The Compulsory Purchase Association (CPA) has been lobbying the government to change the rules since 2008. The CPA’s proposals have now been adopted in an amendment to the Localism Bill which is due to become law later this year.

The main aims of the proposals are to close a loophole that allows owners to claim large amounts of money in “hope value” and to simplify the way compensation is calculated.

At present councils have to work out the value of the site being compulsorily purchased by working out how much it would have been worth when the CPO was first proposed. In some situations this could have been more than five years ago.  Under the proposed changes the valuation dates will not be linked to the when the CPO was first proposed.

The changes will also close the loophole which has seen councils paying excessive prices for sites following long legal battles.

The CPA argue that the changes will save councils time, money and possible legal claims.

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.

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 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.

Buyers of new build properties will be particularly interested to know that following the 2004 Barker Review and the 2008 OFT Homebuilding Study in the UK the Consumer Code for Home Builders was put together.  The purpose of the code is to ensure that home buyers are treated fairly, can rely on the information they are given and have access to quick low cost dispute resolution when things go wrong.

Whilst this does not have a statutory basis for purchasers, and is therefore not enforceable through the courts, the industry’s top structural guarantee providers, most notably NHBC, Premier Guarantee and LABC,  have subscribed to the Code and require that any Home Builder offering their guarantee comply with the provisions of the Code.

Some notable points for Buyers and Home Builders :- 

●  The builder must display a Copy of the Code and provide copies, without charge, to any purchaser who asks for a copy, and all buyers who actually reserve one of their new build properties.

● When a buyer wishes to purchase a property from a Home Builder, they must now be given a reservation agreement setting out the terms on which they have agreed to buy the property.  This reservation agreement allows the hopeful buyer a period in which the Home Builder agrees not to sell the property to any other interested party.  This is not new to the larger home builders, who have adopted this procedure for a number of years, but will have an effect on smaller or start up Home Builders.    At this point a reservation deposit is normally paid over to the Home Builder, by the buyer (typically between £500 and £2500 depending on the value of the property).

●  Previously if the hopeful buyer did not proceed to exchange contracts, being the point at which the purchaser is contractually committed to purchasing the property from the Home Builder, then the Home Builder would often retain the reservation deposit paid.  Under the Consumer Code for Home Builders the builder is obliged to return the reservation deposit to the buyer (although they may first deduct such money as is necessary to cover their reasonable costs).  This will mean that buyers  will not proceed to buy a property they are not entirely happy with for fear of losing their reservation deposit.

●  All sales and marketing material must be clear and truthful, to include a brochure or plan showing the layout, appearance and position of the property within the development as a whole.  Home Builders are currently bound by the provisions of the Property Misdescriptions Act 1991 which could lead to a Trading Standards complaint, investigation and possibly a prosecution for those concerned.  However, this provision within the Consumer Code is likely to mean more to an aggrieved purchaser, as it is an easier course for redress.

●  The Contract for Sale must, under the Consumer Code, detail realistic and reliable information about timing of construction, completion and handover. This is perhaps the most exciting change for a buyer.  Previously most Home Builders contracts provided that completion would take place once construction had been completed, which could take several months or in some cases even years.  One national home builder had a clause within their contract providing that handover could be up to 5 years from the date on which contracts were exchanged.  Home Builders would usually provide buyers with an estimate of a handover date but there would be no penalties if they missed this date.  Home builders must now include a date in the contract setting out the date on which they realistically anticipate  the property will be completed and also termination date, which will allow a buyer to withdraw from the purchase and recover their deposit, if the property is not completed by the termination date.  The termination date must be no more than 12 months for an apartment and 6 months for a house from the anticipated date, where the property is not watertight or 4 months and two months from the anticipated date respectively where the property is watertight at the point of exchange of contracts 

●  A buyer must also now be given an accessible after-sales service  and explain what this includes, who to contact and what guarantees apply to the Home, including what health and safety precautions should be taken when living on a development where work continues. In addition the Home Builder must have a system for receiving handling and resolving the home buyers calls and complaints and must also co-operate with suitably qualified professional advisers appointed by the home buyer to resolve disputes.  This will be of comfort for buyers to know as if the Home Builder fails to deal with any issues, such as areas which need rectifying or perfecting following completion, they can refer the matter for an adjudication under the Code. 

●  This after-sales part is important also because the Code does not just benefit the first purchaser of the property, but any subsequent purchaser for up to two years from the date of completion of the build. 

●  An adjudicator can make an award of up to £15,000.00 and accordingly it is vital that Home Builders also obtain good professional advice from a New Homes specialist before marketing their properties for sale.

Solicitors acting on behalf of Home Buyers of newly constructed properties also need to be aware of the code so that they can competently advise their clients what to expect and what protections are in place. 

Unfortunately adjudications under the code have not been reported in the industry or legal press, but the annual report is due to be published shortly, which should evaluate the effectiveness of the code.   Keep an eye on our website for further information once the report has been published.

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.

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.

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.

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.

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.

Last month, I summarised the Government’s approach for ensuring that all new homes are ‘zero-carbon’ by 2016. However, according to recent reports in The Guardian newspaper, this 2016 target is set to be scaled back following pressure from the housebuilding industry.

According to The Guardian, housebuilders have warned that compliance with the Government’s proposals would be “too expensive and impossible to implement for many flats, and would result in a slump in the rate of homes built.” Consequently, according to The Guardian, the Government may water down its target.

However, the Home Builders Federation has responded to these reports by saying that the housebuilding industry is committed to meeting the zero-carbon target, though it wants the Government to ensure that the definition of ‘zero-carbon’, which is due in the next few months, is “practical, deliverable and affordable” so that the cost of building new homes does not accelerate.

The Guardian’s claims appear to be based on comments made by, conveniently, unnamed senior figures at the Department of Communities and Local Government; and, so far, the Housing Minister Grant Shapps has said nothing to confirm or refute this supposed change in the Government’s stance. We will wait to see what happens, but one thing is for sure: any weakening of the Government’s commitment to its zero-carbon homes plan is sure to anger environmental groups.

Well, one housebuilder has now launched a legal challenge against the Government.

CALA Homes has asked the High Court for a judicial review of the Government’s decision to abolish the Regional Strategies, claiming it was unlawful because (1) the move required primary legislation to be laid down in Parliament, and (2) no transitional arrangements were put in place, which, in the words of Graham Cunningham, managing director of CALA Homes (South), has created a “policy vacuum.”

CALA Homes’ legal challenge centres on a long-running development dispute. Its application for planning permission to build 2,000 homes in Winchester was rejected by the local council in June (following the abolition of the Regional Strategies), but it argues that its appeal against the refusal cannot take place while there is an absence of government planning policy.

