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Planning TV: Compulsory Purchase Orders (CPO) and Urban Regeneration

The emergence of the Housing White Paper in February 2017 saw increased attention to the role of Compulsory Purchase Orders as a tool for regeneration.

Planning TV spoke to Michele Vas at Dentons to gain a picture of the legal context behind CPOs, the legislation that enables CPOs to happen, and CPO guidance set out the government, outlining proper justifications for the application of CPOs for redevelopment projects.

Tayo Araoye at Westminster City Council spoke to us about CPOs in the Local Authority context and the effective community consultation and engagement processes involved.

We discussed the role of CPO legislation in the NOVA Scheme in Victoria SW1 with Justin Black at Land Securities, a shared vision between Westminster and Land Securities, and how CPO negotiations facilitated engagement with the project.

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.

A complex process

We look at the current approaches to assessing compensation in the context of CPOs. The promotion of nationally significant infrastructure projects such as HS2, Crossrail and garden cities, together with the recent (and continued) support in the housing white paper for the use of compulsory purchase to assist in delivering housing, confirms that the use of compulsory purchase orders (CPOs) will play an increasingly prominent role in the delivery of development. The inevitable requirement of exercising CPO powers is that those dispossessed of their land are entitled to appropriate and fair compensation.

Read the full article

This article was first published in Property Law Journal (April 2017) and is also available at http://www.lawjournals.co.uk/.

Vacant Building Credit – an own goal?

Vacant Building Credit (VBC) was re-introduced into the NPPG in May 2016 to less vocal opposition than it faced when originally introduced following a Ministerial Statement in November 2014.  The Statement remains intact following the Court of Appeal’s ruling that it should stand.

The broad premise of  VBC is that is acts as a credit which can be offset against the affordable housing requirement of new development.  The credit is equivalent to the existing gross floorspace of a vacant building brought back into use or demolished for redevelopment purposes.  However, neither ‘abandoned’ buildings or those vacated for the sole purpose of redevelopment are able to benefit from VBC.

Unhelpfully, the NPPG gives no guidance on how VBC is intended to be applied.  Two immediate issues arise:

  • buildWhat is meant by “vacant”?  There is a concern that VBC will incentivise landlords to force the vacation of offices, industrial buildings or even houses to benefit from VBC.  There is also little assistance on where the line can be drawn to assess whether a building is “vacant” or “abandoned”.
  • What is meant by the “gross floorspace” of the vacant building – GIA over GEA?  Once that has been confirmed, how that floorspace should be applied to calculate the off-set?

As a consequence, local authorities are left to make sense of how to apply VBC, and inevitably are creating methods and policies for approaching VBC in a way which will minimise its impact on affordable housing delivery.  Emerging practice includes:

(i)         interpreting “vacant” as being opposite to the “in use” building test set out in the CIL Regulations.  This ensures that a development is unable to benefit from both VBC and the demolition credit which can reduce the amount of CIL payable;

(ii)         requiring the entire building to be vacant, not just part of it;

(iii)        requiring the building for which VBC has been sought to have been actively marketed for a specified period (and for the method and details of marketing to be provided);

(iv)        requiring details of existing floorspace to be provided on a GIA basis when a planning application is submitted.

Of those local authorities that are putting in place policies for calculating VBC, it is clear that there is no standard approach; others will be reviewing whether they apply VBC at all.  The West Berkshire appeal confirmed that the VBC policy is a material consideration and is not capable of being applied in a “blanket” manner; many local authorities will be taking comfort from this, possibly even reviewing how Local Plan policies can be formulated to disapply VBC altogether.

VBC was introduced on the basis it would assist smaller developers deliver viable schemes, however the Government has failed again to build the necessary clarity into the guidance to ensure that it is only small developments which benefit from VBC.

Left to local authorities to put in place their own mechanisms provides no guarantee that VBC will assist those it was intended to; as a consequence VBC’s long-term impact on affordable housing remains potentially damaging at a time when the need for affordable homes remains critical, while the ability to rely on it to bring forward otherwise uneconomic schemes remains unclear.

CPO – gentrification or regeneration?

The recent refusal by the Secretary of State to confirm Southwark Council’s CPO for the next phase of the Aylesbury Estate development demonstrates a meticulous adherence to  parts of the CPO Guidance which have largely been paid lip-service to in many previous CPO decisions.

The mantra that a compulsory purchase order should only be made in the “public interest” is often justified by the inevitable regenerative benefits of development projects.

And that should be good enough, should it not?  – when not a day goes by that the news is reminding us of our housing crisis, that our town centres are failing, of the social divides which exist within our local communities and, as we wait with bated breath, to see what long-term impacts Brexit will have on construction, funding and development, once that axe is finally swung.

Indeed, both the Secretary of State and Inspector agreed that the redevelopment of the Aylesbury Estate would provide social and economic benefits to the area.  However, it was concluded that these benefits were not so significant to justify the lawful interference with the Human Rights of those objecting to the Order.  This was largely based on the conclusion that existing leaseholders, without investing significant savings or taking out new mortgages, would not be able to afford to relocate into new properties provided by the redevelopment and therefore forced to move away from their local community.  He also reached the conclusion that not enough effort had been made to acquire the outstanding interests by agreement.

gentThe decision raises some real issues for the CPO industry.  It paints an uncomfortable picture of CPO being a tool of gentrification, driving residents and small businesses out of their communities on account of rising land values and rents; the polar opposite of what a CPO is intended to achieve, which should be to improve and restore vitality to a local area.

