Silence is Consent: Developers must pay attention to draft pre-commencement conditions

Author: Charlotte Dyer, Senior Associate, Planning, London

Developers beware – if you don’t agree with a pre-commencement condition in draft, you could have to express your disagreement in writing within 10 working days, or risk the authority imposing it in a planning permission anyway.

The government is currently consulting on changing the procedure for imposing pre-commencement conditions in planning permissions, with regulations expected to be in force in April 2018.  After this date, developers must be proactive in deciding whether or not they agree with the terms of any proposed pre-commencement conditions. If they do not agree, they must respond within 10 working days of receipt of a notice from the authority indicating their disagreement or providing comments. In the absence of a response, the authority can proceed to grant permission with the pre-commencement condition.

This is intended to prevent unnecessary delays to decision-making. However, it will create an extra burden on developers, particularly those with multiple applications being considered in parallel or where the authority is seeking to impose a large number of pre-commencement conditions. Given the continued extensive use of pre-commencement conditions, this is likely to have far reaching impacts on developers across England. The consultation is open for responses until 27 February 2018.

Set out below is a quick recap of the current position and a brief explanation of the latest proposals.

1.Restriction on pre-commencement conditions

2. Exemption from the need to obtain written agreement

3. Commentary

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“Women Leading Real Estate” – change is afoot

Author: Alice Dockar, Partner, Real Estate, London

Herbert Smith Freehills was out in force at a fantastic, thought provoking breakfast event yesterday at the Hilton, Park Lane organised by Bisnow and entitled “Women Leading Real Estate”.

There was a keynote interview with Alison Nimmo, CEO of The Crown Estate, and a panel session on “Driving Change & Building the Pipeline for Aspiring Young Leaders” with panellists:

  • Colette O’Shea, Managing Director at LandSec;
  • Sherin Aminossehe, Head of Offices at Lendlease;
  • Brian Bickell, CEO of Shaftsbury;
  • Lynda Shillaw, CEO of Magairports; and
  • Sue Clayton, Executive Director, Capital Markets at CBRE

Closing remarks were given by Vivenne King, Chair of Real Estate Balance and Andrea Carpenter, Director of Women Talk Real Estate.

The turnout was impressive – over 500 people attended this event, and the audience was predominantly female.  We are proud to be positively engaged with and part of the change taking place in the Real Estate industry.

For us, the key take home messages, for women and men in the world of real estate, were:

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Will land values fall if future planning permission is ignored?

Authors: Matthew White, Partner and Head of Planning; Lucy Morton, Professional Support Lawyer, Planning, London

What if land values fell because the value attached to future potential planning permission was disregarded? This is what the Labour party is proposing, through reform of the compulsory purchase process. A Government committee is also asking questions on whether the Community Infrastructure Levy (CIL) is working and what other methods could be used to capture the value of land (here is the link to the inquiry).  We’ve seen some dramatic headlines recently but land value capture is not a new idea and has been around for decades. What are the implications for developers?

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New Trusts Registration Service and the UK Real Estate Sector

Authors: Paul Chases, Partner and Head of Corporate Real Estate; Alex Wright, Associate, Real Estate, London

For any real estate developers with trusts in their holding structures, there are new regulations in force that make it a requirement for trustees to obtain and hold up-to-date details of the beneficial owners of their trusts on record and to register these annually with HMRC where the trust is liable to pay tax in the UK.

The HMRC penalties for failure to comply could potentially be severe and as such, trustees should ensure they are familiar with these reporting requirements, particularly as the deadlines for registration are fast approaching.

To learn more, please click on the link below to read our e-bulletin on the new registration requirements. Please note that since publication of the e-bulletin, HMRC has extended the deadline for compliance for trusts already registered for self-assessment from 31 January 2018 to 5 March 2018.

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LANDOWNERS AND DEVELOPERS – BEWARE THE RIGHT OF FIRST REFUSAL

Author: Michael Chivers, Senior Associate, Real Estate, London

Are you a landlord or developer of property which includes residential flats?  Are you going to dispose of your interest in that property?  If so, you may be obliged to offer your residential tenants a right of first refusal before selling to anyone else. If you don’t, you could face serious consequences including criminal sanctions.

In this blog we go back to basics to explain when the statutory right of first refusal applies, what the consequences are when it does and how it is relevant in the context of mixed-use developments.

The Landlord and Tenant Act 1987 gives tenants this statutory right, however, the legislation was rushed through parliament in the run-up to the 1987 general election by a Conservative government who were under pressure to redress the balance of power between landlords and tenants in the residential sector. The result was a complex and defective piece of legislation which has been heavily criticised by the courts over the years.