CALA Homes is not alone. The number of development schemes being abandoned or put on hold by local councils since the abolition of the Regional Strategies is growing; in fact, according to research published by Tetlow King Planning on behalf of the National Housing Federation in July, plans for 85,000 homes in England have been dropped since the abolition. In a further development, an alliance of nearly 30 organisations, including property groups, engineering bodies and environmental charities, have all signed a letter this month calling for an urgent meeting with Eric Pickles, Secretary of State for Communities and Local Government, to discuss how to replace the Regional Strategies. Pressure on the Government is mounting.

Coincidentally, the Government has now announced details of its ‘New Homes Bonus Scheme’, whereby local councils will be given extra money for every new home built in their area. For the next six years, the Government will match the council tax revenue raised on each new house, thus encouraging local councils to build more homes. Housebuilders, though, who are still unhappy at the decision to abolish the Regional Strategies, urgently require more details of the Scheme. However, with a consultation on the Scheme not due to be published until after the Government’s Spending Review on 20 October, housebuilders may unfortunately have to wait a bit longer.

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.

A buyer was contracted to purchase an underlease of a flat off-plan from a developer. The contract was conditional upon the grant to the developer of a headlease by the longstop date of 1 June 2008. In the event that the headlease was not granted by the longstop date, either party could rescind the contract. The conditional clause did not make provision for the developer to advise the buyer if the condition had been fulfilled. As a result of the credit crunch, the value of the property dropped and the buyer could no longer obtain a mortgage for the amount required to complete the purchase. The buyer advised the developer of their situation but had not realised that the headlease had not been granted and so could have exercised their right to rescind the agreement. The seller agreed to reduce the purchase price. The headlease was eventually granted on 4 September 2008. The buyer purported to rescind the agreement on 29 September 2008 because the headlease had not been granted by the longstop date.

Decision

The Court of Appeal held that the agreement was conditional on the grant of the headlease, although time was not of the essence, and as such the agreement could become unconditional if the headlease were granted after the longstop date. The right of rescission could only be exercised before the agreement had become unconditional and therefore the right to rescind existed only until the headlease had been granted and did not continue beyond that point.

The Court of Appeal stated that the buyer knew that they could rescind after the longstop date, provided no headlease had been granted, and could have taken steps to establish if the headlease had been granted by checking with the Land Registry. The Court of Appeal went on to say that if the right to rescind continued after the grant of the headlease, then the right would have to exist in favour of both parties, as it could be unfavourable to either party, depending on the market conditions.    

Comment

Both developers and buyers should check that they understand the terms of any conditional clause and longstop dates in their agreements and that such clauses are drafted as tightly as required. A buyer would also wish to ensure that any similar clause includes an obligation on the developer to advise the seller whether the condition has been satisfied or not.

He announced that the Government will:

1. Introduce a minimum standard for the energy efficiency of the fabric of a building. This would be set through future revisions of Part L of the Building Regulations, in line with proposals suggested in a recent consultation on the Code for Sustainable Homes;

2. Set a national benchmark carbon compliance standard in the Building Regulations. The Zero-Carbon Hub, the organisation with operational responsibility for co-ordinating the delivery of low and zero-carbon new homes, will test new “appropriate benchmarks” for carbon emission reductions over the coming months; and

3. Explore the possibility of allowing builders and developers to fund community energy projects, such as wind farms and district heating schemes, in order to meet their obligations to reduce carbon emissions from new homes.

Despite this announcement, the property industry is still awaiting the Government’s definition of ‘zero-carbon’, which was promised within weeks of it taking office. However, according to reports, a definition may now not be available until November 2010. The British Property Federation has warned that the industry needs a definition urgently, so that it has time to ensure that all new homes are zero-carbon by 2016.

The Penfold Review has now been published and has made 12 recommendations for change:

1. Reinforcing a service culture

The Government should ensure that non-planning consent decision makers (1) recognise the contribution they make to sustainable development through the decisions they make on non-planning consents; (2) publish a quality development code; (3) publish annual performance statistics; and (4) undertake customer satisfaction surveys.

2. Improving co-ordination and governance

The Government should (1) encourage local planning authorities (LPAs) to adopt development management good practice; and (2) ensure that non-planning consenting bodies include a clear statement in their quality development code about guidance and advice they offer at the pre-application stage.

3. Addressing resource pressures

The Government should promote good working practices in resource-sharing, behaviour and culture by (1) encouraging LPAs to work with each other and the private sector; (2) requiring non-planning consent decision makers to make more efficient use of resources; and (3) enabling consenting bodies to charge for discretionary services.

4. Improving the accessibility of information

The Government should improve the quality of advice and information available through BusinessLink and the Planning Portal.

5. Simplifying the landscape

The Government should reduce the number of non-planning consents by (1) reviewing non-planning consents that have not been reviewed for more than ten years to ascertain whether they are still needed; (2) merging conservation area consent with planning permission; (3) merging listed building consent and scheduled monument consent; and (4) merging water abstraction and impoundment consents with the environmental permitting regime.

6. Improving proportionality

The Government should (1) increase the number of small commercial developments and small non-residential developments that are treated as de minimus (i.e. falling below designated thresholds requiring a consent application); (2) Identify the current consent requirements that would be suitable for a process below formal consent application or where deeming consent is appropriate; and (3) review the inquiry and appeal processes for planning and non-planning consent with a view to standardising and simplifying related processes.

7. Clarifying the boundary between planning and non-planning consents

The Government should (1) ensure that the revised national planning policy framework confirms the centrality of the planning process in determining whether a development should go ahead; (2) ensure LPAs have robust local development documents in place; (3) promote the use of pre-application discussions; and (4) create clear rules of engagement between LPAs and the non-planning consent decision makers.

8. Making changes to specific regimes

The Government should clarify what is material to planning and non-planning consent regimes, remove duplication and reduce the need for detailed design work.

9. Facilitating integration of planning and non-planning consents

The Government should encourage more LPAs to offer an improved and integrated planning and non-planning consents service.

10. Extending unification of planning and non-planning consents

The Government should consider extending the use of development consent orders to a wider range of projects.

11. Providing oversight of the planning and non-planning consents landscape

The Government should create a new body responsible for maintaining central oversight of the planning and non-planning consents.

12. Making change happen

The Government should develop an action plan to implement the recommendations of the Penfold Review.

The next step

The Penfold Review’s recommendations have been welcomed by the British Property Federation and the Home Builders Federation. The Government will now consider the recommendations and publish a formal response in autumn 2010. Full details of the recommendations are here.

Well, according to new research by the Financial Times newspaper, since May (when the Government announced its intention to scrap the Regional Strategies), local authorities have rejected a number of residential development projects that would have created 7,500 new homes across the UK. Why? Because local authorities felt emboldened by the Government’s decision on 27 May to allow them to act as though the Regional Strategies had already been scrapped (even though they officially hadn’t been scrapped and wouldn’t be until 6 July.)

Whilst local authorities await more guidance from the Government on its housing policy, developers find themselves ‘in limbo’, with a growing number of local development plans either being cancelled or put on hold because of uncertainty over the policy. The implementation of the financial incentives that the Government has proposed to encourage local authorities to build more houses can’t come quick enough.

