At our planning and development club we covered the following topics: • starter homes - the saga continues • SDLT changes 2016 • brexit - possible implications • recent property case law - some points to note. https://www.brownejacobson.com/sectors-and-services/services/real-estate/planning

1. Planning and development club
May 2016, Nottingham

2. Starter Homes Update
Stephen Coult

3. Starter Homes - The Policy Commitment
• Conservative Party Manifesto commitment to
build more homes that people can afford
including 200,000 starter homes exclusively for
first-time buyers under 40.

4. The story so far
• Housing and Planning Act 2016 puts starter homes
on a legal footing.
– Introduced 13th Oct 2015 to Parliament.
– Royal Assent on 12th May 2016.
• Autumn Statement announces £2.3bn funding for
Starter Homes
• NPPF now subject to review.

5. What does the Housing and
Planning Bill do?
• S1.Defines purpose – to promote the supply of starter
homes in England
• S2 Defines Starter Homes
• S3 Introduces General Duty to promote supply of starter
homes
• S4 Only grant planning permission if Starter Home
Requirement is met.
• S5 Provide Monitoring Reports about performance
• S6 Compliance direction powers for SoS
• S7 Interpretation.

6. Quick reminder of basics in Bill
Starter Home is
a) New dwelling
b) Available for purchase by qualifying first time
buyer (under 40)
c) Sold at discount of 20%
d) Sold for less than Price cap (£250k except
Greater London)
e) Subject to restrictions in regulations

7. What the Housing and Planning
Bill does not do.
Explains the details - all to follow in
regulations.
But further explanation through review of
NPPF.

8. Key amendments to Bill
• Minimum qualifying age now 23
• Regulations to allow flexibilty in age requirements
• Regulations must be consulted upon
• New Section “Power to require payments or
discounts on resale (subject to tapering)etc.
• Disapplication to rural exception sites.

9. Review of NPPF and Starter
Homes
• Consultation Document issued December 2015.
• Ended 22nd February 2016
• Took form of general explanation of policy changes
and questions seeking responses.
• No detailed drafting of NPPF changes at this stage.

10. Implementation of Act
• Commencement dealt with under “old” S216
• Regulations will specify when Chapter 1 comes into
force.
• Given consultation requirement regarding
regulations likely to be a few months.

11. Key Relevant Elements of Review
• Broadening the definition of affordable housing,
to expand the range of low cost housing
opportunities for those aspiring to own their
new homes.
• Supporting the delivery of Starter Homes.
(Other issues discussed are increasing density
around transport hubs and general housing
delivery issues.)

12. Affordable Housing Definition
• To be amended to encompass full range of products
that can support people to access home ownership.
• Concern definition is stifling innovation.
• Some products may not be subject to “in perpetuity”
restrictions or have recycled subsidy.
• Aim to be clearer in policy to plan for those who aspire
to home ownership alongside those whose needs are
best met thorough rented homes subject as now to the
overall viability of individual sites

13. Supporting Delivery of Starter
Homes (1)
• Reiterates existing starter home exception for unviable or
underused commercial or industrial brownfield land not
currently identified in Local Plan
• Now extending to underused retail, leisure or institutional uses.
• Increases commitment to use unneeded commercial land
through amendment to para 22 of NPPF. Presumption in favour
unless significant and compelling evidence for retention.
• Encouraging starter homes within mixed use commercial
developments (town centre shopping developments). Unlet
units could be converted.

14. Supporting the Delivery of
Starter Homes (2)
• Starter homes included in rural exceptions sites
policy.
• Community identification of starter home sites in
Green Belt.
• Disused brownfield land in Green Belt to be
regenerated providing starter homes included.

15. Transitional Arrangments.
• No strong case for transitional arrangements
• No case for slowing down Local Plan processes in
relation to policy change
• Fast track review system in place by Inspectorate
which should deal with development plan changes
required quickly.

16. What next?
• Consultation on Starter Homes Regulations
• Possible consultation on NPPF drafting changes
(maybe?)
• Exemplar S106 clauses to be issued.
• Homes and Communities Agency will have starter
homes delivery at top of agenda.

17. Questions?

18. SDLT Update
Additional Residential Property
Beth Dowson (Technical Director, Tax)

19. What will we cover?
• Why are these new rules relevant?
• Individuals - the basic rules
• Companies - the basic rules
• Exemptions/reliefs
• Interaction with Multiple Dwellings Relief
(“MDR”)
• Any questions?

