1 February 2008.

 ●        Although D was no longer a tenant, he remained in the property following 1 January 2002 until October 2005. Although unclear from the facts, he was either a sub-tenant or licensee of the three tenants. His interest extended to the whole of the property and any payment he made was treated as a contribution towards the rent paid by the three tenants.

●        Each tenancy demised the whole of the property to the tenants, including the conservatory. However, with the tenant’s ageement the landlord stored the furniture that came with the property in the conservatory.

●        Each tenant paid their “share” of the rent direct to the landlord. However, the formal tenancy agreements provided for a single rent per month for the property of £1,200 for which each joint tenant was jointly and severally liable.

The local authority had treated the property as being let to the tenants under a single tenancy that covered the entire property, so that the tenants were liable for council tax and had billed the tenants for council tax. However, there was some council tax outstanding on the tenant’s vacating the property, and the local authority decided to pursue the landlord for it on the basis that the property had been a HMO since 1 April 2002, claiming that:

●        The three tenants had occupied part only of the property because the conservatory had not been used.

●        D occupied part of the property and had not been liable (whether alone or jointly with other persons) to pay rent or a licence fee in respect of the whole property.

The landlord appealed to the Valuation Tribunal, which also held that the property was an HMO thereby making the landlord liable for the council tax because:

●        The individual rent that each tenant had paid to the landlord had given rise to “multiple occupation”.

●        The tenants had not occupied the whole of the property because the furniture that had been stored in the conservatory had prevented them from so doing.

Decision:

The High Court decided that the property was not an HMO and the landlord was not liable to pay the council tax.

The High Court held that the Valuation Tribunal had misunderstood the law. The local authority had failed to satisfy the definition of an HMO as required by the 1992 Regulations:

●        The local authority had failed to satisfy test 2(a) in that the property, including the conservatory, had been occupied by the three tenants who, by the unvaried terms of their tenancy, had been entitled to occupy the whole of the property including the conservatory:

- The tenants had remained tenants of the conservatory, even if factually they had been unable to use or gain access to it.

- The only items of furniture stored in the conservatory were items for which the tenants had paid rent. The tenants were entitled at any stage to enter the conservatory should they wish and could have removed the furniture from the conservatory so long as they had stored or used the furniture elsewhere.

●        The local authority had failed to satisfy test 2(b) in that the three tenants had been liable to pay rent in respect of the property as a whole, notwithstanding that each had paid a separate cheque to the landlord for part of the rent. This was simply a convenient arrangement and did not diminish or affect their overall liability for the rent in respect of the property as a whole.

Comment:

The test for establishing whether a property is an HMO for council tax purposes is different to the one used for the licensing of HMOs under the Housing Act 2004.  Landlords wishing to ensure that they are not exposed to council tax liability should put all tenants on a single agreement and not reserve any part of the property for themselves.