Back in May, the Government promised to bring in new legislation that would scrap ‘top-down’ house-building targets and give local authorities the freedom to make their own decisions on what is built in their communities. Mr Pickles then followed this up by writing to local authorities, asking them to act as though the Regional Strategies had already been scrapped (even though they officially hadn’t.) The result was that many local authorities decided to hold off making decisions on some development proposals until the Government clarified its position, leaving many developers in limbo. 

However, the Government has now made a statement to Parliament to end the imposition of the Regional Strategies with immediate effect: an order revoking the Strategies was laid before Parliament on 6 July, and instead of centrally imposed house-building quotas, local authorities will be offered “powerful new (financial) incentives” to encourage support for the construction of new homes in their locality. The Chancellor has suggested that the “financial incentives” could be passed onto local residents via council tax or business rates.

This move is another step by the Government to transfer centrally-held powers to local communities. In this instance, the Government believes that the changes will increase house-building, help local councils protect green belt land, and allow local communities to decide what should be built in their areas. Towns that were planning to make green belt land cuts because of centrally-imposed targets will now be able to make their own decisions where new development is built. They include Guildford, Harlow, Hatfield, Hemel Hempstead, Stevenage and Welwyn.

Some MPs and the British Property Federation (BPF) have warned that the change raises a number of serious questions for local authorities, and that further clarification is needed to ensure a smooth transition. No doubt developers will agree.

In its coalition agreement, published on 20 May, the Government stated its intention to give councils more powers to stop this practice – and it has wasted no time in putting this policy into action.

In a statement made on 9 June, Decentralisation Minister Greg Clark said that, with immediate effect, Annex B of Planning Policy Statement 3 (PPS3) will be amended so that private residential gardens are no longer classified as ‘previously developed land’ (i.e. brownfield land). This will make it easier for councils to reject planning applications for new dwellings on garden land, where local people object. The reclassification of gardens will not affect people who wanted to build extensions on their homes.

Mr Clark also announced the immediate removal of minimum housing density targets, meaning that councils will be able to decide what level of housing density is appropriate for their area.

This change in policy could have adverse consequences that the Government will not have intended. Many old houses have reached their “sell by date” and the land should be re-processed in a more modern, efficient manner. Many elderly people find large gardens too large a burden, and help fund their retirement by selling some of it for development. People will still want to live in the South East, but if land within a community cannot be released for development then there will be added pressure on the green belt. It is not simply a matter of house building being swapped onto derelict industrial land; firstly, there isn’t much of that in the South East and, secondly, land is needed to create employment opportunities as well, not just housing.

One other important aspect is that house building is one of the most important industries in the country. Apart from those directly employed, this could have adverse consequences on the High Street in the sale of fixtures and fittings and furnishings. A lack of new housing will put up the price of second-hand housing. The main concerns of neighbours will generally be overlooking and inappropriate development. There may well have been other ways of achieving the same end but without such far reaching consequences. I expect the Government will be criticised for implementing a far-reaching proposal without proper consultation with those most affected.

The following policy agreements will be of interest to the property industry:

• Home Information Packs (HIPs) are to be suspended, but Energy Performance Certificates will be retained. Legislation will be required to completely abolish HIPs;
• Decision-making powers on housing and planning will be given to local councils, including new powers to stop ‘garden grabbing’ by developers;
• Home energy improvements will be paid for through savings made from lower energy bills;
• Reform the planning system to give local people the ability to determine the shape of the places in which they live. This will be based on the principles set out in the Conservative Party publication Open Source Planning;
• Abolish the Infrastructure Planning Commission and replace it with a democratically accountable system that provides a fast-track process for major infrastructure projects; 
• Plans to establish a high-speed rail network will continue, but plans for a third runway at Heathrow will be cancelled. No additional runways will be built at Gatwick and Stansted airports; 
• Maintain the Green Belt, Sites of Special Scientific Interest (SSSIs) and other environmental protections, and create a new designation to protect green areas of particular importance to local communities; 
• Introduce new measures to bring empty homes into use;
• Promote shared-ownership schemes and help social tenants and others to own or part-own their home; 
• Promote ‘Home on the Farm’ schemes that encourage farmers to convert their buildings into affordable housing; 
• Create new trusts that will make it simpler for communities to provide homes for local people; 
• Require continuous improvements to the energy efficiency of new housing; 
• Provide incentives for local authorities to deliver sustainable development, including for new homes and businesses; 
• Review the effectiveness of the raising of the stamp duty threshold for first-time buyers; and
• Bring forward the national planning statement so that it can be ratified by Parliament. The statement will enable new nuclear construction. The Liberal Democrats, who are opposed to any new nuclear construction, will abstain from voting on the issue.

These policies are part of the Government’s legislative programme for the next five years, and further detail about how they will be implemented will be published in due course.

Similarities are notable between the Conservative and Liberal Democrat manifestos, which can be used to interpret what impact this Government is likely to have on Property.

The first similarity was clearly the plan to abolish Home Information Packs before a property could be sold. The Liberal Democrats did however wish to retain the Energy Performance Certificate element of the packs. As of today (21 May), this plan has been implemented following the announcement by the Government for their immediate suspension. This would seem to be a sensible move by the Government; many had predicted this move and could therefore have had the effect of sellers withholding their properties from the market, hoping to save the cost of the Home Information Pack. This move will certainly be welcomed by residential developers and sellers alike, and hopefully bring back some spontaneity to the market.

A second point on which both parties are agreed is for a more localised planning policy. The Conservatives want to see a new “open source” policy, with local people being able to specify what type of development they want. The Liberal Democrats want local authorities to determine how and what type of developments are carried out. These proposals are in line with a clear intention to scrap the previous Government’s housebuilding targets, which many commentators state to be unrealistic based on current levels of construction. Whether a more local planning policy will help developers in obtaining planning for developments remains to be seen. One move which developers may not be so keen on is a Conservative proposal to force developers to pay a tariff to local authorities as compensation for the loss of amenities and costs of additional infrastructure.

The Conservatives proposal to permanently scrap Stamp Duty Land Tax for first-time buyers on properties priced under £250,000 may help the lower end of the market. Whilst this is likely to be welcome news, its effectiveness could be watered down by the scaling down of schemes such as Homebuy Direct, which has been suggested by the Liberal Democrats. This scheme has been of assistance to a number of developers and purchasers alike during challenging times.

There has also been much news on plans to increase the rate of Capital Gains Tax, currently at 18 per cent, and thought to be likely to increase to at least 40 per cent. This is not just likely to hit property investors and people investing in property to fund their retirement, but potentially also people who had lost confidence in pensions and may not have made separate provisions. However, if this has the effect of putting off potential buy-to-let investors from entering the market, then this could see an upturn in rental incomes as demand outstrips supply for rental properties.