20. Why are the new rules relevant?
• If a transaction is a “higher rates transaction”, an
additional 3% of SDLT will be payable on all of the
consideration
• Usual residential “slice” system but no 0% band for first
£125,000:
– £100,000 purchase – extra £3,000
– £300,000 purchase – extra £9,000
– £500,000 purchase – extra £15,000
– £1,000,000 purchase – extra £30,000
• Potentially increasing costs

21. Individuals - the basic rules (1/2)
• The extra 3% charge will apply to:
– the acquisition of a “major interest”
– in a “dwelling” (a building/part of a building used or
suitable for use as a dwelling or in the process of
being constructed or adapted for such use)
 “everyday meaning” (question of fact)
 gardens/grounds etc.,
 “off-plan” purchases
 specific exclusions?
– that is not subject to a lease with an unexpired
term of +21 years

22. Individuals - the basic rules (2/2)
– where the consideration is £40,000+
– if at the end of the effective date the purchaser has
a major interest in another dwelling which has a
market value of £40,000+ and is not subject to a
lease with an unexpired term of +21 years
(geographical location is irrelevant)
– it is not a replacement for the purchaser’s
only/main residence (NB: possible refund)
• Joint purchasers?
• Spouses/civil partners?

23. Companies - the basic rules
• The extra 3% charge will apply to:
– the acquisition of a “major interest”
– in any “dwelling”
– that is not subject to a lease with an unexpired term
of +21 years
– where the consideration is £40,000+
• i.e., even if no other residential property is owned

24. Exemptions/reliefs
• No special exemption/relief for property developers,
property investors or local authorities
• Most other general SDLT reliefs should still apply (e.g.
charities relief)
• Non-resi/mixed use properties are not caught
• Interaction with the 15% rate?
– 15% rate takes precedence over the extra 3% rate
– If a transaction would be within the 15% rate but relief is
available, will be back into the extra 3% rules

25. Interaction with MDR
(Multiple Dwellings Relief)
• The extra 3% will still apply and so will need to be
included in the calculation
• If buying six or more dwellings - choose whether to
claim MDR or treat it as a non-residential purchase,
with non-residential SDLT rates. E.g.,
– A company purchases a block of 10 flats for £1m
– MDR - SDLT would be £30,000 (average price of £100,000 x 3% x 10)
– Non-residential rates - SDLT would be £39,500 (£150,000 x 0% +
£100,000 x 2% + £750,000 x 5%)
– The company can make a claim for MDR or choose to apply the non-
residential rates

26. Any Questions?

27. The Implication of Brexit on
Planning and Development
Ben Standing – planning team

28. Overview
• In the event of a vote to leave, the effect on our planning system would
hinge on the exit terms
• The government could alter, or potentially repeal, environmental
regulations imposed by EU directives
• European infrastructure funding for major projects, such as Crossrail and
HS2, could be threatened
• Recent negotiations between David Cameron and the European Council did
not cover principles of environmental protection, resource management
and climate change, so there is little clarity on what an exit vote would
mean for the sector

29. 2 possible scenarios
• The English planning system is affected by European law,
particularly regarding environmental considerations
• The impact of a Brexit would depend on whether the UK
retained access to the single market through the EEA:
– Inside the EEA, most EU laws would still apply in the UK, but
the ability to influence future EU policy would be limited
– Outside the EEA, EU laws and policies would no longer apply

30. European legislation which may
impact a developer (1)
• Under the Lisbon Treaty, the EU and the member states must
pursue policies designed to protect the environment and promote
energy efficiency
• EU Stability and Growth Pact 2010 and the National Planning Policy
Framework
• The Environmental Assessment of Plans and Programmes
Regulations 2004 (the SEA Regulations) require public authorities
to assess and publicise the likely significant environmental effects
of plans and programmes that set the framework for development
consents before they are adopted

31. European legislation which may
impact a developer (2)
• The Town and Country Planning (Environmental
Impact Assessment) Regulations 2011 (the EIA
Regulations) - information on the likely significant
environmental impacts of certain developments
• The Conservation of Habitats and Species
Regulations 2010 (the Habitats Regulations) –
assessment and public consultation
• The Building Regulations 2010 and Schedule 1, Part
L – construction standards for new buildings

