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Real Estate Matters – September 2014

Real Estate Matters – September 2014

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08/09/2014

Conserving the land

Introduction On 24 June 2014 the Law Commission reported to the Government on a proposal […]

Introduction

On 24 June 2014 the Law Commission reported to the Government on a proposal to put in place legislation to permit landowners and responsible bodies to voluntarily agree that certain things should be required or prohibited in respect of piece of land for conservation purposes, called conservation covenants.

A conservation covenant is different from a normal positive or restrictive covenant in that the responsible body does not need to own any land in the vicinity of the land affected by the conservation covenant to enforce it. In fact the responsible body does not need to have a connection with the land at all.

Once a conservation covenant is made it would be binding on the landowner and future owners and it would be up to the responsible body to make sure the landowner complied with it. The conservation covenant would take effect as a local land charge.

Why is it needed?

In the past landowners have wanted to bind future owners of the land to ensure that certain features, such as plants or historic buildings, are conserved for the public. As things currently stand it can be very difficult to do this, requiring complex ownership structures and in some cases it is just not possible to achieve.

Conservation covenants are already permitted in many other common law jurisdictions, such as Scotland, and the Law Commission has recommended that this be introduced in England and Wales too.

Who could enter into a conservation covenant and when could it be made?
A landowner could voluntarily agree to enter into a conservation covenant with a responsible body. The landowner would need to either own the freehold interest in the land in question or be tenant under lease with a term of more than 7 years.

Responsible bodies would include the Secretary of State (for England), the Welsh Ministers (for Wales) and those appointed by them, such as local authorities and public bodies or charities whose purpose is connected to conservation.

The covenant must be:

for the public good
for a conservation purpose, meaning for the purpose of conserving, protecting, restoring or enhancing:
– the natural environment
– natural resources
– cultural, historic, archaeological, architectural or artistic features of the land
– surroundings, setting or landscape of any land which has any of these features.

The Law Commission has given examples of what a conservation purpose might be, which could include an obligation to preserve a historic building, grow a specific type of plant, maintain woodland and allow the public to have access to it or to prevent the use of certain pesticides.

It has also been recommended that a conservation covenant template be produced that sets out the various points that the parties might want to consider, including the time period, the obligations of the parties and how the covenant is to be enforced.

Enforcement and defences to breach

It is up to the responsible body to ensure that the conservation covenant is complied with and to take action against the landowner if it is not. The covenant can also place obligations on the responsible body.

It is currently suggested that the responsible body should have a range of ways to ensure compliance with the covenant by the landowner. In the majority of cases it is expected that the landowner would have to pay damages and in circumstances where the breach was the landowner’s fault the court could order exemplary damages, being damages set at a higher amount than normal compensatory damages. Where compliance is required urgently the responsible body could potentially obtain a court injunction.

The landowner would be able to defend a breach of a conservation covenant in limited circumstances, for example a natural disaster where the breach is outside of their control or where it has come about due to an emergency and the parties were trying to prevent injury or loss of life.

Varying or discharging the covenant

Conservation covenants could be changed or discharged by mutual agreement between the parties. Alternatively, either party could apply to the Lands Chamber, which has the power to change or discharge the covenant if it would be reasonable to do so. The Lands Chamber would look at factors such as change of circumstances, what is of most benefit to the public and whether the covenant is successfully meeting its conservation purpose.

WM comment

Although this is currently only a proposal to the Government, the Law Commission have recommended that the scheme goes ahead. It may be worthwhile for landowners, local authorities and quasi governmental bodies or charities with a conservation purpose to reflect now upon how this could affect them and what benefits could be achieved.

Developing allotments

Background The term allotment usually refers to land held by a local authority under the […]

Background

The term allotment usually refers to land held by a local authority under the Allotment Acts 1908 – 1950 however it is also possible for allotments to be privately owned. Privately owned allotments are however still governed by the statutory provisions relating to the determination of tenancies and payment of compensation and therefore disposal of land which is the subject of such tenancies can be complicated by the need to follow those statutory provisions in order to regain possession of the land in question.