Clearly, some uncertainty remains as we wait to see whether any such plans are watered down following consultation and the parliamentary process.  

The investigation found that there were 25 High Court cases in 2009, compared to only one case in the previous five years. Claims were brought against valuers for many reasons, including:

• negligently overvaluing commercial premises that dropped in value because tenants became insolvent during the recession;
• negligently overvaluing residential property development sites which dropped in value because of falling house prices and a big increase in similar new build properties built during the housing boom;
• negligently underestimating the cost of putting a development project on hold; and
• negligently valuing a property that was subject to a fraud.

Banks and building societies have launched legal action against surveyors, claiming that they had overvalued properties that they had repossessed and been forced to sell for much lower sums. However, surveyors have hit back at these claims, stating that many of these properties had securitised loans against them and that lenders, rather than valuers, were to blame for the upward pressure on prices.

The intention of the Code is to give buyers more protection when acquiring a new flat or house, or a newly-converted flat or house, from the time the property is marketed to them to, and including, the after-sales service they receive when they have purchased the property.

Builders and developers that are selling new flats/houses, and are registered with one of the home warranty providers that are participating in the Code, must comply with the Code (participators are currently NHBC, Premier Guarantee and LABC New Home Warranty.) If one of these builders or developers breaches the Code, the home warranty providers can (1) remove them from the relevant register, or (2) exclude them from all registers run by other participating home warranty providers. This could mean that excluded builders or developers would have to obtain home warranty insurance cover from another provider in order to satisfy buyers.

Developers are now required to give an “Anticipated Completion Date” and a period after that date when the buyer can choose to rescind the contract (a maximum of 6 months for a freehold property and 12 months for a leasehold property) in the contract itself, amongst other requirements imposed in the Code. Developers will need to amend their standard contracts to comply and we have been able to assist several of our developer clients with this task. 

If you have any concerns, or would like some assistance, please get in touch with one of the New Homes Team at Matthew Arnold & Baldwin.

The intention of the Code is to give buyers more protection when acquiring a new flat or house, or a newly-converted flat or house, from the time the property is marketed to them to, and including, the after-sales service they receive when they have purchased the property.

Builders and developers that are selling new flats/houses, and are registered with one of the home warranty providers that are participating in the Code, must comply with the Code (participators are currently NHBC, Premier Guarantee and LABC New Home Warranty.) If one of these builders or developers breaches the Code, the home warranty providers can (1) remove them from the relevant register, or (2) exclude them from all registers run by other participating home warranty providers. This could mean that excluded builders or developers would have to obtain home warranty insurance cover from another provider in order to satisfy buyers.

Developers are now required to give an “Anticipated Completion Date” and a period after that date when the buyer can choose to rescind the contract (a maximum of 6 months for a freehold property and 12 months for a leasehold property) in the contract itself, amongst other requirements imposed in the Code. Developers will need to amend their standard contracts to comply and we have been able to assist several of our developer clients with this task. 

If you have any concerns, or would like some assistance, please get in touch with one of the New Homes Team at Matthew Arnold & Baldwin.

This latest case dealt with:

1)      the effect of notices warning that there is “No Public Right of Way”

2)      whether registration of a new green depends on proving that users come from a specific locality

3)      whether the residents of other localities can gain any rights after a new green is registered

 The Facts:

Warneford Meadow in Oxford had been used by local people for recreational purposes for more than 20 years. There were 2 well defined paths crossing the meadow. In 1989 the landowner erected 2 signs reading “No Public Right of Way” and sited these so that they appeared to refer to the paths. In 2006 a resident applied to register Warneford Meadow as a new green after the landowner decided to develop the land. The land was subsequently registered as a green by the local council. The landowner’s application for Judicial Review of the decision was dismissed by the High Court.

The High Court’s Decision:

The High Court reaffirmed the decision in the Redcar case and the requirements to register land as a new green.

In dealing with the 3 issues mentioned above the High Court decided:

1. The landowner was aware that locals used the meadow for recreation and that there were well used paths. The landowner was unaware that rights could be acquired under the commons legislation.  The landowner erected the 2 signs in order to prevent the public acquiring rights over the informal paths. The landowner argued that the effect of the signs was to make contentious any recreational use of the meadow and not just the paths. The High Court held that the objective effect of the signs only made contentious the use of the paths and not the meadow as a whole.
2. The meadow was registered as a new green on the basis that a significant number of users came from a particular neighbourhood, although users did not predominately come from that neighbourhood. In this case the relevant legislation was the Commons Registration Act 1965 as amended by The Countryside and Rights of Way Act 2000. The amended legislation made it easier to register new greens by requiring use by “a significant number of the inhabitants of any locality or of any neighbourhood within a locality”. It had previously been decided that prior to amendment the 1965 Act had required the users to come predominantly from the locality. The landowner argued that the “predominance” test still applied after the legislation was amended. The High Court disagreed. All that is required is that use was by a significant number of the inhabitants of any locality.
3. Counsel for both parties agreed that registration of land as a new green confers recreational rights only upon the inhabitants of a specific locality. Counsel seemed to rely on the Regulations promulgated in 2008 which provide for the model entry in the register to specify the locality. The Judge accepted this as correct in law.

 In Summary:

1. Landowners are aware of the risk that rights may be acquired by prescription but are still blissfully unaware of the rights that may be acquired under the legislation relating to new greens. Landowners and developers should make sure that any signs that are erected extend to the recreational use of the land as a whole and not just to footpaths.

2. The decision carries forward to the current legislation in relation to new greens. The “predominance” test does not apply and as such it is easier to register new greens.

3. It is difficult to read Section 15 of the Commons Act 2006 as allowing further localities to be registered as having rights. It seems that where a green is used by a significant number of inhabitants of several localities, registration of a new green  in favour of one locality will make it impossible for the inhabitants of other localities to establish legal rights of recreation over the same green. In principle this does not seem right.

The expected rise in CGT – a key plank of the Liberal Democrats’ election manifesto – will particularly hit buy-to-let landlords and property investors. This is because when a property is sold, the entire gain made on that property is potentially liable for CGT in that tax year. Consequently, there is likely to be a sudden rise in landlords and investors selling their properties in the coming weeks, before the impending tax rise.

At the time of writing, it is not known when the CGT rise will take effect, though it is likely to be in April 2011. There is, however, the possibility that it will be brought in immediately following next month’s emergency budget.

The full details of the change have yet to be decided; in fact all the Government has said is that it “seeks to agree a detailed agreement” on raising CGT, so that it falls in line with income tax rates. However, with the proposed change only affecting “non-business” assets, the key issue will be how the Government defines “business” in the forthcoming legislation. The National Landlords Association has called on the Government to treat buy-to-let property as a business asset, so that investors ‘escape’ the rise.