It also creates a real tension with the current reforms to CPO compensation, which essentially seeks to ensure that those subject to compulsory acquisition should not gain any benefit from any enhanced value created by the regeneration scheme underlying a CPO.

It raises the question of whether Council’s should wrestle back control from developers when seeking to engage with those affected by CPO.  Most CPOs are developer-led and their surveyors will be at the fore of seeking to negotiate acquisition of land by agreement, albeit with a duty of care to the Council.  This possibly creates the wrong perception that there is a lack of engagement by the Council.  Greater visibility of the Council promoting the CPO and a genuine strategy to engage will be important.

Whilst the decision is, in some respects, a breath of fresh air that reminds us the impact CPO and redevelopment can have on individuals and local communities must be given more careful consideration together with a thorough review of solutions which can be put in place to maintain the identity of the local community.  One does have to question how genuinely balanced the decision was when the majority of existing residents had raised no objection, the scheme was set to deliver over 800 new residential units and other benefits; yet the CPO failed on the back of only 8 outstanding objections.

Southwark Council has announced they will be judicially reviewing the decision; a sensible move given its ramifications.

The problem with reserved matters …

The consistent message from Government is that development and infrastructure is key to improving our recovering economy.  The creation of new communities by residential led development, large mixed use schemes and town centre regeneration are on the increase.  However, does the planning system provide us with the necessary tools to assist in the proper delivery of these schemes once planning permission is secured?

Securing outline planning permission for large scale development is a task in itself.  Inevitably, developments with a 5, 10 or 20 year construction timetable, will evolve as the proper detail of the scheme gets sorted out by the Reserved Matters process.

It is now common place for detailed conditions to be imposed on Reserved Matter blogApprovals, whether this is correct or not under the existing statutory regime is a topic for another day.  At the time outline planning permission is granted it is not uncommon that the LPA or developer will not know the identity of the end user of, for example, the A1, A3 or other commercial uses applied for.  It is not until Reserved Matters are submitted that the nature of the use and/or operator is known and the potential effects and need to mitigate against anti-social opening hours, deliveries or noise become clear.  Conditions restricting the use accordingly get imposed on the Reserved Matters Approval.

However what if these conditions are onerous or the operator changes?  Where is the power to seek to amend these “conditions” or make minor alterations post Reserved Matters Approval?  A Reserved Matters Approval is not a planning permission, Section 73 or S96A of the Town and Country Planning Act 1990 are not applicable when seeking to vary conditions imposed on Reserved Matters Approvals.   This is unhelpful.  The only options available are to appeal, re-apply for Reserved Matters (assuming still in time) or seek an entirely new consent.  None of which offer a satisfactory solution.

With large scale and complex projects on the increase, the planning system needs to become more flexible in allowing schemes to change as the detail evolves and conditions imposed to be varied accordingly, albeit within the set parameters established at outline stage.  There are sufficient safeguards in place to ensure that the environmental assessment of changes still remain to be assessed if needed and that consultation takes place.  The form of Reserved Matters Approval is evolving to keep pace with the complexity of development and the planning system needs to catch up.

First road test for special measures

Less than a year after the introduction of the government’s ‘special measures’ regime for poorly performing local planning authorities, the secretary of state has determined the first planning application submitted directly to him.  Section 62A of the Town and Country Planning Act 1990 (amended by the Growth and Infrastructure Act 2013), which came into force on 1 October 2013, enables applicants to apply directly to the secretary of state to determine applications for major development where the local planning authority for the area has been designated as being in ‘special measures’.

In the first case, Gladman Developments applied to the Secretary of State to determine its outline application for 220 new homes, a school drop-off and pick-up zone and associated infrastructure in Blaby in Leicestershire. This application had been refused on five separate grounds, including conflict with the local authority’s planning policies seeking to promote sustainable development within or adjacent to Leicestershire’s principal urban area. The inspector took the view that the proposal would result in unsustainable out-commuting patterns and so conflict with the principle of promoting a reduction in travel.  He considered that the development would fail to preserve or enhance the character or appearance of local heritage assets and not reflect the distinctive character of the area, and result in the loss of high-quality agricultural land.

The new procedure demonstrates that an application for major development can be determined on a quicker timescale – within three months in the Blaby case – than a scheme of this size might usually be considered locally.  So far, this is the only application to go through the section 62A procedure. But does this route provide developers with a genuine alternative to working with local authorities in ensuring that development is acceptable at the local level, whilst waiving their right to appeal?

This is a shortened version of the article that appeared in Planning magazine, 29 August 2014 – click here for the full version, and here for a copy of the decision.