Type of tenancy

The first step in compiling a strategy for disposing of land which is the subject of allotment tenancies is ascertain how the tenancy can be determined but in order to do this it is necessary to assess what type of tenancies are actually in place. Unfortunately, in many cases this is easier said than done as it may often be difficult to assess which type of occupation a particular allotment tenancy falls within. Whilst the tenancy documents may contain contractual termination provisions, it should be noted that regardless of the termination or compensation provisions in the relevant tenancy document, these may be overridden by the statutory provisions. The table below sets out a brief overview of the main types of allotment tenancies (which are further considered later in this note):

Agricultural Acts

There are various Allotments Acts which contain statutory provisions covering termination of allotment tenancies and payment of compensation. As can be seen from the table above, the Allotments Acts distinguish between ‘allotment gardens’ and ‘allotments’. ‘Allotments’ may qualify as ‘agricultural holdings’ or as ‘farm business tenancies’ under statute if used for the purposes of a trade or business.

Allotment Gardens

If an allotment is let on a tenancy for use as an allotment garden, regardless of the provisions of the tenancy document, the tenancy cannot be terminated other than:

by giving at least 12 months’ (which cannot expire after 6 April or before 29 September in any year)
by three months’ notice if the land is required for building, mining or other industrial purposes or for roads or sewers necessary in connection with these purposes
in certain other scenarios, including for corporate landowners as owners of a railway, dock, canal, water or other public undertaking, breach by the tenant of the tenancy or tenant insolvency or
re-entry for non-payment of rent, breach of the terms of the agreement or bankruptcy of the tenant.

Compensation is potentially payable on termination of the tenancy and this is regardless of whether compensation is excluded in the tenancy agreement. Furthermore, the landlord may also be entitled to compensation for deterioration of land.

Tenants of allotment gardens and allotments have certain rights to remove fruit trees and bushes and fencing/improvements etc carried out by them subject to an obligation to make good damage. Further, in certain circumstances the tenant may have rights following termination, such as to remove crops.

Allotments

There are limited statutory provisions regarding termination of allotments but if the land has been used for the purpose of a trade or business, it is possible that such allotments can be classified as farm business tenancies or agricultural holding meaning that the statutory provisions relating to these types of agreements would then apply. Provisions for compensation differ to allotment gardens and can be payable for crops, labour, fruit trees, bushes and improvements made by the tenant to buildings and structures. Such compensation can even be payable if the tenancy expires naturally by effluxion of time.

Farm Business Tenancies/Agricultural Holdings

An allotment tenancy agreement granted after 1 September 1995 will be subject to the provisions of the Agricultural Tenancies Act 1995 if the relevant qualifying conditions (set out in Schedules 1 and 3 of that act and which amend the Allotments Act 1922) are met. If the land is for the purpose of a trade or business and meets either the notice condition or agricultural condition it will be a farm business tenancy. If occupation is under a farm business tenancy for more than two years, rather than occupation terminating at the end of the term, it continues on a yearly tenancy and at least 12 months’ notice to terminate (to expire at the end of a tenancy year) is required to bring the tenancy to an end. Furthermore compensation for tenant improvements may be payable. If occupation is by certain types of agricultural holdings, there are more onerous termination provisions and tenants can resist notices to end the tenancy.

Security of Tenure

Security of tenure under the Landlord and Tenant Act 1954 may if the occupation does not fall within the agricultural statutory regime or is a farm business tenancy. Some tenants may therefore acquire rights to remain in occupation of a leased property at the end of the contractual term and the tenant may require the landlord to grant a new lease.

Security of tenure requires occupation for the purposes of a business. In terms of occupation, this is likely to be satisfied by the users of allotments. ‘Business’ has a wide definition and includes trade, profession or employment and there are various principles as to what constitutes a business. This will be fact dependent.

If a lease has security of tenure, the landlord must serve notice if it wishes to terminate the lease at the end of the term. To validly serve such a notice, the landlord must satisfy one of the grounds of opposition. These grounds include certain tenant faults (such as disrepair of the property or arrears of rent) or the ‘no fault’ grounds, such as the landlord having a genuine desire to occupy the property itself (which requires the landlord to have owned the property for at least five years) or plans to redevelop the property which is prevented by the tenant’s occupation. If a new lease is successfully opposed on a ‘no fault’ ground, the tenant is entitled to statutory compensation.

Strategies for the transfer of allotments

If the tenancies in question cannot be terminated in order that a sale of the land with vacant possession can be achieved, the sale will need to be made subject to the residents’ interests in them.