Landlords and investors who have been thinking about disposing of their property portfolios would be advised to consider whether they should act sooner rather than later, so that they benefit from the current 18 per cent CGT rate. However, it may not always be practical (or desirable) to sell a property or portfolio on the open market in such a short timeframe; aside from a lack of purchasers, property values are still depressed. With careful tax planning it may, however, be possible to dispose of the asset and trigger a taxable gain without making such a sale. If this is of interest, please contact our tax department or your usual Matthew Arnold & Baldwin contact.

In the meantime, we, and the property industry as a whole, await the Government’s emergency budget with great interest.

The Court ruled that Natasha Rashid must pay Ballymore the £279,200 balance due on the flat she agreed to buy, plus interest and legal costs. Ms Rashid had put down a £69,800 deposit on the luxury flat, agreeing to pay the remainder of the purchase price once the flat was completed. The Court also said that if Ms Rashid fails to comply with the order by the end of April, Ballymore will be able to resell the property and seek a court order for damages against her.

This ruling highlights the growing number of claims being brought by housebuilders and developers against purchasers who renege on their contracts. A recent investigation by the property journal Estates Gazette found that between August 2008 and December 2009, nearly 300 claims were lodged against buy-to-let investors who had not completed on off-plan purchase contracts. These findings came to the fore when, in December 2009, the High Court backed housebuilder Prestige Homes South West in its attempt to obtain payments from an investor over two failed completions in its Zero 4 scheme in Plymouth, awarding it damages of £133,000.

There is no doubt that these two recent rulings are good news for developers and housebuilders, who have invested a lot of time and money in their developments and rightly expect purchasers to honour their contracts. However, off-plan buyers have become victims of the decline in the property market, with many of the properties they put deposits down on now worth much less than when they agreed to purchase them. Buyers have been unable to obtain mortgages once the value of their properties fell and buy-to-let investors have been unable to sell their properties on at a higher price than they paid.

It is an unfortunate situation for all concerned, and, although similar disputes are being settled out of court, more court cases should be expected.

 Labour

• Build up to 10,000 new council homes a year by 2014/15;
• Maintain the HomeBuy Direct scheme;
• Maintain the stamp duty threshold at £125,000, but (1) abolish it for people in home ownership schemes, and (2) scrap it for two years for first-time buyers on homes worth up to £250,000;
• Ensure that all new homes will be zero carbon by 2016;
• Maintain Home Information Packs;
• Maintain the standard interest rate on the Support for Mortgage Interest Scheme at 6.08 per cent until December 2010;
• Give more powers to local authorities to manage the developments of houses in multiple occupation (HMOs), particularly where HMOs affect the composition of local communities;
• Crack down on social housing tenants who fraudulently sub-let their properties;
• Develop a new form of affordable housing for families on modest incomes who don’t qualify for social housing (e.g. allow them to rent an affordable home at below market rates while they build up an equity stake);
• Give tenants who rent from a private landlord the right to a written tenancy agreement;
• Establish a new National Landlord Register.

Conservatives

• Scrap national and regional housebuilding targets, but reward those local authorities who build more homes by allowing them to keep more of the proceeds from council tax and business rates;
• Create Local Housing Trusts to develop homes for local people (if there is strong community backing for this);
• Expand the self-build sector, particularly in rural areas – local authorities will have to set up a register of families who want to join a self-build scheme and then assess how much land needs to be put aside for a self-build community to be set up.
• Allow neighbourhoods to stop the practice of ‘garden grabbing’;
• Permanently scrap stamp duty for first-time buyers on homes up to £250,000;
• Abolish Home Information Packs;
• Give social tenants with five years good behaviour a 10 per cent equity stake in their properties;
• Pilot a new ‘right to move’ scheme and introduce a nationwide social home swap programme, so social tenants can transfer their tenancy to another home in any part of the country;
• Introduce a new ‘open source’ planning system, so that local people can specify what kind of development they want to see in their area;
• Force developers to pay a tariff to local authorities as compensation for the loss of any amenities and costs of additional infrastructure;
• Abolish the power of planning inspectors to rewrite local plans;
• Amend the ‘Use Classes Order’, so that people can use buildings for any purpose allowed in the local plan;
• Limit appeals against local planning decisions to cases that involve abuse of process or failure to apply the local plan.

Liberal Democrats

• Scrap regional housebuilding targets and allow local authorities to determine how many and what type of homes are needed in their area;
• Bring 250,000 empty homes back into use by offering grants and cheap loans to their owners to renovate them – grants if the home is for social housing, loans if the home is for private use;
• Build tens of thousands of affordable houses to rent;
• Ensure council houses sold under the ‘Right to Buy’ scheme are replaced;
• Allow local authorities to keep 100 per cent of the capital receipts from ‘Right to Buy’ sales;
• Create a new ‘Safe Start’ mortgage that protect buyers from negative equity;
• “Scale back” Homebuy Direct schemes;
• Offer “green loans” for people to invest in home energy efficiency and micro-renewables;
• Scrap Home Information Packs, but retain energy performance certificates;
• Create a third-party right of appeal in cases where planning decisions go against locally agreed plans;
• Stop major new housing developments in major flood risk areas;
• Promote schemes for affordable homes, such as equity mortgages and ‘Home on the Farm’ which encourage farmers to convert existing buildings into affordable housing;
• introduce a new planning ‘use class’ for second homes, so that communities and local authorities can control the number of homes given over to holidaymakers.

Comment

The Home Information Packs (HIPs) have not been particularly popular with sellers, estate agents, developers or conveyancers, and there is a general feeling that they have not actually achieved what they were introduced to do, which was to speed up the process of buying and selling properties, although the HIP industry comments that they believe it has. The Conservatives say that they will abolish them, but the shadow housing minister Grant Shapps has not said what he will replace them with. The Liberal Democrats are saying that they will abolish them but retain the Energy Performance Certificates (EPCs). There is obviously concern in the HIP industry as to how this will affect them and they are urging the new government to adapt not scrap HIPs. Thousands of people trained to be Energy Assessors and the HIP industry employs a lot of people.

Apparently sellers are also delaying putting their properties on the market until after the election to see what actually happens. However, whichever party or parties do take over, the decision will not be an instant one, so are sellers going to carry on waiting indefinitely? I am sure we all want to see an upturn rather than a stall in the housing market.

The Labour government’s first-time buyer relief on properties up to £250,000 for two years is good news for first-time buyers, but is difficult for conveyancers to “police”. Clients could tell us that they are first-time buyers when they have actually owned a property previously anywhere in the world, and we have no way of checking and have to rely on their honesty. The Conservatives say that they will permanently scrap this for first-time buyers, which will presumably not encourage first-time buyers to get on the property ladder as soon as possible, thereby assisting the market to pick up after the recent slump.

The HomeBuy Direct schemes have been extremely popular in the recession, which Labour want to encourage, but the Liberal Democrats want to “scale back”, although they have other schemes in mind.

