Evolving schemes to reflect changing conditions

As the country continues to recover from the effects of the Covid-19 pandemic, many developers may now be considering how to change their projects to reflect an evolving real estate sector, whether as a direct result of the pandemic or due to the acceleration of existing underlying trends. Developers may be seeking to vary planning permissions due to uncertainty over the future market for office space and retail uses, or to reflect strong demand for build to rent and logistics. Whilst it will be key for developments to be able to adapt to reflect this changing environment, developers may face a number of challenges under the rules of the current planning system.

The issues faced by developers looking to amend or vary their schemes are discussed in our recent publication “Forearmed: A real estate disputes guide to likely trends in 2021 and beyond“, and have also been the subject of our two recent webinars in conjunction with Landmark Chambers on varying planning permissions and overlapping planning permissions. What are the considerations that developers need to take into account, and what steps should be taken now to avoid or minimise potential problems?

Factors to consider

To respond to the rapidly changing economic climate, many development schemes need to adapt. Although a developer could apply for a new planning permission, this may not be desirable – submitting a new application has time and cost implications, and the relevant development policy and/or other material considerations may have moved on. It is often preferable therefore to vary existing planning permissions and section 106 agreements instead, but this may lead to challenges in practice.

  • Varying planning permissions – There are restrictions on the use of section 96A and section 73 of the Town and Country Planning Act 1990 (the 1990 Act) to vary planning permissions – section 96A can only be used for non-material changes, and Finney v Welsh Ministers confirmed that section 73 can only be used to vary planning conditions, not the description of development. Some local planning authorities are willing to work with developers to find solutions to this, frequently combining a section 96A application with a subsequent section 73 application. However, this can be fraught with difficulty. Furthermore, where there are overlapping planning permissions for the same piece of land, which is not uncommon for major schemes, Hillside Parks Ltd v Snowdonia National Park Authority has confirmed that once one permission has been implemented, and development has been carried out which makes it impossible to complete development under another permission, that other permission is no longer valid. This can pose difficulties for developers of long term, complex, multi-phase development schemes when they look to vary their schemes. The combined effect of Finney and Hillside may mean that developers will be unable to achieve the flexibility they require using their existing planning permissions.
  • Using permitted development rights – Developers wanting to avoid potential conflicts might consider taking advantage of permitted development rights to change track without the need either to vary an existing permission or apply for a new one. Unfortunately, it is not possible to rely on permitted development rights for a change of use before the existing use has been implemented. Whether the existing use has been implemented will depend on the facts in question, but a genuine use for more than a minimal period would be required. This may create practical difficulties if, for example, a developer has planning permission for a cinema as part of a larger mixed-use development, but the cinema use is no longer viable. This could result in a situation where the developer would be required either to implement a use it no longer wishes to pursue, or apply for a new planning permission for the whole development.
  • New planning applications – Given the difficulties developers face attempting to vary existing planning permissions, they may have no alternative but to apply for new planning permissions. However, there may be challenges at the planning application stage because when planning authorities are considering new planning applications, many are continuing to apply policies adopted before the pandemic which do not take into account the current economic climate. There are real difficulties of anticipating with certainty what the short, medium and long term impacts of the pandemic will be, causing issues for both local planning authorities when updating policies and for developers when considering how best to adapt their projects.

Overall, developers seeking to maintain the viability of schemes, whether during development or for changes of use following completion, should seek to work with local planning authorities to adapt their projects at the earliest opportunity. However, although local planning authorities will usually work with developers to achieve this, there may be disagreements about how to make changes in practice or what changes are acceptable.

Steps to take now:

  • Review existing planning permissions and section 106 agreements – what conditions or obligations might now be or could become onerous or impossible to comply with?
  • Consider options available for amending planning permissions – is it possible to use section 96A, section 73 or a combination of the two?
  • Discuss potential variations with the local planning authority as early as possible – what would they be prepared to agree to, and how can it best be achieved?
  • Build flexibility into any variations agreed to existing planning permissions, and to new planning permissions.
  • Resist detailed descriptions of development – look to put the description of development into conditions instead.