1. When does the right of first refusal apply?

2. What are the consequences when the right of first refusal applies?

3. How is the right relevant to mixed-use developments?

 

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Reasons to be cheerful

Authors: Matthew White, Partner and Head of Planning; Lucy Morton, Professional Support Lawyer, Planning, London

It is good practice for a local planning authority to give reasons for the grant of planning permission. Failure to give adequate reasons may be serious enough to justify quashing the permission.

There is a statutory duty to give reasons for the grant of permission for EIA development.  However, even if it is not EIA development, reasons will need to be given where the grant of permission does not follow the planning officer’s recommendation; where the development would not comply with planning policy; and where there is significant public interest in the proposals. The law on the duty to give reasons was summarised and confirmed recently in a Supreme Court case, Dover District Council v CPRE Kent (2017) UKSC 79.

1. Background

2. Supreme Court

3. Comment

 

1. Background

The Dover case related to a planning application for a large residential development in an area of outstanding natural beauty (AONB). Before the local authority granted permission, the planning officer’s report had made several recommendations, including reducing the number of residential units, to reduce the harm caused to the AONB. The report stated that this would preserve scheme viability and retain the economic benefits of the development, which helped to provide the finely balanced exceptional justification needed for causing harm to the AONB. The officer’s report also recommended implementation as a ‘single comprehensive scheme’ to secure those economic benefits (including a hotel and conference centre) and conditions or planning obligations to achieve this.

Planning permission was granted by the local authority without following these recommendations. No reasons were given by the local authority for this departure from the officer’s report.

2. Supreme Court

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Supreme Court ruling on negligent property valuations: Tiuta International v De Villiers Surveyors [2017] UKSC 77

Authors: David Reston, Partner, Insurance Dispute Resolution, Sarah Irons, Professional Support Lawyer, Dispute Resolution, Matthew Bonye, Partner and Head of Real Estate Dispute Resolution

The Supreme Court judgement in the case of Tiuta International v De Villiers Surveyors was handed down at the end of last month. The case involves surveyors valuing a property development, and a lender granting a loan facility to a developer while relying on the valuation.

The Supreme Court held that where a lender, Tiuta, advanced money on the basis of an initial valuation of property by surveyors De Villiers, then Tiuta refinanced the facility on the basis of a second negligent valuation by De Villiers, the liability of De Villiers was limited to the ‘top up’ element of any additional lending.

This ruling has come at a time when valuation negligence is a hot topic in the courts. There is an increased frequency of claims, often being tied to the financial instability of the late 2000s and its effect on commercial real estate values.  In recent months, other important issues such as the width of the margin for error in valuation, have come under scrutiny.

For more information on this case please click on the link to the HSF insurance blog post, below:

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What developers and planners need to know about autonomous vehicles

Author: Matthew White, Partner and Head of Planning, London

Developers and planners need to start preparing now for the future impacts of autonomous vehicles, Matthew White suggests in his article for Planning Magazine, published on Friday 15 December 2017.  The article takes the form of a Q&A with Matthew answering the following questions:

What support are the government and the private sector providing for driverless car technology?

Is there any evidence that driverless cars will become widespread on UK roads?

What key planning and development issues does the spread of driverless cars raise?

How could the rise of driverless cars impact on local authority planners?

What particular implications does it present to developers?

Should planners prepare for the impact of driverless cars now?

Please click on the link below to read the article from Planning Magazine:

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Affordable Housing: Back to Basics

Author: Charlotte Dyer, Senior Associate, Planning, Real Estate, London

“Affordable housing” – two words that those working in the property and planning world can hardly move without seeing flashed about everywhere. There is a wealth of information available on the subject. However, much of it is technical, highly detailed and assumes an existing level of knowledge that can make it hard for those who are new to the industry or who haven’t previously come across affordable housing to really get to grips with the subject.  This blog is the first in a series of blogs that we will be publishing over the coming weeks that will go back to basics to explain what is affordable housing in England, what are the different types, who is eligible for it, how is it implemented and what it means for private developers.

1. Where is affordable housing defined?

2. What are the different types of affordable housing?

3. The London Plan

 

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Commercial Service Charges – the RICS consults on proposed mandatory requirements

Authors: Matthew Bonye, Partner and Head of Real Estate Dispute Resolution and Judith Smyth, Associate, Real Estate Dispute Resolution, London

Commercial property practitioners and stakeholders have just under a week left to have their say on the draft text of the 4th edition of the RICS Code of Practice: Service Charges in Commercial Property (the “Code”), which is due to come into effect on 1 April 2018.  This professional statement will replace the 3rd edition of the Code, which is the RICS’s current best practice guidance.

In this blog post we look at what the proposed changes are and how landlords will be affected.

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