Section 15 of the Commons Act 2006 (CA 2006) provides that anyone can apply to register land as a town or village green where: 

• a significant number of local inhabitants have indulged as of right in lawful sports and pastimes on the land for a period of at least 20 years”; and
• the use of the land for that purpose (or the use as of right) ceased before 6 April 2007. (Time limits apply and the use may also be continuing but for the purposes of this update this will be ignored)

The Facts:

The common in question was owned by the council and was used as a golf course. The local inhabitants (including Mr Lewis) used the common for recreational purposes such as dog walking and parents playing with their children. The local inhabitants did not use the common if golf was in play and left if asked to do so by the golfers.

The council agreed that a developer could develop the land for mixed residential and leisure use for which the developer subsequently acquired planning permission. In 2007, Mr Lewis applied to register the common as a town and village green under section 15 of the CA 2006.

The lower Courts decided that the use by the local inhabitants had not been as of right since they deferred their use when golfers were playing golf. The council could not be expected to believe that the local inhabitants thought they were exercising a public right. This lack of belief amounted to permission on the council’s part, which meant that the use was not as of right. As such the land could not be registered as village green.

The Supreme Court’s Decision:

The deference demonstrated by the local inhabitants was a “perfectly natural behaviour”. The local inhabitants had been courteous and sensible when using the common. A reasonably alert owner should have recognised that the use was an assertion of a right, which would lead to an established right unless the owner took action to stop it. Any deference was merely an acceptance that, where two or more rights co-exist over the same land, there may be occasions when they cannot, practically, both be enjoyed at the same time.

If any use of the land was without force, secrecy or permission then it would be as of right for the purposes of Section 15 of the Commons Act 2006.

The critical question, in each case, is the quality of user:

• was the land used by a significant number of local inhabitants?
• were they enjoying lawful recreational activities?
• were they doing so openly and in such a way that a person entitled to do so, would do?

If the use had been for at least 20 years, to such an extent and in such a manner that it would reasonably be regarded as being an assertion of a public right, the council would have acquiesced in the use unless they could show that the use had not been without force, secrecy or permission.

In Summary:

Developers should seek assurances when buying land that it has not been used for purposes that may support a claim for registration as a green. In reality, the seller may have owned the land for a short period of time and be unaware of any such use prior to their period of ownership. However to limit the risk of an application for registration putting a proposed development in jeopardy, it is imperative that a developer and its advisers consider this case and the surrounding legislation regarding town and village greens.

This change at first glance seems very straightforward. Those people who want to purchase a property worth an least £1m will have to pay 5 per cent stamp duty instead of the current 4 per cent, meaning that stamp duty tax bills for such purchases will increase by a minimum of £10,000. This rise will particularly hit purchasers in the south-east, where property is more expensive.

This change, though, is not as clear-cut for off-plan buyers. Off-plan buyers, as opposed to other purchasers, quite often buy a property a year in advance, meaning they could potentially fall into the 5 per cent tax bracket. For example, if a buyer agrees to purchase a new-build property valued at £1m, which has not yet been completed, they may be liable for the 5 per cent tax (instead of the current 4 per cent) if the sale is not completed before 6 April 2011.

At the time of writing, the Chancellor has not announced any new provisions which will protect off-plan buyers from such a scenario. However, in the past, provisions have been put in place to ensure that contracts entered into before a Budget were taxed at existing rates, so we will wait and see if the Chancellor will clarify the situation in the coming weeks.

There are potential ways of avoiding such a future liability, which I will be happy to discuss with any clients who find themselves faced with this position.

The optimism in the market place has been gathering momentum, with Taylor Wimpey announcing an operating profit for 2009 of just over £40m. Pete Redfern, Taylor Wimpey’s chief executive, has been quoted in the press as saying that he believes the UK housing market has strengthened “significantly” over the past year. The company has also described UK trading as “encouraging” in the first two months of 2010, with continued improvement in visitor levels, sales rates and cancellations. Persimmon are another large developer restoring some confidence in the New Homes market after announcing a pre-tax profit of £78m. The company was reported to have made a huge £780m loss in 2008, but an increase in demand and prices in the second half of 2009 is seen to be responsible for the improvement in its full-year figures.   

It is without a doubt great to hear that the long-struggling developer sector is starting to see a return to profit, although most developers remain cautiously optimistic, with new-build sales still struggling with down valuations by the mortgage lenders. This disturbing trend has caused developers to lose many sales and many first-time buyers have been unable to get their foot on the housing ladder. 

Persimmon is one of the many housebuilders who benefit from the first-time buyers government funding, with 2,700 of its plots receiving funding from the scheme, and this has been a positive way of supporting more plot sales. Persimmon’s chief executive, Mike Farley, has said that the prices for their new homes had held up, with a rise of 1 per cent in the first two months of 2010 , whileplot sales were up 7 per cent on the same period last year. But as for predictions for 2010, Mr Farley said that he expected the prices to rise by between 2 per cent and 3 per cent over the course of 2010 – gently optimistic some would say. 

Barratt Developments and Galliford Try reserve their judgment as to whether the recent rise in demand would continue into 2010. Barratt has said that it had cut its losses for the last six months of 2009 from £678.9 million to £178.4 million after rises in their new homes prices and sales. Galliford Try, a smaller developer largely building in the South East, has reported a similar trend, with their half year pre-tax figure of £6.4 million up from a loss of £26.9 million in the six months before. However, Galliford has expressed concerns that government funding for affordable housing, which accounted for a fifth of its completions in the last six months of 2009, will fall away as a result of housing budget cuts. Will the government cuts further damage the recovery from the biggest downturn most of us can remember?

Both Barratt and Galliford have made the suggestion that Santander’s welcome move to increase its loan limit for first-time buyers to 90 per cent for new properties is a sign that the mortgage market is set to improve in 2010.  So are we ready for a recovery in house prices? As mortgage availability improves and buyers confidence is restored there will be strong demand for new properties, particularly as many developers have slowed the pace of their building. News like this from large developers could spell the start of the long-awaited recovery of the UK housing market.

The information required in a HIP for new build homes is very similar to that required for older homes. However, you will need to ensure that you consider whether the property is being sold off-plan and then take this into account with the information contained in the HIP. For example, with properties sold off-plan you will be unable to obtain an Energy Performance Certificate (EPC), as these can only be produced on properties that are available for inspection. Therefore, you will need to provide a Predicted Energy Assessment (PEA). The PEA will be based upon the specifications for the property and should be upgraded to an EPC once the property is build complete and it has still not been sold.

A new home is defined in the Home Information Pack (No. 2) Regulations 2007 as a home that is being designed or constructed, or a home that has been constructed but that has never been occupied. This definition does not include converted properties.

What a new home HIP must contain

 A new home HIP must contain the following:

1. An index;
2. A Property Information Questionnaire (specific to the plot);
3. An EPC or PEA;
4. A Code for Sustainable Homes certificate or interim certificate;
5. A sale statement;
6. Evidence of the title;
7. A copy of the proposed lease (if selling a leasehold property); and
8. Searches – local search and standard water search.

