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A legitimate expectation to what, exactly?

The Court of Appeal has considered whether the Secretary of State is required to give reasons for deciding not to ‘call in’ a planning application. In R (on the application of Save Britain’s Heritage) v Secretary of State for Communities and Local Government [2018], Save Britain’s Heritage (Save) challenged the lawfulness of the Secretary of State’s (SoS’s) decision under s77 of the Town and Country Planning Act 1990 not to call in an application relating to the ‘Paddington Cube’ development. We consider the court’s findings and its implications.

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This article was first published in Property Law Journal (December 2018/January 2019) and is also available at www.lawjournals.co.uk.

Holiday lets in Edinburgh – has the bubble burst?

Fancy a city break anyone? Who could resist a few days in an iconic European city that also happens to be a UNESCO World Heritage Site?

So, where to stay – one of Edinburgh’s many hotels or perhaps a flat is more appealing? There are lots of options to consider. Interestingly, the concentration of Airbnb’s in Edinburgh is four times greater than in London, Paris or New York, but could three recent enforcement notice appeal decisions (1, 2, 3) point the way towards a clampdown on the operation of Airbnb’s and short term holiday lets in Edinburgh?

The appeals related to three separate properties in the same block located in the heart of the tourist centre and lying in close proximity to Princes Street Gardens and the Castle. All three properties were one bedroom flats, with sofa beds in the living room, thereby allowing occupation by up to 4 adults. In summary, the enforcement notices stated that the flats were being used for short term commercial visitor accommodation, without having obtained planning permission and, accordingly, required the alleged use to cease within two months.

The key here was whether there had been a material change of use from residential flats which had resulted in harm to the amenity of adjoining occupiers. Reference was made in the various submissions to City of Edinburgh Council’s Local Development Plan policy Hou 7 (inappropriate uses in residential areas) and the Council’s non-statutory Guidance for Business. The Guidance provides advice on whether the use of a residential property for short term commercial visitor accommodation requires planning permission and refers to the need for an assessment of (i) the character of the new use and the wider area; (ii) the size of the property; (iii) the pattern of activity associated with the use, including the number of occupants, the period of use, issues of noise, disturbance and parking demand; and (iv) the nature and character of any services provided.

In all three cases, the Scottish Government Reporter refused the appeals having concluded that there had been a material change of use, taking account of the number of arrivals and departures, the likelihood of increased noisy activity late in the evening, increased activity due to cleaning the properties, luggage drop-off in between checking in and out and the increased use of the communal drying area by guests for socialising – all of which would be greater than if the properties were in use by a single household.

Meanwhile, the Green MSP, Andy Wightman, has successfully tabled an amendment to the Planning (Scotland) Bill which would require property owners to obtain planning consent in order to change a main residence into a short-term let property such as an Airbnb. This would only apply to a main residence, rather than second homes and is still to be considered by all MSPs at Stage 3 of the Bill next year.

City of Edinburgh Council believes a licensing regime would be the best way to control short term lets and has asked the Scottish Government to consider introducing this.

So, plenty to consider going forward for owners of holiday lets – maybe book that city break sooner rather than later?

Planning TV: Delivery Challenge – Speeding up build out

The focus on the rate of delivery of housing on sites that have planning permission has sharpened recently. This was  signalled in the Housing White Paper, 2017 and accelerated by the announcement in January 2018 of a Ministry of Housing, Communities and Local Government (MHCLG) review on this matter, chaired by Sir Oliver Letwin MP. Housing delivery has also been a focus of for the Local Government Association.

Planning TV asked a group of planning experts to come up with creative solutions to get housing delivered on a real site in a town in the south of England with a for permission 200 homes with where build out has slowed and in currently stalled with only a handful of homes built over several years – presenting a bit of planning mystery. Lindsey Richards – Homes England, Anna Rose – Planning Advisory Service and Mary Parsons – Places for People share their insights on how to tackle this problem site and speed up build out.

