This article was orginally co-written for Estates Gazette by Helen Miller and Helena Davies from DWF and Tom Kibblewhite, Director of Watts Group Limited.
Developers face a considerable number of obstacles when commencing largescale works of building or redevelopment, particularly in heavily built-up areas where there can be a plethora of neighbours with differing levels of enthusiasm for what is being proposed. Neighbours get a number of bites of the cherry for blocking work; from objecting to planning applications to insisting on the preservation of private property rights. The latter can be of serious concern to developers as there is always a risk that a spurious right of light (for example) could result in a potential injunction application even post-completion.
Whilst the case law has started to lean in favour of developers away from injunctive remedies and towards damages awards, developers are still willing to pay astronomical insurance premiums to cover the risk of a successful neighbour's claim. Developers can be faced with a choice of insuring or negotiating with neighbours over ransom strips, rights of way and light and other easements. However, there is an alternative solution available in certain circumstances, arising under s.203 of the new Housing and Planning Act 2016 (the replacement for s.237 Town and Country Planning Act 1990).
Previous Situation under the 1990 Act
The Town & Country Planning Act 1990 (the "1990 Act") provided a benefit to Local Authorities by allowing developments to proceed even where the threat of an injunction existed (either before construction or after completion). Section 237 of the Act provided Local Authorities with the power to override easements (including rights to light) and other rights, liberties, privileges or advantages. In order to take advantage of this power, the Local Authority had to have acquired or appropriated the land for planning purposes. If done correctly, the development would be able to proceed notwithstanding the fact that it interfered with the interest or right of a neighbour or breached a restriction as to user.
There has been an increase in understanding on the part of both developers and local planning authorities in recent years, leading to improved ease of use such that a number of high profile developments that had been held up by rights to light and other easement constraints were unlocked by the process.
New Law - Housing and Planning Act 2016
Section 203 Housing and Planning Act 2016 (the "2016 Act") came into force last year, replacing Section 237 of the 1990 Act. The effect of S.203 is broadly similar to under the 1990 Act (authorising building work even when it involves an interference with a private property right) but there are a number of ways in which the new law has consolidated and expanded the rules.
Under the 2016 Act those entities benefitting from the power to override easements have been extended beyond Local Planning Authorities. Now these powers can be exercised by a wider pool of ‘specified authorities’, namely;
- A Minister of the Crown;
- The Welsh Ministers;
- A government department;
- A local authority;
- A body established by or under an Act;
- A body established by or under an Act or Measure of the National Assembly for Wales
- A statutory undertaker (as defined by Part 11 of the Act or a person to whom the electronic communications code is applied by a direction under section 106 (3)(a) of the Communications Act 2003)
The section uses the expression "a person" carrying out building etc. work, which means that as under the 1990 Act, successors in title of the public body can have the benefit of the removal of the easements. Similarly, persons deriving title from the public body can benefit from the outcome of public bodies using this power.
The power has also been expanded to include 'qualifying land' which widens the benefit of the power to relate to land vested in, acquired or appropriated by other organisations such as urban development corporations, the Homes and Communities Agency and land acquired historically by certain, specified, Acts of Parliament.
Because of these changes, real estate due diligence has become even more important. Investigating the history of land and neighbouring land could uncover that it has previously been in the ownership of a ‘specified authority’ or that it falls into the category of ‘other qualifying land’. Whether this is good news or not depends on whether you are the developer looking for a magic wand for title obstacles or an occupier with potential redevelopment on his doorstep.
Restrictions on Use of the Power
While it is understandable that ‘specified authority’ or developers with ‘other qualifying land’ may wish to unlock stalled developments, they will need to consider carefully whether using their power is appropriate, given the risk of judicial review if it is not used properly. Section 203 specifies that the criteria for the benefit of the use of this power is that the authority ‘could acquire the land compulsorily for the purposes of the building and maintenance work.’ At present, it is unclear what the intention is behind this requirement and it is likely that further guidance will be required to clarify the point but the key principles of promoting the compulsory acquisition of land are likely to come in to play, as was the case under the former section 237. These are essentially that the benefit to the economic, social or environmental wellbeing of the surrounding area is key in determining whether the Authority could have acquired the land compulsorily. Individual decisions will turn on the facts and circumstances of each particular development but some of the overarching issues that will need to be considered include:
- Whether the scheme is a proper use of planning powers;
- Whether there is a compelling case in the public interest for the use of its powers; and
- Whether the public interest in the development proceeding outweighs any impact on the human rights of any third party likely to be affected.
Importantly, in order to benefit from this power, there must be planning permission for the building or maintenance work to be undertaken on the site and the maintenance or building work must be for a purpose related to the purpose for which the land was acquired, vested or appropriated.
In every case, it is important for the local authority and/or developer to show that the use of the power is a last resort. A local authority/developer must first genuinely endeavour either to avoid interfering with the rights or to negotiate a deal for the right to be released by agreement.
Whilst using Section 203 to override easements such as rights to light, allows the construction or maintenance work to be carried out even if it interferes with such a right, compensation will need to be paid (in accordance with sections 7 and 10 of the Compulsory Purchase Act 1965). This is likely to be calculated on a diminution in value basis which is not usually anything like the sort of sum that might be negotiated for release of a ransom strip, and so unlikely to be a major factor in the decision to use the power.
Obviously not all developers can take advantage of S.203 and there is no magic spell here for a private redevelopment of land that has always been privately owned. However, if you can uncover a sufficient nexus to a public body, even historically, there is a real possibility that this statutory power could solve a good many problems.
Practical Tips for a Developer:
- Check the extent and nature of the rights which may be affected;
- Check the planning and land ownership history to the site;
- Identify the relevant planning permission which the Site is to be developed under;
- Attempt to negotiate a private treaty agreement or determine whether the scheme can be altered to avoid interfering with the rights;
- Approach the Local Authority early to establish the significance to the proposed development and how far will they support the use of Section 203 if negotiations fail
- Section 203 Housing and Planning Act 2016 has replaced Section 237 Town & Country Planning Act 1990
- Power to override private property rights (easements, covenants etc.) for the purpose of a specific development – rights continue but cannot be enforced against the developer
- Powers extended to a range of public bodies
Why This Matters:
Private land rights are normally considered to be sacrosanct. This statutory power does not extinguish them, but allows them to be completely ignored (but for the nominal compensation right) if the right circumstances for a nearby redevelopment arise.
Who Needs to Know?
- Private and public developers of land
- Purchasers of properties close to land ripe for development