Developers are unable to begin the marketing of a property until all of the required elements of the HIP have been requested and paid for (or at least a commitment to pay for them has been made.) You must also have the basic HIP information available before marketing a property. The basic information required for marketing are the index, Property Information Questionnaire, EPC/PEA, sustainability certificate, sale statement and evidence of title. Once this information has been complied, the HIP is ready to market, albeit not a complete HIP. You then have 28 days in which to ensure that the completed HIP is available.

When is a new home HIP required?

If you sell the plots on a development individually, they will each require a HIP. However, if you are selling completed dwellings to another developer then you will not normally require a HIP, as you have not offered the property for sale on the open market. You will, however, still require an EPC for each plot sold as a completed dwelling.

Sales to a registered social landlord are also generally exempt but the regulations on this are far from straightforward.

Should you sell a portfolio of properties, these are generally exempt from HIP requirements under regulation 30 of the Home Information Pack (No. 2) Regulations 2007. For example, if you sell two or more properties to an investor under a single or multiple contracts, and indicate within the terms of the sale that you would not have accepted their offer on the properties in isolation and make this clear when marketing, then no HIPs are required for the subject properties. There is also no HIP requirement for mixed-sales under these Regulations.

Only homes marketed to the public require a HIP, even if the home is offered on a shared-ownership or shared-equity basis.

Code for Sustainable Homes

From 1^st May 2008, where the local authority has received a building notice, initial notice or full plans application the new homes involved must have a Code rating. The Code uses nine categories for measuring the sustainability of a new home. However, assessing a property against the Code is not compulsory, but you must ensure that the HIP either contains a nil-rated certificate if the home has not been assessed, or if the home has been assessed against the Code then a rating must be included.

Availability of the HIP

Any potential buyers are entitled to a copy of the HIP or any part thereof if they request the same. You have 14 days from the request in which to provide them with the information, and you should make no charge for providing the information to them unless they request the same in paper form. You can then make a reasonable charge for copying and postage.

Whilst you are marketing the property continuously there are no requirements for you to update any of the information contained within the HIP, except that you must replace the PEA with an EPC should the property be completed prior to sale.

The legislation surrounding HIPs can be very complex and this article simply scratches the surface. If you have any questions regarding the legislation relating to a particular development or new home then please do not hesitate to contact me on helen.chaproniere@mablaw.co.uk and I will be happy to help and advise.

Sir Cliff Richard and his conservatory

Runnymede Council ordered Sir Cliff Richard to demolish the £30,000 conservatory he had built at his Surrey mansion, after he failed to win retrospective planning permission for it.

The singer only discovered that he should have sought planning permission for the conservatory, when he decided to sell his mansion. He was told by the Council that the conservatory, which was built in 2006, breached its green belt policy, as any extension to the mansion should not have exceeded 30 per cent of the original floor space.

The Council has said that the conservatory must be demolished by 9 March 2010.

Farmer told to demolish the “castle” he hid behind straw bales

A farmer who secretly built a castle-like property, and lived in it for four years while it was hidden behind bales of straw, was recently ordered to demolish it by the High Court.

Robert Fidler hid the property behind straw bales while it was being built in an attempt to avoid having to apply for planning permission. Mr Fidler and his wife even went as far as not sending their son to school one day when he was due to draw a picture of his home, just in case he drew a big haystack and teachers queried the structure!

When the building work was finished, Mr Fidler dismantled the disguise and applied for a certificate of lawfulness on the grounds that it must now be lawful, having been erected for four years without any objections. However, Reigate and Banstead Council decided that the four-year rule did not apply in this case because the property had not been visible during that period and he was ordered to demolish it.

The Court backed the Council, ruling that ”The inspector’s findings were clearly ones he was entitled to reach on the evidence. It fully justified his conclusions that the erection and removal of the bales formed part of the totality of the building operations that Mr Fidler originally contemplated and intended to carry out. The inspector was plainly right to reach the conclusion that he did.”

Property developer who built a home disguised as a barn defeats council eviction bid

Alan Beesley and his wife were granted planning permission to build a barn for agricultural use only, but instead built a three bedroomed house with gym (although externally it looked like a barn with farm machinery on the outside.)

However, when faced with eviction by Welwyn Hatfield Council, the Court of Appeal ruled that the couple had acted within the law and had achieved immunity for the use of the building as a dwelling. This is because owners living in a property for four years are entitled to a certificate of lawfulness even if they fail to get the correct approvals (as Mr Fidler had applied for in the above case).

The Judge in the case admitted that it was a “a surprising outcome which decent law-abiding citizens will find incomprehensible”, but the case was a lesson for local planning authorities.

Comment

The average person who has spent a large amount of money on a construction, innocently believing that consent was not required only to be ordered to demolish it, such as in Cliff Richard’s case, is going to be devastated. Our advice is to always seek the advice of the local authority before carrying out any works whatsoever, particularly in conservation areas and especially with listed buildings. The local authorities are used to such requests and are generally very helpful.

With regard to the other two cases where there was no innocence apparently. It will be difficult for people to understand why the results were so opposite. (It will be interesting to see the decision in the next similar case). 

In Mr Fidler’s case, it could be that his “Castle” had not been built to building regulation standards, was obviously not checked at each phase by an inspector as is usual if you have applied for formal consents, and presumably did not have the benefit of an NHBC (or similar) guarantee which could render it unmortgageable and therefore unsaleable had it been allowed to remain. I suspect that Mr Fiddler did not intend to sell it in the forseeable future, but you also have to consider if it is structurally sound, with his family living there. Building regulations are issued for reasons such as safety.  

Similarly, Mr and Mrs Beesley will not have NHBC (or similar) cover, which will be an issue if they ever decide to sell the property. I would imagine that a surveyor would also have difficulty putting a value on such an unusual dwelling for mortgage purposes, as I doubt that there is anything comparable to it anywhere, let alone in the neighbourhood!

If you have any queries on the consents required for extensions or erections, please do not hesitate to contact us. We have property and planning experts available to assist.

So what do you do? You raise your mortgage with any high street bank or building society through an independent legal adviser who is familiar with the scheme in your area (a list of appropriate advisers can be provided to you by your local MyChoice HomeBuy agent). Then, in addition to your mortgage, you will receive a government equity loan for up to 50% of the purchase price of the property. The scheme confirms that savings above £10,000 can be used to ‘top up’ your purchase price without affecting the equity loan provided by the government.

You are free to choose a home of your own choice on the open market provided the property you have selected is in a reasonable condition (you will need to instruct a homebuyer’s survey to ensure this is the case). If you are employed as a key worker, you must also ensure sure that you choose a property that is no more than 90 minutes travelling distance from your place of work.

MyChoice HomeBuy is for people who would not normally be able to buy their own home on the open market and is predominantly aimed at key workers and public-sector tenants. If you want to purchase a property with the assistance of the MyChoice HomeBuy scheme, you will need to meet the legal and other costs associated with buying a home. Your MyChoice HomeBuy agent will provide you with a list of recommended solicitors who are familiar with the scheme and the paperwork involved so you can be rest assured the transaction will progress smoothly.