Where multiple allotments are owned it is likely to be impractical to sell off the allotments as individual plots to the relevant allotment occupier. Each purchaser may well require different terms for the transfers, and it would be logistically difficult and costly to deal with the individuals separately. Instead, it could be advisable for the individual purchasers to create a tenant’s association (i.e. an entity where all of the purchasers are members and the land is purchased as a whole). This should allow the land to be sold under one transfer (which is administratively easier), and an association may be more likely to instruct a solicitor where the cost can be shared. If the purchaser appoints a solicitor, this will mean there is more due diligence etc on the sale, but is likely to reduce the overall difficulty, time and expense of the sale.

An alternative would be to sell the allotment land (as permitted) to a local Council or a local Parish Council (a Council). It is fairly common for allotments to be let to tenants by a Council and a Council may be willing to purchase the land, as allotments are considered to be valuable community amenities (and there are certain statutory provisions requiring Councils to provide allotments).

However, it is ultimately decided that land is to be sold, the first step is to identify the basis of each tenants’ occupation and ascertain how such tenancies can be terminated if a sale with vacant possession is to be achieved. As an alternative the land can be sold subject to the tenancies, albeit the range of purchasers for such land could well be limited.

Possible planning changes for the retail sector

Background On 31 July 2014 the Government published a technical consultation on further proposals for […]

Background

On 31 July 2014 the Government published a technical consultation on further proposals for reform of the planning process (the Consultation).

The Consultation seeks views on a range of proposals which the Government considers will improve the planning system. The Consultation includes proposals to:

ease the neighbourhood planning regime
expand permitted development rights, including for the creation of homes in buildings currently used for light industry, warehousing, launderettes, casinos, nightclubs etc
improve the use of planning conditions and ensure developments can proceed more quickly after a grant of permission
streamline the seeking of views from statutory consultees
the screening thresholds for environmental impact assessments and
change the existing criteria for determining nationally significant infrastructure projects.

The Consultation was officially launched with publication of the formal 100-page document at the end of July 2014. A press release was issued by the Department for Communities & Local Government (DCLG) in early August.

As part of this, Housing and Planning Minister Brandon Lewis stated: “Today’s proposals will help scrap even more red tape and make it easier to get the homes and shops communities want built, while at the same time breathing new life into our vital industries”.

Expanded Facilities for Existing Retailers

Proposal H of the Consultation details proposals to enable existing retailers to expand facilities without facing undue planning obstacles or delays. The objectives of the proposals are to:

help retailers improve their retail offer
facilitate and aid the move in purchasing behaviour towards online shopping, via adaption of existing premises for more effective distribution of online purchases and
attract consumers back to stores (particularly on the high street)/retailers that already have a physical presence.

Proposal H suggests changes in the following areas:

permitted development rights for ancillary buildings within existing shop’s curtilage (1)
increased back-of-house loading bay capacity (2)
allowance for internal mezzanine floors (3) and
parking standards (4).

Permitted development rights for an ancillary building within the curtilage of an existing shop (1) – the Government intends to build on existing permitted development rights, to allow for the erection of small, ancillary buildings to facilitate ‘click and collect’ (C+C) services.

It is proposed that:

shops can erect ancillary buildings within existing premises’ curtilage, including the car park;these ancillary buildings can:

not exceed four metres in height
have a cumulative gross floor space of up to 20 square metres and
not be erected within two metres of a boundary of the shop’s curtilage

where the building is erected between the shop front and a highway, the distance from the new building to the boundary must be more than five metres
prior approval will be required to consider the design, siting and external appearance of any new structure and
the permitted development will not be allowed on / in the following areas or types of structures:

– Article 1(5) land (that is, within a National Park, the Broads, an Area of Outstanding Natural Beauty (an AONB), a conservation area, or land within World Heritage sites)
– listed buildings and buildings within the curtilage
– scheduled monuments and land within the curtilage and
– Sites of Special Scientific Interest (SSSI).

Increased back-of-house loading bay capacity (2) – it is intended that retailers will be able to increase their back-of-house loading bay capacity, to enable storage of more goods for home delivery and C+C.

It is proposed:

to allow the installation of new loading bay doors and new loading ramps in existing shops without permission
existing loading bays will be able to be increased by up to 20% and
that the permitted development will not be allowed on / in the following areas or types of structures:

– Article 1(5) land (that is, within a National Park, the Broads, AONBs, a conservation area, or land within World Heritage sites)
– listed buildings and buildings within the curtilage
– scheduled monuments and land within the curtilage and
– SSSIs.

Mezzanine floors (3) – Existing regulations allow most retailers to build an internal mezzanine floor in their premises up to 200 square metres, without the need for a planning application. The proposal is to increase this limit, with views being invited as to what size would be appropriate.