Brought to you by Dentons and Citiesmode it draws on the knowledge of a core panel of experts from across the sector, supplemented with special guests hand picked for their particular expertise. From Greenbelt to Brownfield, national planning policy to local plan-making and everything in between, Dentons Planning TV provides a unique insight into the thoughts of those involved at the sharp end.

Section 203 as a regeneration tool

It has been two years since s203 of the Housing and Planning Act 2016 became operative, replacing s237 of the Town and Country Planning Act 1990. While s203 does not entirely resemble its predecessor, this does not appear to have dampened or affected the development industry’s confidence on the benefits of using the provision, and it continues to be utilised as part of the development process.  We look at the lack of consistent guidance when implementing s203.

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This article was first published in Property Law Journal (November 2018) and is also available at http://www.lawjournals.co.uk/

Consenting New Towns

Development Consent Orders are a great way to draw together the consents necessary for a piece of infrastructure.   As the locally led garden towns movement grows there are siren calls to use the DCO process to help deliver some of the housing that is needed. Could a DCO could be used for a new town or major urban extension?

Building a windfarm and creating a community are very different. Any new town worth its salt will evolve over time – both during initial development and beyond. Having the ability to evolve is crucial.  What we imagine now as the community of the future is, almost inevitably, wrong. People will live differently. They will travel differently.  Education will be delivered differently. Health and well-being will be part of daily life, to prevent the cost of medicine and elderly care becoming a national millstone.  Shopping will have undergone several revolutions. The nature of jobs, and the balance between jobs, homes and social life will probably be unrecognisable. New communities will also need be actively curated. Success will depend as much on the relationships that are created as upon the bricks and mortar. The built form of all communities will have to change, and adapt over time, to reflect these processes.

The present breed of DCOs is probably ill-suited to this type of long-term social engineering. At the moment they suffer from inflexibility.  They work well where the proposal is clear, neat, tidy and fixed – like a windfarm.  New towns are not so neat and tidy.  DCOs to date have also largely been governance free exercises – aside from a few controls on “reserved matters” and security for CPO compensation.  Delivering new towns will need the active participation of the public and private sector, as well as both existing and future communities. It will need both active and passive governance. None of this has been addressed, so far, in the DCO process.

One of the hardest lessons for those delivering new towns is that they are, and should be changeable, iterative, complicated, exercises in trial and error, buffeted by markets, politics and people. There will be many different ways to deliver them, from private sector schemes going through the traditional planning process with negotiated long term quality partnerships through to development corporations, both nationally and locally led. And there will be numerous variants in between.  A common factor to all will be the need to facilitate and encourage change.   We need to ensure that the benefits of variety and the capacity to evolve is not straitjacketed by the using DCOs if they remain as rigid as they are at present.  Remember that the sirens called ships to ruin on their rocks.

Transient Transparency?

In the recent Paddington Cube case, the Court of Appeal has confirmed that, at the moment, the Secretary of State (SoS) is required to give reasons when deciding whether or not to call in any planning permissions pursuant to Section 77 of the Town and Country Planning Act 1990.

SAVE’s appeal centred around the basis that the SoS should give reasons when deciding not to call in an application on two grounds, (i) there was a legitimate expectation to do so and (ii) there was a common law duty to give reasons. The Court allowed the appeal on the first grounds but dismissed it on the second.

On the basis that the SoS had previously given commitments publicly to give reasons when deciding not to call in applications, the Court found that this gave rise to a legitimate expectation that the “promised” approach would be followed and reasons therefore given.

In this case, the “legitimate expectation” arose from a series of promises made by the SoS, dating from 2001 (contained in the Planning Green Paper, an announcement by Lord Falconer in the House of Commons and other subsequent publications) that reasons would be given by the SoS when deciding not to call in planning applications.

The key points are:

  • “legitimate expectation” can arise either through an express promise or by a practice, and either can occur in the planning context;
  • if a public body sets out “a clear and unequivocal policy” an individual is entitled to expect that policy to be operated;
  • such an expectation continues to apply unless and until that policy is modified, withdrawn or otherwise would interfere with statutory duties;
  • the withdrawal or modification of a policy should be done so publicly;
  • no common law duty arises to give reasons for procedural decisions which are not directly determinative of a party’s rights and obligations;

It is notable that whilst LJ Singh accepted that no common law duty arose in the SAVE case, he did not dismiss altogether the possibility that such a duty could still arise in cases of a procedural discretion, stating this “was to be decided in each particular context where the issue may arise in the future“.  This leaves the door open for continued debate as to whether there should be a common law duty to give reasons in planning decisions.

