ADV RE WS4 ✅ - Advanced Real Estate Workshop notes PDF

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ADVANCED REAL ESTATE LAW AND PRACTICEUnit 4 Guide Planning PermissionContextIn this Unit, you will look at the grant of planning permission. Planning permission is often granted subject to conditions, but there are strict limitations on what these conditions can cover. As a result, local authorities...

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ADVANCED REAL ESTATE LAW AND PRACTICE Unit 4 Guide Planning Permission

Context In this Unit, you will look at the grant of planning permission. Planning permission is often granted subject to conditions, but there are strict limitations on what these conditions can cover. As a result, local authorities have other mechanisms at their disposal – most notably, planning obligations (also known as s106 agreements) and the Community Infrastructure Levy – in order to minimise the impact of development in their area and, where possible, to ensure that such development takes place in a manner which benefits the community as a whole. Outcomes By the end of this Unit you should be able to: 1. Understand the conditions relating to planning contained in a typical sale and purchase agreement and explain the buyer’s rights, obligations and options in relation to them. 2. Demonstrate research and understanding in relation to the nature of, and interplay between, planning obligations and the Community Infrastructure Levy. 3. Amend a s106 agreement in order to protect a developer’s position, and justify those amendments. Unit Workshop Tasks In this Unit Workshop you will: 1.

Analyse the conditions attached to a draft planning permission and decide whether they are acceptable in the light of statutory guidance and the agreement for sale.

2.

Explain the obligations imposed on your client under a typical conditional agreement for sale, should planning permission be granted subject to conditions.

3.

As part of a team, answer questions based on the research you undertook for the Preparatory Task.

4.

Amend a section 106 agreement in order to protect your developer client’s position, and explain those amendments.

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Preparation To prepare for this Unit Workshop you should: 1.

Read and make notes on the chapters on Planning Control and Planning Obligations & Community Infrastructure Levy in the Commercial Property textbook.

2.

View Lecture 2.

3.

Do some online research as required by the Unit Workshop Preparatory Task.

4.

Complete Test & Feedback – Unit 4 (Preparation).

5.

Find the Planning Practice Guidance via the directions on the Planning Portal website and read the Use of Planning Conditions section.

6.

Complete the Unit Workshop Preparatory Task.

Materials required for the Unit Workshop 1.

The Planning Practice Guidance on Use of Planning Conditions.

2.

Your research and notes for the Unit Workshop Preparatory Task.

3.

The Exemplar Flowchart from Task 2 of Unit 3.

4.

The Agreement for Sale from Unit 3.

5.

The Commercial Property textbook.

6.

This Guide.

Consolidation It is important that you consolidate your learning. In particular you should: 1.

Revise your answers to the Unit Workshop Preparatory Task and the Unit Workshop Tasks in the light of the feedback you received in the Unit.

2.

Complete Test & Feedback- Unit 4 (Consolidation).

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PREPARATORY TASK Planning Obligations and the Community Infrastructure Levy Planning permission can be granted subject to conditions, but the nature of these conditions is limited by the ‘six tests’ in paragraph 55 of the National Planning Policy Framework. In addition to the imposition of conditions on the grant of planning permission itself, local planning authorities (“LPAs”) have other ways of imposing requirements on developers, which go beyond the scope of planning conditions. Traditionally, the mechanism LPAs have used is the planning obligation (or “s106 agreement”, so-called in reference to the legislative provision from which they derive). More recently, the Community Infrastructure Levy (“CIL”) has been introduced as another way of seeking contributions from developers to local infrastructure. Your supervisor, Harry Wright, is not a planning specialist and has asked you to put together an update on this area for him and the rest of the Real Estate Department. In preparation for Unit 4, please answer the questions below. As well as reading the textbook, you should do some online research to explain CIL and give some practical examples for questions v) and vii). i)

What are planning obligations? How do they differ from planning conditions? Planning obligations are separate from planning conditions. Planning conditions are those which are contained in the planning permission itself. They must meet the stringent 6 test in NPPF Para 55. Planning obligations sometimes called S106 Agreement are used where conditions cannot be met. E.g., can be used to make a financial contribution when additional roads are needed in the nearby area as a consequence of the development. (See textbook for more) A planning obligation is a separate agreement made by deed which runs alongside planning permission. This can be used to deal with issues that cannot be dealt with in the planning permission itself. They are a part of the planning process and are ancillary to planning permission which the developer is trying to obtain. S106(1) has more detail on what the planning obligation may seek to do. They may seek the land from being used in a particular way or to require certain operations or activities to be carried out or may require money behind made to the council.