For further information please contact:

Matthew White
Matthew White
Partner and head of UK planning practice, London
+44 20 7466 2461
Annika Holden
Annika Holden
Senior associate (Australia), planning, London
+44 20 7466 2882
Joanna Wilde
Joanna Wilde
Associate, planning and disputes, London
+44 20 7466 2368
Matthew Bonye
Matthew Bonye
Partner and Head of Real Estate Dispute Resolution, London
+44 20 7466 2162

Overlapping planning permissions – webinar with Landmark Chambers

On Wednesday, 10 March 2021, Matthew White and Annika Holden of Herbert Smith Freehills joined Neil Cameron QC (Chair) and Zack Simons of Landmark Chambers for a webinar on overlapping planning permissions. Annika Holden discussed the practical implications of inconsistent planning permissions, while Matthew White considered potential for reform. If you missed the webinar but would like to see the recording, please click here. We are grateful to Landmark Chambers for the opportunity to work with them on this follow-up to our previous webinar, Varying planning permissions.

We can offer webinars to developers on a variety of topics including planning, general real estate, dispute resolution, corporate real estate, construction, energy and environment or any combination of these. Training is tailored to the recipient’s needs in terms of content, format, level and length. Please contact us if you are interested in exploring how we can help your team.

For more information please contact:

Matthew White
Matthew White
Partner and head of UK planning practice, London
+44 20 7466 2461
Annika Holden
Annika Holden
Senior associate (Australia), planning, London
+44 20 7466 2882
Fiona Sawyer
Fiona Sawyer
Professional support lawyer, planning, London
+44 20 7466 2674
Jane McMenemy
Jane McMenemy
Professional support lawyer, real estate, London
+44 20 7466 2850

Webinar: Overlapping planning permissions – the difficult questions

In a follow-up session to the popular “Varying Planning Permissions” webinar held earlier this month, Herbert Smith Freehills and Landmark Chambers will host a webinar on Wednesday 10 March 2021 from 5pm to 6pm on overlapping planning permissions and the difficult questions arising for developers and planning authorities.

We will cover the current state of the law (as expressed in Pilkington, Hillside and other cases), practical issues arising (including the role of “slot in” applications and the considerations applying to larger multi-phase developments) and whether reform may be needed.

There will be a focus on answering questions from the audience – please submit your questions in advance by email to marketing@landmarkchambers.co.uk.

Speakers:

This event will be hosted as a webinar. Participation is free of charge however, advance registration is required. Please note that participants will receive the joining instructions by email prior to the webinar, kindly check your email spam folder if you do not receive these within 24 hours of submitting your registration.

You will be required to set up a free Zoom account to access this webinar. This takes less than one minute.

Click here to access the booking page. You will be taken to the Landmark Chambers website to complete booking.

For more information, please contact:

Matthew White
Matthew White
Partner and head of UK planning practice, London
+44 20 7466 2461
Annika Holden
Annika Holden
Senior associate (Australia), planning, London
+44 20 7466 2882
Karen Barker
Karen Barker
Legal PA, real estate, London
+44 20 7466 3661

The perils of Pilkington – when is a planning permission no longer capable of implementation?

This was the question considered in Hillside Parks Ltd v Snowdonia National Park Authority [2020] EWCA Civ 1440 where the Court of Appeal held that implementation of a masterplan pursuant to a 1967 permission was no longer possible due to developments carried out under later permissions. This decision is particularly relevant to developers of complex multi-phase developments – the Court has confirmed that planning permissions should be construed holistically, that it is unlikely that modern planning permissions could be interpreted as a “series of independent acts”, and that therefore caution should be exercised with overlapping planning permissions. Also, this may not be the end of the story as regards the legal status of works undertaken under a permission which conflicts with a later, inconsistent permission. What are the implications of this judgment, and are there arguments for future reform?

The facts

Hillside concerned the development of a large housing site in the Snowdonia National Park. Planning permission was initially granted in 1967 for 401 dwellings based on a masterplan. The masterplan was subsequently “varied” several times by the grant of subsequent planning permissions but, despite development having been carried out pursuant to the subsequent permissions, in 1987 the High Court held that: the original 1967 permission had in fact been implemented and remained lawful; and that therefore the original development authorised by it could be completed at any time. The 1967 permission was thereafter varied a number of times and further standalone planning permission were also granted for additional building work within the masterplan area.

By 2017 the local planning authority contacted the landowner to say that, in its view, the 1967 permission could no longer be implemented because the developments carried out in accordance with the later planning permissions rendered it impossible to implement the original masterplan. All works at the site were therefore required to be stopped until the planning situation had been regularised.