SAVE have presented the case as a victory for transparency.  Their victory may be doubly pyrrhic.  First, the main judgement suggests that the level of reasoning required when declining to call in applications is not great, and that the promise to give reasons can easily be withdrawn.  Secondly, it is already bittersweet since SAVE were denied the right to challenge the underlying Paddington consent – with the Court saying that to do so would have been an “abuse of process”.

Legislation not the ‘agent of change’

Supporters of the Planning (Agent of Change) Bill 2018-19 had been looking forward to its second reading in the House of Commons on 26 October 2018. On 10 September, however, the Bill was withdrawn.

Parliamentary bale out

Music/ cultural venues and pubs in particular will be disappointed. There will be no legal planning protection for existing such uses, which are often threatened by nearby noise-sensitive (i.e. residential) development.

It is not clear why the Bill was withdrawn. The Bill itself was not published (or, if it was, it was withdrawn shortly afterwards), so we do not know what we are missing.

Planning policies fill the gap?

The agent of change principle is, however, included in Paragraph 182 of the new NPPF, which provides:

Where the operation of an existing business or community facility could have a significant adverse effect on new development (including changes of use) in its vicinity, the applicant (or ‘agent of change’) should be required to provide suitable mitigation before the development has been completed.

The Paragraph 182 provision that the new use ‘should be required’ to mitigate is in itself strong, but it is subject to there being a ‘significant adverse effect’ – a high threshold. It does not necessarily preclude complaints to councils or, worse, nuisance claims.

The NPPF is highly material but will need to be applied flexibly. In practice, the effectiveness of the principle is likely to depend on development plan policies, planning officers and council members upholding it. This in turn depends in some cases on communities demonstrating the importance of music venues and pubs in their area. It also requires decision-takers to recognise the wider nuisance-sensitive uses that should benefit from protection against parachuting in, for example retail operations. The Draft London Plan Policy D12 helpfully unpacks some of these elements but is also artificially narrow, protecting ‘venues’ rather than the wider range of uses that make up diverse and, increasingly, intensified, city spaces.

However, regardless of any planning policy mitigation measures, there will always be a risk of a statutory nuisance claim. Legislation will be needed to deal with that problem, ideally providing a partial immunity to both existing and new cultural and entertainment facilities.

Setting the Tone

There is a general consensus that land should be “right priced”. Where it is viable the costs of providing both hard and social infrastructure needed to support development should be established and thoroughly tested so that they can be reflected in land values. The local plan and CIL examination and inquiry processes are an essential, if not perfect, basis for setting a viability benchmark.

Right pricing land will, however, often lead to values below landowners’ existing aspirations. Necessarily, it removes some hope value and reduces market value. It has been pointed out that this loss of expected value will lead to some landowners to hold back on their land, potentially starving the development market of a staple need. They will continue to ask for unadjusted values and that will cause problems since developers will not be able to pay those prices and still deliver policy compliant schemes.

One answer to this is that the CPO process can be used to buy land, at a price that reflects adopted planning policy and any CIL and realigns land value expectations. Quite rightly critics have observed that it is impossible to compulsorily acquire all the land required for 300,000 homes a year. There is no capacity within local authorities (or within housebuilders to be fair) to support such an effort. While that is true CPO powers do not need to be used to acquire all development land, just enough to make it clear that inflated expectations of site value should not stand in the way of housing delivery.

If the local plan and CIL processes work properly, and are held to account by those affected, there should still be a healthy margin, or incentive, for landowners to sell their land. The initial landowners affected would be rather like the unfortunate Admiral Byng, being subject to the judicious use of CPO powers “pour encourager les autres”.