Maximum parking standards (4) – The Government is here aiming to build on its previous changes. The consultation asks for views on whether:

local authorities are, via their approach, now stopping builders from providing sufficient parking spaces to meet market demand and
local authorities’ powers to set maximum parking standards should be restricted.

Extensions to Business Premises

Proposal K looks to make permanent the new permitted development rights for business, which were initially introduced for a three-year period in May 2013. The deadline for such extensions using these rights (formerly May 2016) will therefore now be removed, if the consultation outcome is favourable.

The new permitted development rights allow:

shops (A1) and financial / professional services (A2) to extend their premises by up to 100 square metres, provided the gross floor space is not increased by more than 50%
build up to the boundary, unless that boundary is with a dwelling house – where a two metre gap is required
offices (B1(a)) to extend their premises by 100 square metres, provided the gross floor space is not increased by more than 50%
the building of new industrial or warehouse buildings of up to 200 square metres within the curtilage of an existing industrial or warehouse building and
the increase of the gross floor space of existing industrial or warehouse buildings by up to 50%.

Such permitted development will still not be permitted:

in Article 1(5) land (that is, within a National Park, the Broads, an AONB, a conservation area, or land within World Heritage sites) or
on / in the following areas or types of structures – listed buildings and buildings within the curtilage; scheduled monuments and land within the curtilage and SSSIs.

Additional

It is important to be aware that the aforementioned changes will not remove the requirement for all applicants to comply with other relevant planning, building and environmental legislation / regulations.

The Government has invited responses on whether its view of the costs and / or benefits likely to arise from the proposed changes and permitted development rights (as outlined in sections 2 and 3 above) are correct.

In addition, there is a proposal for certain fees to be introduced as follows:

for change of use only (with a prior approval being required): £80
for change of use and allowing for some physical development (with a prior approval required): £172; and
for prior approval to carry out physical development – including for the erection of a structure in a retail car park or the installation of solar panels on commercial buildings: £80.

Responding to the Consultation

The Consultation is open to the public, so anyone with an interest in the proposals may respond. The deadline for submitting comments is Friday 26 September 2014. While responses should ideally be submitted online, alternative methods of making submissions are via email to planning.consultation@communities.gsi.gov.uk or post to the Planning Consultation Team at DCLG.

When responding, consultees must indicate whether they are replying as an individual or submitting an official response on behalf of an organisation. Responses should include the respondent’s name, position and name of organisation (if applicable), address (including postcode), email address, and contact telephone number.

Following close of the Consultation, the Planning Consultation Team are to consider the responses received. It is expected that a summary report will be published on DCLG’s website within three months of the closing date.

Technical consultation on further changes to planning law and procedure

As part of ongoing attempts to ensure a more transparent, efficient and streamlined process, the […]

As part of ongoing attempts to ensure a more transparent, efficient and streamlined process, the Department for Communities and Local Government (DCLG) has launched a technical consultation on further proposals for reform of the planning process (the Consultation). Measures such as the introduction of the National Planning Policy Framework, the online planning guidance portal, and the Growth and Infrastructure Act 2013 have already brought significant changes. However, under the auspices of the Government’s ‘Red Tape Challenge’, this Consultation considers additional ways to simplify and reduce the burdens faced under current planning and environmental regulation.

The Consultation highlights plans to:

improve the use of planning conditions;
introduce new thresholds for environmental impact assessments (EIAs);
modify the planning application process;
refine the determination process for nationally significant infrastructure projects; and
change the neighbourhood planning regime.

Planning Conditions

The Consultation acknowledges that planning conditions play an important role in shaping developments. However, the tendency for some local planning authorities (LPAs) to impose numerous conditions at the decision-making stage and delay in discharging conditions is noted. A key part of the Consultation is the suggestion that, going forward, LPAs will have to share draft conditions with applicants for major developments before a decision is made. It is also expected that written justification will have to be given in relation to any pre-conditions – that is, those requiring action before any on-site development work begins. If accepted, the proposal would require LPAs to explain why the matter must be addressed before development.

In line with proposals made as part of the current Infrastructure Bill, Section 3 of the Consultation seeks views on the practical approach to ‘deemed discharge’ for conditions where the LPA has not made a timely decision. It appears an exemption will apply to conditions:

relating to development subject to an EIA;
relating to development likely to have a significant effect on a qualifying European site;
relating to development in areas of high flood risk;
requiring a Section 106 Agreement or a Section 278 Agreement is entered into before development can proceed; and
requiring the approval of details via a reserved matters application.