32. The Habitats Directive and the
Wild Birds Directive
• Vital for the protection of habitats and species
• The Habitats Directive prohibits the grant of consent for any
development that would adversely affect the integrity of a
site of nature conservation importance (sites forming the
Natura 2000 network)
• The only legal provision within any UK planning regime
where the outcome of an assessment is capable in law of
determining if consent can be granted
• Post Brexit, it would be up to individual UK jurisdictions to
decide whether they retained the substance of these
Directives

33. Impact of Brexit
• This legislation results in the encouragement of
less environmentally damaging proposals
• A gradual shift in the change in law
• Domestic-only regulations would be unaffected

34. Environmental Impact
Assessments (EIAs) (1)
• EIAs, required for certain planning applications, and Strategic
Environmental Assessments (SEAs), needed for local and
neighbourhood plans, are the product of EU directives
incorporated into UK law
• A decision to leave the EU would not immediately invalidate
environmental duties required as part of planning processes, such
as EIAs or SEAs
• If the UK did not join the single market, it would no longer be
bound by the obligations that are set out in the EIA Directive
• In the event of a total Brexit, the government may come under
pressure to dilute the English EIA Regulations to cut red tape and
bureaucracy within the planning system

35. Environmental Impact
Assessments (EIAs) (2)
• The new amended EIA Directive (2014/52/EU) came
into force on 15 May 2014 and must now be transposed
by the UK into domestic law via domestic legislation
• The new Directive contains timescales for EIA screening
determinations and consultation on the environmental
report, as well as a requirement that if projects have
significant adverse effects on the environment,
member states must impose conditions requiring the
monitoring of significant adverse effects after
development begins

36. Waste disposal in construction
• Much of the UK’s current waste policy is derived
from the EU Waste Framework Directive
• It is unlikely that a Brexit would lead to significant
changes to the UK’s waste and recycling policies
• Greater pressure from local authorities to move
away from the objectives set by the EU Landfill
Directive
• Long term waste management contracts

37. House building
• A possible drop in EU migration could reduce
housing need
• House builders have benefited from lower
construction costs through the use of EU migrant
labour
• Easier housing forecasts
• Energy performance requirements in the Building
Regulations impose further construction costs

38. Infrastructure
• UK infrastructure planning could be hit by an exit vote
because of the role of EU funding in the delivery of major
infrastructure projects. EU investment in projects such as
Crossrail and HS2 would no longer exist
• The EU may continue to fund some aspects of UK
infrastructure, given it would be on a direct transport route
to Ireland (an EU member)
• Loss of access to the European Regional Development Fund

39. Special Protection Areas (SPAs) and
Special Areas of Conservation (SPCs)
• The Birds Directive and the Habitats Directive provide
the legislation for the general protection of wildlife in
the EU, in particular through the protection of sites
that are of specific importance for selected species and
habitats – creating the ‘Natura 2000 network’ (SPAs for
birds and SPCs for habitats)
• These are material planning considerations for local
planning authorities

40. What changes would actually be
made?
• There may be opportunities to alter case law
derived from decisions of European Commission
institutions and the interpretation of European
Commission policy
• Legal principles giving direct effect to European
laws would no longer apply
• The government could implement policies which
were less stringent in terms of the protection of
environmental resources, in order to promote
industry

41. Devolution
• Unless a joint UK environmental regulatory
framework is established post Brexit to set common
standards and to provide longer-term stability, the
loss of the common EU environmental law
framework could lead to greater divergences
between regulatory regimes in UK jurisdictions

42. The future – uncertainty
• The future direction of environment and energy
policy and law in an independent UK would be
heavily influenced by:
– New trading arrangements
– International treaty obligations
– Devolution
– The political make-up of the governments and
administrations in the UK
• There is much uncertainty over how legislation could
change

43. Conclusions
• Uncertainty regarding how current laws and
policies could change. Initially change may be
limited.
• However uncertainty could have negative effect on
housing market (for example uncertainly for
lenders could increase the cost of borrowing).
• Reduced EU funding for major infrastructure
projects.
• May reduce red tape

44. Property caselaw update
Rebecca Toates
Development & Housing

45. Conditional contracts - specific
performance
Airport Industrial GP v Heathrow Airport Ltd & AP16
• Defendant had obligations to build a car park as
soon as reasonably practicable and provide spaces
from October 2016
• When litigation commenced, car park not in course
of construction and, in fact, planning had not been
obtained