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When the council has the choice to impose planning permission and entering into a planning obligation, they should always start by seeking to impose a planning condition. Planning obligation shouldn’t be used if the CIL has been used instead. ii)

Who can enter into planning obligations? Who will be bound by them? S106 Town and Country Planning Act 1990 enables anyone with an interest in the land to enter into a planning obligation with a council. A person interested in land must have a legal estate of interest (this also includes someone who has equitable interest over the land). This means that that people who can enter planning obligations are those who have interest over the land as well as tenants and lenders. Planning obligations can be bilateral agreements entered into between the developer and the LPA or can be unilateral. Planning obligations are usually negotiated between the landowner and the developer and local planning authority. Making the agreement a mutual one. However, if the landowner or developer feels the obligations appear unnecessarily protracted or there are unreasonable demands being made by the council it may offer a unilateral undertaking without the cooperation of the LPA. Who will be bound? Planning permissions run with the land S106(3) Town and Country Planning Act 1990 Once entered into, the planning obligation binds successors. This means that planning obligations can be enforced against the original contracting party and any work requires interest in the land. It is possible to limit liability of the original contractor to the period of their ownership of the land. this potentially enables someone who is entering into a S106 Agreement to ensure they aren’t bound to the terms once they have sold the land.

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Once planning obligations has been entered into it can be registered as a local land charge. There is limitation to who is bound by planning obligations Planning obligations can/t bind superior titles. This means that if a tenant enters into a planning permission with the council the landlord won’t be bound by the planning permission of the provisions of the planning obligations unless they are joined as a party. Planning obligations can’t bind parties that have obligations in the land existing at the time that the obligation is entered into e.g., lenders iii) How are planning obligations enforced? Planning obligations are enforced by the LPA against the original person and any person deriving title from that original person. Breaches can be enforced in many ways:  Injunction can be used as to restrain a breach of a restrictive covenant in the deed  The council have powers similar to self-help remedies – so if the developer breaches the obligation to carry out this the council can come onto the land and carry out the works themselves and recover its costs by doing so by the developer. Anyone that prevents the council from doing this it will be a criminal offence. Planning obligations can be altered or discharged on agreement by application to the LPA Sec of State. iv) What is CIL? Community Infrastructure Levy A charge that can be imposed by local authorities on new developments in their area. The CIL is a charge on new buildings above a certain size that LPA may choose to set, and which is designed to fund local and regional infrastructure project identified in the Council’s development plans. The levy only applies in areas where a local authority has consulted on and approved a charging schedule which states its levy rate published on its website. A developer would need to make enquiries of the local authority to see whether this particular local authority has adopted the levy. Most new development is potentially liable for the levy Exemptions and reliefs For charities and social housing as well as certain construction that doesn’t attract certain levies at all. E.g., pile on and wind turbines. CIL will be paid primarily by owners/developers of land that are to be developed but liability for the levy runs with the land. 5edfee8062723c3746edd352efaf7f8e.docx

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CIL can ONLY be spent on infrastructure however infrastructure is a wide subject. It includes roads, transport facilities, flood defences, schools and other educational facilities, medical facilities, and other facilities like sports centres. Exclusions – impact mitigation and social housing Local authorities that have inputted the CIL regime may publish this on their website. v) How is CIL charged? The rate of CIL must be set out in a charging schedule. The amount of the levy can vary through charging authorities the rate can also vary within an administrative area. Residential areas are charged at a higher rate than elsewhere. No levy will be payable once there are no CIL charging schedule in place at the point where planning permission is granted. vi) What is the relationship between planning obligations and CIL? Until a charging schedule has been adopted, the LPA will rely on the regime of planning obligations. The LPA do not need to adopt the levy at all, even if they do, planning obligations will still sometimes have a role to play. CIL can only be spent on infrastructure however a lot of things fall outside of this e.g., S106 Agreement should still be used for site specific impact mitigation for matters to make an individual development more acceptable. They should also be used for local housing when required but this can’t be covered by the levy. vii)

How has CIL been received in practice by LPAs, developers, practitioners and others? When the CIL was introduced in April 2010 it was hoped it would fix some of the deficiencies associated with the use of planning obligations and the levy would replace the planning obligations completely. Planning obligations were criticised for being opaque and leading to the perfection that in certain circumstances developers could buy their way into planning permissions. CIL was seen as answer to the deficiencies on the basis that levies are far more transparent: it provides certainty to the developer when putting together a planning proposal, they get to know how much everything is doing upfront and avoids the costly and lengthy negotiation process. CIL has been criticised of overcharging by some councils – supermarkets have argued that in some parts of the country they’ve been discriminated because of the levy. There is no guarantee that the contribution towards infrastructure will benefit the site charged. There may still need negation of the S106 Agreement alongside the levy © The University of Law Limited

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NOTE TO STUDENTS: Tasks 1 and 2 below are for completion in accordance with your tutor’s instructions during Unit 4 and you should not therefore attempt them before you attend the Unit Workshop.

