Authors: Matthew White, Partner and Head of Planning, Real Estate, London and Lucy Morton, Professional Support Lawyer, Planning, Real Estate, London
On 16 September 2016, the Secretary of State for Communities and Local Government, Sajid Javid, decided not to confirm Southwark Council's compulsory purchase order (CPO) for an area of the Aylesbury Estate. This is an unexpected decision by Sajid Javid and has been described as "bizarre" by Southwark Council. There are reports in the press that the Council intends to challenge the decision in the High Court, because they say it jeopardises the entire housing-led regeneration of the Aylesbury Estate.
Javid's decision agreed with the Inspector's recommendation following a CPO inquiry in October 2015. The CPO would have facilitated the redevelopment of the third parcel of land on the Aylesbury Estate, including demolishing the existing residential units and providing mixed tenure residential development and associated landscaping.
The decision not to confirm the CPO gives more weight to human rights and community issues than we have seen in previous decisions on CPOs. This effectively raises residents' expectations that they will be able to remain in their community, and the considerations outlined by Javid are now likely to be a significant factor in future CPOs. The decision also demonstrates some of the tensions involved for the Government when they promise to prioritise housing and regeneration.
Southwark Council granted planning permission for the redevelopment of the relevant land in August 2015, along with outline planning permission for the redevelopment of the remainder of the Aylesbury Estate. The plans include demolition of the existing buildings and development of 830 new mixed tenure dwellings, a flexible community use, open space, energy centre and cycle parking. The Council made a CPO of the relevant land on 24 June 2014, the purpose being to secure the regeneration of the estate in accordance with the provisions of the Aylesbury Area Action Plan.
Following an inquiry, the Inspector recommended that the CPO should not be confirmed because, although the scheme was in accordance with the planning framework for the area, was viable, deliverable, and there was no viable or deliverable alternative to the scheme, overall there would be too many negative impacts meaning that "a compelling case in the public interest [had] not been proved".
In his letter, the Secretary of State accepted the Inspector's recommendation and refused to confirm the CPO. The reasons provided by the Inspector were mostly accepted by the Secretary of State, who gave particular consideration to the human rights aspects, the public sector equality duty and weighing up whether, overall, there was a compelling case in the public interest.
The key reasons given by the Secretary of State for his decision were:
– insufficient negotiation with remaining leaseholders: Southwark Council had not taken reasonable steps to acquire land interests by agreement;
– there would be considerable economic, social and environmental disbenefits for the leaseholders who would remain on the land;
– interference with the human rights of those with an interest in the relevant land was not sufficiently justified; and
– overall, the test for a "compelling case in the public interest" was not met (as required by CPO policy guidance).
The Secretary of State's letter does, however, state that the potential negative effects of such a CPO could be alleviated by Southwark Council working with the remaining leaseholders and resubmitting a new CPO application, to retain the positive aspects such a scheme would bring and to achieve the objectives in their planning framework.
This is a surprising decision. Javid's letter states that the values offered by the Council would not enable the leaseholders to purchase a property on the open market in the locality, which appears to introduce a new policy test for CPO. The usual position is that property owners must be properly compensated for their financial loss based on the open market value of their actual properties (in this case, on the Aylesbury Estate) and not the open market value of properties in the general area (including properties not on the estate itself). Javid's decision appears to introduce a broader test of whether that compensation would be enough for them to buy a new home in the same local area, rather than in another part of the authority's area with lower values.
Peter John, the leader of Southwark Council, was reported in the Architects' Journal as saying that he "honestly doesn't know what the government's policy is on estate regeneration any more, as they say one thing and do another. … Of course the human rights of our residents are important, which is why each of the remaining resident leaseholders has been offered a brand new home in the same area, rent-free, and with a shared equity arrangement which protects the money they've saved and invested. I'm afraid that we can't just keep offering them more and more taxpayers' money."
The decision demonstrates the importance of addressing human rights where individuals are affected by a CPO (the article 8 right to a home specifically) and also highlights the increasing focus on the Public Sector Equality Duty, with the decision finding that children, the elderly and black and ethnic minority residents would find their cultural life "likely to be disproportionately affected" by the CPO, which would have a negative impact on their ability to retain their cultural ties. Issues such as the "dislocation from family life" and the potential to harm the education of affected children were identified in the decision letter, indicating a much wider approach to assessing the impacts of a CPO than we have seen from previous Secretaries of State.
In short, the decision raises the weight to be given to residents' expectations that they will be able to remain in their community. This falls short of an absolute "right to a community", but will clearly be a significant factor in future CPO decisions.
The Government has said that increasing housing supply remains its number one priority, but this decision demonstrates the inherent tensions that are involved in implementing that policy on the ground, particularly in the case of estate regeneration projects.
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