So these will only be able to be discharged following a formal LPA decision. The suggestion is for deemed discharge to be available any time after the expiry of six weeks from the day after the discharge application was received by the LPA. The relevant applicant would then have to submit a notice, informing the LPA of the situation, and that the deemed discharge will be considered effective if nothing further is heard within two weeks.

Permitted Development Rights

The Consultation details changes that would ease the planning burden facing retailers, both in central and out-of-town locations. Extended permitted development rights (PDRs) will heighten operators’ ability to take advantage of the ever-increasing move towards internet shopping and particularly the rise of ‘Click + Collect’.

It is suggested that existing PDRs allowing offices to be converted into new homes should be made permanent. Having been introduced temporarily in May 2013, the change of use from office (Use Class B1(a)) to residential (C3) would now be permitted beyond the original 30 May 2016 ‘expiry’ date. Alongside this, new PDRs may be established to allow the creation of homes in buildings used for light industry B1(c)), and warehousing (B8) – provided they were used as such at the time of the 2014 Budget (19 March 2014). Launderettes, casinos, nightclubs and amusement arcades in use as at 19 March 2014 will also be able to change to residential use as long as certain requirements are observed.

Further, the Government proposes to:

make permanent the PDRs for residential single-storey rear extensions, allowing extensions of up to eight metres for a detached house and up to six metres for other house-types;
make permanent the PDRs allowing larger extensions for shops, financial and professional services, offices, and industrial and warehouse buildings;
widen Use Class A1 to a broader ‘retail class’ encapsulating most financial and professional services (currently covered in Use Class A2) – so the change from a shop to an estate agent, for instance, will be possible;
allow change of use to the new, wider ‘retail class’ from betting and payday loan shops (A2), restaurants and cafes (A3), drinking establishments (A4) and hot food takeaways (A5);
allow properties under 150 square metres and in use on 5 December 2013, to change from their existing A1 / A2 / launderette, amusement arcade, casino or nightclub use, to restaurant / cafe (A3) or assembly / leisure use (D2) without permission in certain instances;
introduce a new PDR, allowing commercial filming and associated physical development on certain sites;
support the installation of solar photovoltaic panels on non-domestic buildings;
allow waste management facilities to replace buildings, equipment and machinery in certain situations without specific permission; and
permit sewerage undertakers to install equipment housings via new PDRs.

Payday loan and betting shops would be excluded from a new, wider ‘retail class’. Such establishments would therefore not benefit from the heightened planning flexibility, with local councils retaining control over these opening in their area.

Environmental Impact Assessments

The screening threshold for EIAs for development of residential property in urban areas will potentially be raised from 0.5 hectare to five hectares. This equates to schemes of less than 150 units being excluded. The change would significantly reduce the burden on developers of sites in town and city locations, being expected to reduce the number of such screenings from 1,600 per year to approximately 300. If accepted, a substantial reduction in the time and costs expended to obtain planning permission on such projects would be likely.

For industrial estate development, the screening threshold may also be raised from 0.5 hectares to five hectares. However, if any development project is in a sensitive area, case-by-case screening will continue.

Additional

A further proposal under the Consultation is to alter the approach to obtaining views from statutory consultees. The change is expected to reduce the number of applications needing input from organisations such as English Heritage, Natural England and the Highways Agency. Most notably, the Environment Agency would not be affected here. Correspondingly, where development is proposed near a railway, the notification requirements would be strengthened.

Amongst the other measures open for discussion, is the suggestion that local authorities should resolve applications for neighbourhood area status within 70 days of receipt. Currently, applications can take an average of 126 days, with some being submitted 400 days before any decision is made. Many local communities have already produced neighbourhood plans or development orders. While parish councils, town councils and neighbourhood forums would still need to consult and win a local referendum before submitting their final plan / order, it is proposed that the minimum six-week consultation and publicity period is removed.

Consultation Response

The Consultation was officially launched with publication of the formal document on 31 July 2014. Any member of the public with an interest in the proposals may respond, but the deadline for submissions to DCLG is Friday 26 September. The Consultation’s outcome is likely to be known within three months of the closing date. For more information on the possible impact of the changes or the process for submitting representations, contact the Planning and Environment team at Walker Morris.

Contacts

Nick Cannon
Consultant
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