The decision

At first instance, the High Court held that, owing to further development since 1987, development under the 1967 masterplan was now physically impossible (eg because roads had been built on areas shown as housing on the 1967 masterplan, etc). On appeal against the High Court’s decision, the Court of Appeal had to consider several questions including whether:

  1. the High Court’s 1987 decision that the development could still be completed under the original 1967 planning permission was still binding;
  2. the local planning authority could not now argue that the 1967 permission was not valid because it had accepted up until 2017 that the 1967 permission could be implemented; and
  3. that the “Lucas exception” applied, which stems from a 1964 case (F Lucas & Sons Ltd v Dorking and Horley Rural DC [1964] 5 WLUK 27) which held that permission for a particular development was to be regarded as permission for the development to be carried out as a “series of independent acts”.

The Court of Appeal confirmed that the 1987 High Court decision was not now binding as works under permissions granted since 1987 had rendered development under the 1967 masterplan impossible. For the same reason, it was open to the local authority now to argue that the 1967 permission was no longer valid. The Court of Appeal also confirmed that, whilst it is possible that a particular planning permission might could grant permission for a development to take place in a “series of independent acts”, this was unlikely to be the way that a modern planning permission would be construed.

The consequences

This case confirms the general doctrine established by Pilkington v Secretary of State for the Environment and Others [1973] 1 WLR 1527 CA and subsequent cases (the “Pilkington doctrine”), namely that, whilst a landowner can make multiple planning applications for the same piece of land which may be inconsistent with each other, once one of those permissions has been implemented, and development has been carried out which makes it impossible to achieve development under another permission over the same piece of land, that other permission is no longer valid. Whilst not actually overruling Lucas, the Court of Appeal held that the case should be regarded as “having been decided on its own facts”, meaning that it cannot reasonably be relied upon in relation to modern planning permissions for large masterplan developments. The Court of Appeal re-asserted that a developer cannot lawfully “pick and choose” different parts of a development to be implemented.

Hillside does not change the law, but it does represent yet another example of judicial assertion in the strongest terms that planning permissions must be construed holistically and that overlapping planning permissions for the same land should be approached with extreme caution. This makes life very difficult for developers who are building out complex multi-phase developments over many years and who, understandably, wish to amend their developments to reflect a changing market or specific tenant requirements. Combined with the recent Court of Appeal decision in Finney v Welsh Ministers [2019] EWCA Civ 1868, which prohibited the use of section 73 of the Town and Country Planning Act 1990 to vary a planning permission where that variation would be inconsistent with the description of development, many developers will be faced with the only option of re-applying for planning permission for the entire development. Given the scale of modern planning applications, this would clearly be disproportionate in the majority of cases.

The end?

What is particularly chilling about Singh LJ’s judgment in Hillside is that he left open the question of whether development which has already lawfully taken place in accordance with one planning permission would be rendered unlawful simply by virtue of the fact that subsequent operations take place pursuant to another permission which is inconsistent with the first. This would mean that, until a development is completed in full, landowners, investors and tenants would be at risk of the earlier phases of development being rendered unlawful as a result of subsequent development potentially outside their control. This would present enormous difficulties in the case of multi-phase masterplan projects in fragmented ownerships or where early phases are sold off to realise capital receipts to fund the later phases. Singh LJ recognised these as “potentially important questions” but said that he would prefer to express no view on them because they did not need to be decided in the appeal.

All of this highlights the very urgent need to reform section 73 of the Town and Country Planning Act 1990 in order to provide a full power to amend existing planning permissions. It is an oddity of the English planning code that this power does not exist and a succession of reforms have tried to address this through a make-do-and-mend approach that is plainly no longer fit for purpose. It is disappointing that this straightforward planning reform was not picked up in the government’s Planning White Paper, given that it would streamline the planning process for large projects, reduce bureaucracy for local planning authorities and help to unlock many developments that need to evolve to reflect changing demands. In the current market, where flexibility and adaptability will be essential to the success of development in a post-Covid economy (see here for our Future Cities research), this is something that the government should tackle urgently.

For more information please contact:

Matthew White
Matthew White
Partner and head of UK planning practice, London
+44 20 7466 2461