TASK 1 Imposition of Planning Conditions by the Local Planning Authority In Unit 3, you considered different types of sale contract. Phoenix does not need any more advice or assistance in relation to Kings Meadow for the moment. You also studied the conditional agreement for sale (“the Agreement for Sale”) in relation to the British Ordnance Factory in Nottingham (“the Site”) which your client, Phoenix Developments Limited (“Phoenix”), proposes to buy. You saw that the Agreement for Sale was conditional on satisfactory planning permission being obtained for Phoenix’s proposed development of the Site. Contracts have now been exchanged on the Site, and Phoenix has submitted its planning application for the Site in accordance with the terms of the Agreement for Sale. Phoenix now awaits the decision of the local planning authority. Yulia Dimov of Phoenix originally had some concerns about rumours she had heard in relation to Phoenix’s planning application. She had heard that some of the councillors were opposed to the retail element of Phoenix’s plans. Happily, it transpires that these rumours were unfounded, although Nottingham City Council is considering the imposition of various conditions should it grant planning permission for the Site. Yulia has just received a copy of a draft planning permission which Nottingham City Council is considering granting. Yulia has now forwarded you a copy of the draft planning permission for the Site and your supervisor, Harry Wright, has asked you to look at it for him. In particular, he has asked that you should brief him on the following points: 1.

Are any of the conditions in the draft planning permission contrary to the Planning Practice Guidance on the Use of Planning Conditions? (see draft for answers)

2.

Do any of the conditions constitute Unacceptable Planning Conditions as defined in the Agreement for Sale? If so, what are Phoenix’s options under the Agreement for Sale? For the contract to become unconditional, the planning conditions imposed must not be unacceptable to the buyer. See page 23 WS3 Paragraph 11 means that if the planning permission for the site contained a condition limiting the type or range of good that can be sold from the property (the retail park) the condition will be deemed to be unacceptable. The buyer could point to this condition and conclude that it doesn’t have to proceed with the purchase of the site © The University of Law Limited

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Planning

condition

5

fails

under

UPC

paragraph

8.

This will be problematic to the buyer who will want the ability to let out the retail unit to tenants who won’t want to be constrained by having to close every night by 5.30pm – retail tenants may want the ability to open at late night shopping especially during the week. It could prevent letting to food stores/supermarkets who may need more flexible working hours. Phoenix can argue that planning condition 5 could be a UCP for the purpose of the contract. This is because para 8 of the schedule states that a planning condition will be deemed unacceptable for the purposes of the condition if the condition prevents trading at the property at any time between 8am-10pm etc. An early closing time imposed by the council runs contrary to the UCP. Planning Conditions 4 & 6 These conditions are likely to be covered by UCP 4 UCP says that a planning condition will be unacceptable if it infringes the principle and guidance in the NPPF or the Planning Practice Guidance. This means that if you have any planning conditions that fail the 6 tests of the NPPF that planning permission is likely to be a UCP for the purposes of the contract. The buyer has a choice: accept conditions or appeal They can accept the conditions and not give notice under Clause 7.4 – in this case the planning permission is seen to be free of UCP’s. If the buyer takes this approach, the effective date will be the next working day after expiry of the appeal notice period which is 10 working days after the seller receives copy of the planning permission from the buyer under Clause 7.2 The detail on how the effective date arises is set out in Clause 11.1. The other option is to reject the conditions made by the council. Taking this approach, it can give written notice to the seller under Clause 7.4 that the conditions are UCP’s. This written notice must be given within the appeal notice period which is a period of 10 working days of the seller’s receipt of copy of the planning permission from the buyer who would’ve sent the copy within 5 working days of receiving it from the council. The buyer must send the appeal to the secretary to state under Clause 7.5 within 30 working days following the expiry of the appeal notice period.

3.

If Phoenix tries to have any of the conditions removed on appeal (on the basis that they are Unacceptable Planning Conditions), what happens under the

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Agreement for Sale should the appeal fail e.g., the decision is still to grant permission with those conditions in place? The buyer has a choice: accept the conditions or ref The buyer can accept the conditions and decide not to give notice and refer the matter to the independent surveyor under clause 7.10. Then the effective date occurs according to the time limits in clause 11.1(d). The parties will eventually come to completion Alternatively The buyer can see the conditions are too problematic to make the development viable. If this is the case: They could attempt to get out of the contract - what they could do here is refer the matter to an independent surveyor under Clause 7.10. The surveyor is to be appointed by the buyer AND seller or in the absence of agreement by the president of the royal institute of chartered surveyors. If the independent surveyor agrees that they ARE UCP’s then termination date occurs under Clause 12.1 and the contract comes to an end on the date of the surveyor’s decision. If the independent surveyor agrees that the AREN’T UCP’s then the contract becomes conditional. The effective date will take place on the date of the surveyors written decision. (Clause 11.1(e)) Then the parties will proceed to completion 4.

Finally, if neither the statutory guidance nor the Agreement for Sale pose any issues in relation to the draft planning permission, what happens next under the Agreement for Sale? The effective date occurs under Clause 11.1 Clause 3 provides that Clauses 15-25 come into force that includes Clause 19. Clause 19.1 provides that a deposit of ½ a million £ becomes payable by direct credit within 10 working days. Under Clause 25.1 completion should take place within 20 working days of the effective date. You will find a copy of the draft planning permission overleaf. Read it and consider Harry’s questions above, as directed by your tutor. Note to Students: You will need to refer to: 

the Planning Practice...