Funding from the government for the scheme is usually available from April and is in huge demand, with many MyChoice HomeBuy agents accepting applications from January. So get the ball rolling and contact your local MyChoiceHomeBuy agent to see if you are eligible for the scheme.

In addition to the developers own schemes, developers have joined forces with local housing associations by participating in schemes backed by the Government. Indeed, properties on residential developments participating in such schemes have been quick to sell.

Homebuy Direct is one such scheme that developers have been participating in and is open to households earning less than £60,000 who would otherwise be unable to purchase their own home. First time buyers, key workers and housing association or council tenants are examples of those eligible to take part in the scheme.

Under this Scheme, an equity loan is given to the buyer by a Homebuy agent (through public funding) and the developer. These loans represent a percentage of the value of the property and are secured as second and third legal charges against the property. The Buyer then obtains the balance of the purchase price from a conventional mortgage lender.

No fees or charges are payable during the first five years of the equity loan, so what is the catch?

When the property is sold, the owner will be liable to repay both equity loans and also the conventional mortgage. The amount to be repaid will depend on the percentage borrowed. Therefore, if the property has increased in value then the owner has to share that profit with the Homebuy agent and the developer. However, there is also a risk to the developer and Homebuy agent if the property has fallen in value, as they may make a loss on the amount loaned.

We have seen a number of developers keen to participate in this scheme. This would suggest to me that they have confidence in a recovery of house prices in the near future!

“Garden grabbing” has become a contentious issue for both councils and those living in residential areas. Gardens are generally regarded as brownfield land and are therefore good sites for developers, as there are likely to be less issues such as contamination. The DCLG investigation was undertaken in response to concerns that the number of garden developments has increased and become a significant issue for local planning authorities (LPAs). Key findings from the investigation include:

• There is no universally agreed definition of garden land between LPAs and therefore it was difficult to assess the true scale of garden development;
• Only a third of respondents considered garden development to be a national concern. However, it was of greater concern to LPAs with high development pressures who were unable to keep up with the increased workload associated with investigating garden development;
• PPS 3: Housing, the document used by LPAs when considering garden site applications, was considered by LPAs not to help them to resist garden development;
• Few LPAs monitor and hold information on types of housing development and therefore it is difficult to track garden development in specific areas, especially if no local development policies had been put in place.

Following the investigation, Housing and Planning Minister, John Healey, has announced that he will be strengthening national policy advice to make it clearer that garden land is not necessarily suitable for development and that decisions to stop building on it should be taken at a local level.

Recently I have had a spate of acting for either developers selling, or buyers purchasing, plots in small back garden developments, so it will be interesting to see the outcome of this investigation.

From 6 April 2010, the rule against perpetuities will only apply to those interests set out in the PAA 2009. These are generally trust interests (except pension schemes and inter-charity dispositions). Interests such as easements (legal rights), restrictive covenants (restrictions on use of property), options and pre-emption rights will no longer be subject to the rule against perpetuities.

From my many years of experience, I know that the majority of people we have dealt with do not know what a perpetuity period is (and why should they?) Our property and trust lawyers here often have to explain, and buyers regularly confuse it with a leasehold term of years.

The original rule was intended to prevent certain rights in property being tied up indefinitely and therefore the previous legislation set the maximum period at 80 years, although often the period was less, for example 21 years.

The fact that the perpetuity period is abolished for options could particularly be of use for option agreements, as they will have a longer life span. This could be of assistance to landowners and developers.

For developers doing plot sales, as interests such as easements and restrictive covenants will no longer be subject to the rule against perpetuities, their legal documentation will need amending from April and obviously we at Matthew Arnold & Baldwin LLP will be preparing for this.

For information on how this will affect trusts and accumulations, I will leave this to my expert colleagues!

The unnamed investor was one of 30 people who had paid deposits for flats at the development but who had then reneged on the deals, preferring to lose their deposits rather than complete their purchases in a falling market. The company is expected to sue a further eight investors and has reached agreements with several others.

With more than 300 similar cases involving other developers reportedly waiting to be heard in London alone – and many more expected to follow – this could well turn out to be a hard lesson for property investors,  some of whom may have been first time individual investors and even buyers who intended to actually live in the property but could not obtain mortgage finance once the value of the property fell.  Some may even face the possibility of bankruptcy.

Despite no doubt being advised by their solicitors (as we do and in writing) of the risks of not completing on an exchanged contract, some buyers do not take on board that it is not just their 10 per cent deposit (or reduced deposit in lieu of 10 per cent) that is at risk if they fail to complete. They are also liable for damages, being any reduction in the sale price of the property in the intervening period, plus marketing and legal costs and expenses the developers incur in remarketing. In a growing market, developers would generally just take the 10 per cent deposit as compensation and resell, but in a falling market they are taking advantage of the fact that they are contractually able to recoup their losses.

This may seem unfair on the buyers, but in the opposite scenario where a plot was worth more on completion that it was on exchange, would buyers be willing to pay a higher price than they contracted to? The situation has to be looked at from more than one angle.

Following the introduction of the Planning Act 2008, the Government ordered an independent review in May 2009 to establish the extent of development on back gardens. Although the findings revealed that “inappropriate building” on back gardens is not a widespread problem in England, over one third of councils considered it to be an issue, particularly those in the London suburbs, Home Counties and parts of the West Midlands. However, of those who reported it to be an issue, only 5 per cent had local policies in place to stop inappropriate development on garden land.

Mr Healey has now (1) changed the official guidance for planners “to make it crystal clear that previously developed or former garden land is not necessarily suitable for development, and that the impact on the surrounding area should be considered.”, and (2) instructed the Chief Planning Officer to write to planners across the country, outlining how local authorities can refuse inappropriate development by including measures on “garden grabbing” in their annual local plan.

This could be of concern to many developers, as a lot of the land that is used for housing is built on previously used land, much of which was previously garden land.  The key word in the Minister’s statement is that “inappropriate development” will be discouraged. This has always been the case, so developers who propose sympathetic schemes should be okay. There is still a great need for new homes in the South East, especially family homes, so by discouraging “garden grabbing”, the Government could be adding even more pressure to release green belt land for development.

Jay Das, our planning law specialist, advises that the timescales for implementing this into their local plans will vary from local authority to local authority. Local Development Frameworks (LDFs) are being prepared, but many authorities do not have any in place. It could take between two and five years to change LDF policies (although the Planning Act anticipated it could be done much more speedily.) The Planning Policy Statements and Guidance will be effective immediately, and some authorities may pass supplementary planning guidance where local plan policies do not conflict and these could be effected in three to four months. Developers need to be vigilant on all policy documents being consulted upon by planning authorities. They will need to take part and respond to consultations if it affects or is likely to affect them.