Planning Court victory for Sainsbury’s

We successfully acted for Sainsbury’s in defending a judicial review seeking to challenge planning permission for the supermarket’s new store in Whittlesey, Cambridgeshire. The application for permission was dismissed by the newly formed Planning Court on 22 May 2014 as “totally without merit“, just under four weeks from Sainsbury’s serving its grounds resisting the challenge.

Sainsbury’s new store in Whittlesey will comprise some 5,306sq.m (GEA) and also provide a new Country Park and shuttle bus service to the town centre.

Having been part of the team involved in securing planning permission for the scheme, we advised Sainsbury’s on the subsequent judicial review of the planning permission, including the new procedures for the recently formed Planning Court, in particular, to dispose of the challenge as quickly as possible.

Dave Lazenby, Town Planning Manager at Sainsbury’s, commented: “Dentons guided us seamlessly through each stage of this process and we are very pleased that the right and proper decision was reached so promptly.”

Michele Vas said: “It is pleasing that this development, which has much local support, has not been delayed any further through protracted court proceedings. This swift and decisive decision of the Planning Court signals a new era that court proceedings can no longer be used tactically to bring development to a halt.”

The Dentons team comprised Michele Vas and Katie Scuoler.


Reducing contributions

Another developer has successfully appealed under Section 106BC of the Town and Country Planning Act 1990 to reduce its affordable housing contribution on viability grounds.

The appeal by Tamewater Developments Limited followed the refusal of Oldham Borough Council to discharge three outstanding affordable housing contributions totalling £283,525 for a development consisting of 19 flats and 25 dwelling houses (£383,525 being the total sum secured as an off-site affordable housing contribution under the original S106 Agreement).

o-HOUSE-PRICES-POUNDS-facebookThe Inspector accepted the viability evidence presented by the Developer and allowed the appeal, reducing the overall affordable housing contribution to £100,000 for a period of 3 years from the date of the decision.

Interrogating viability information supplied by developers does appear to present a challenge for Councils in an appeal situation.  In a market where housing values are rising (albeit perhaps not as quickly in Oldham), Councils determining applications under S106BA should be pressing for a greater use of viability review mechanisms as a form of modification to the original affordable housing provisions, rather than simply refuting the viability evidence presented by the developers, particularly where there is not the expertise to robustly defend this position on appeal.  At the very least, the provision of some affordable housing may be secured by a more solution based approach.

The Planning Chamber

Yesterday the Government published its response to its Autumn consultation on the reform of Judicial Review.  Following last year’s reforms, the  response affirms the Government’s intention to continue to reduce the role judicial review can play in delaying and/or frustrating development.

The response confirms:

  1. a new specialist Planning Chamber is to be set up, but within the High Court rather than the Upper Tribunal (as previously proposed);
  2. a new permission filter will be introduced to S.288 appeals in order to weed out weak claims early on;
  3. a new threshold will be set which allows the court to refuse to grant leave or relief where the outcome for the claimant is unlikely to have been substantially different from that complained of;
  4. no proposals will be introduced to restrict “standing”;
  5. cost capping and tighter rules are being introduced for the use of Protective Cost Measures, but this will not extend to proceedings relating to environmental cases;
  6. measures be put in places to allow costs to be awarded more regularly against claimants following  refusal of permission at oral hearings; and
  7. the ability to “leapfrog” cases straight to the Supreme Court will be less restricted.

Some of these measures have already found their way into the Criminal Justice and Courts Bill.  It is expected that changes to the Civil Procedure Rules will be introduced to deal with the operation of the Planning Chamber.  It will be interesting to see if the reforms have a genuine impact both in deterring third parties from lodging judicial proceedings.  The key issue is to ensure that the Planning Chamber is properly resourced so that any delays are kept to a minimum.  That will always be far more important than the other measures.

Market restrictions

housing-bubbleForeign investment is being blamed for contributing towards a “housing bubble” in London.  I was asked, while speaking at a conference last week, whether the planning system could be used to dampen the ardour of foreign buyers inflating the value of London’s property market by restricting the sale of new market units to UK residents.

Aside from the fact that we have laws which seek to police and prevent discrimination  (of which such a restriction would normally fall foul), this is not an inherent UK “problem” but rather a London-centric one.  How well does this sit with the active promotion of the UK by the Government for foreign investment?

If local authorities are intent on introducing a restriction, there will need to be justifiable and evidenced planning reasons for doing so, ideally enshrined in a local policy.  The policy will have to be justified, for example, on the basis that the local housing market is not meeting the needs of local residents.  Possible means of addressing this may be to require new development to be marketed locally for a prescribed period, or, more restrictively, require a certain percentage of units to only be made available (both of first sale and re-sale) to local residents but with cascade provisions allowing others with local connections to buy units if there is not enough local interest.  However, I question how easy such a restriction would be to monitor and control.

The fact is that foreign investment in residential property, even if largely within London for the time being, provides wider regenerative benefits for the UK as a whole in contributing to economic growth via the creation of new jobs, new homes and infrastructure. Is this not what good planning should achieve?  Whilst the UK is still coping with the effects of austerity, any investment, whether national or international, should be welcomed unless there is a very clear harm which can be “planned away”.

As Lord Rogers recently noted there is a separate issue about houses being bought but not occupied.  Care is needed not to confuse the two points.