Magic Bullets? Why Value Capture Should Be Kept Simple

The House of Commons Housing Communities & Local Government Select Committee Land Value Capture Inquiry report is great, but dangerous. It is a welcome reminder that the planning system can, and should, do more to capture the cost of the infrastructure required to support development. It is also problematic because it suggests a range of new “toys”, including a review of CPO compensation provisions, that is politically unworkable, a distraction and unnecessary.

Right Price

The report is clear that landowners, and developers on their behalf, already make significant contributions towards infrastructure and affordable housing. The combination of planning obligations and CIL can work effectively. With more local authority resource, greater transparency and a stronger emphasis on the local plan, even more can be achieved. As the report indicates, proper planning requirements should be viability tested and reflected in planning policy and a reformed and simplified CIL. Those needs will then, perhaps slowly, be “hardwired” into land prices. Land will be “right priced”.

No end to hope

A number of witnesses, and the evidence, emphasise that using planning policy is not a panacea. It will not fund all infrastructure requirements.  It will not solve the housing market problem.  Markets in different parts of the country are very different. The planning system can be used to secure a full contribution to infrastructure in parts of the South East, in a way that is simply impossible in parts of the North West.  Local planning processes can reflect those differences better than any sweeping national change.  Similarly, right pricing also requires some market sensitivity and testing. The aim should be to maximise the contribution that landowners make to infrastructure, whilst still allowing the land market to function. That means developing policies in a way that still leaves a sensible market value.

In urban areas that market value will, often, reflect the existing use value plus a sensible margin and an incentive to bring land to the market. For greenfield sites, the market value will need to reflect an amount needed for landowners, or promoters, to bring forward development and recycle value themselves into infrastructure delivery and place-making. However, landowners need to recognise that any existing “hope value” is not a permanent or fixed part of market value. As the market, planning policy and CIL levels change hope value necessarily also has to adjust. Any balancing exercise should diminish, but not dash, hope.

Thin Ice

Perhaps the more important Select Committee issue is the suggestion that the 1961 Land Compensation Act should be changed. In broad terms, the Committee recommend that land being compulsorily acquired should be acquired at existing use value instead of market value. That would be resisted. It would create a two-tier land market – with different values applying to adjacent plots depending on whether it is being sold on the open market or being publicly acquired. How would that work? Would that meet one of the tests that the Committee set for itself – fairness?

It is also unnecessary. The Committee attributes the success of the first generation of new towns to there being a different CPO compensation code, and suggests that the same result would not be achieved today. That is just wrong.  If a site for a new town is compulsorily acquired, the valuation will disregard the “scheme”.  In most cases, that will mean the land is acquired at something close to the existing use value – most sites would not be developed in the absence of the new town proposal. Even if, in the absence of the new town proposal, there would a development value to the site then a properly constructed planning policy framework will require any new development to fund the necessary infrastructure and the cost of doing so will be reflected in the land value.

Keep it simple

Why is there a need to change legislation to do something that can, largely, already be achieved without burdening the system with more complexity and change? It should be a fundamental principle of CPO compensation that landowners receive a proper market value for their land. The Parkhurst Road case has made it clear, quite rightly, that market values should reflect planning policy. If that happens, then the hope value component of market value will, properly, be adjusted by the proper attribution of infrastructure costs.   If, after the proper deduction of those costs there is still a margin and a residual hope value, what is the justification really, for amending the compensation code to take that?  If there is a justification for taking that capital gain then the tax system should be used to do so rather than playing games with compulsory purchase compensation which are ultimately likely to slow down development and unhinge investment.

Development assets?

The Localism Act 2011 introduced a number of community rights, including provisions to help communities safeguard land and  buildings serving a community purpose. The asset of community value, or ACV, regime allows local communities to identify land  or buildings that serve a purpose to further the social wellbeing or social interests of the local community, and provide the community with an opportunity to bid for the land or building when the owner decides to sell – known as the community right to bid. We analyse the impact of land and buildings being listed as ACVs on development schemes, as illustrated by three recent cases.

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This article was first published in Property Law Journal (August 2018) and is also available at www.lawjournals.co.uk