46. Conditional contracts - specific
performance (2)
• Court awarded specific performance requiring
action to be taken in advance of the date for
fulfilment of the obligation (so for anticipatory
breach)
• An onerous obligation – ie to undertake substantial
building works
• Damages not adequate in the circumstances

47. Conditional contracts – all
reasonable endeavours
Bristol Rovers v Sainsburys Supermarkets
• Sale of existing stadium to Sainsburys who would
purchase and construct the new stadium
• Conditional on obtaining acceptable planning
permissions for new store and new stadium
• New store permission contained an onerous
condition on delivery hours
• Sainsburys had appealed under s73 TCPA 1990 and
this had failed

48. Conditional contracts – all
reasonable endeavours (2)
• Bristol Rovers argued Sainsburys could not
terminate as they had not used all reasonable
endeavours – they should have lodged a second s.73
application – they also relied on the good faith
clause
• Court found Sainsburys was entitled to terminate
• Obligation did continue beyond the condition date
• It only ended when there were no more reasonable
steps to take

49. Conditional contracts - interpretation
Dooba Developments v McLagan Investments
• Buyer acquiring land for £12m subject to four
conditions:
– Planning
– Planning Agreement
– Highways
– Pre-Start
• Contract provided for termination if “all of the
Conditions have not been discharged” by 23 July
2014

50. Conditional contracts – interpretation
(2)
• Buyer argued “all” meant “any” of the Conditions
had not been satisfied
• Seller argued the right to terminate only arose if
all four Conditions were undischarged – ie “all”
meant “all”!
• The Judge agreed the Seller’s argument accorded
with a more natural use of language, but in these
circumstances, “all” did mean “any” and the Buyer
could terminate

51. The importance of replies to
enquiries
Morrell & Anr v Stewart & Anr
• Prior to sale, Seller had issues with drainage and
correspondence with the EA regarding it
• Replies to standard enquiries concerning drainage
were inaccurate
• Deliberate misrepresentation even though the
Seller thought the problem had been rectified
• Duty to notify in changes up to exchange of
contracts

52. Overage and section 106
agreements
Redrow Homes Ltd v Martin Dawn (Leckhampton) Ltd
• Redrow acquiring land from MD for a basic price plus
deferred overage, secured by a charge in favour of MD
• Charge contained provisions requiring MD to enter into
any s106 agreement required
• MD declined to enter into the relevant s106 (even
though its conditions were met) – claimed this was due
to Redrow not using all reasonable endeavours to
obtain permission on a minimum acreage

53. Overage and section 106
agreements (cont)
• Court granted specific performance, forcing MD to
execute the s106 agreement
• Any breach by Redrow of the sale agreement on
acreage was too remote
• Specific performance is an equitable remedy

54. Are unilateral notices sufficient?
Alpha Student (Nottingham) Ltd (in liquidation)
• Individual apartment buyers entered unilateral
notices to protect their agreements for lease,
having paid 50% deposits
• Developer went into liquidation having not
commenced works
• Court confirmed it had an inherent power to order
the removal of the notices so the liquidator could
sell the site free of the buyers’ interests

55. Option to purchase – free from
encumbrances?
Hallman Holding Ltd v Webster
• Landowner charged their property whilst it was
under option
• Since option not made subject to charge, the
landowner would be obliged to remove the charge
in order to give good and marketable title – the
same would apply to other encumbrances

56. Community Infrastructure Levy –
mezzanine floors
Orbital Shopping Park Swindon v Swindon Borough
Council
• Council issued a CIL notice following two planning
consents allowing for 1,700 square metres of extra
space (CIL charge was for £170,000)
• Had the works been under one planning
application, CIL would have been payable
• Works were carried out at the same time, though
in theory could be independently implemented

57. Community Infrastructure Levy –
mezzanine floors (cont)
• Court found the liability notice had been issued
unlawfully
• Owner had been entitled to apply for two separate
consents
• Where mezzanines affect the interior of a building
only, CIL is not payable

58. Contact us…
Stephen Coult – 0115 976 6152/07979 536990
Stephen.coult@brownejacobson.com
Beth Dowson – 0115 976 6186 / 07985 934445
Beth.dowson@brownejacobson.com
Ben Standing – 0115 976 6200 / 07826 926419
Ben.standing@brownejacobson.com
Rebecca Toates – 0115 908 4862 / 07799 676365
Rebecca.toates@brownejacobson.com