Key points
- Section 203 of the Housing and Planning Act 2016 has replaced section 237 of the Town and Country Planning Act 1990
- Section 203 provides the power to override private property rights (easements, covenants, etc) for the purpose of a specific development
- The rights continue, but cannot be enforced against the developer
- Section 203 extends the power to a range of public bodies
Developers face a considerable number of obstacles when commencing large-scale 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 to block 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 to light (for example) could result in a potential injunction application, even post-completion.
However, there is, in certain circumstances, an interesting card in the developer’s hand, arising under section 203 of the new Housing and Planning Act 2016 (“the 2016 Act”), the replacement for section 237 of the Town and Country Planning Act 1990 (“the 1990 Act”).
How things worked under the 1990 Act
Section 237 of 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).
That section 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 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.
The new approach
Section 203 of the 2016 Act came into force last year. Its effect is broadly similar (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 benefiting 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 2016 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 may carry out building or maintenance work” under it, a broad expression which means in practice 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 by or appropriated by other organisations, such as urban development corporations and 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 to make title obstacles disappear, or an occupier with potential redevelopment on your doorstep.
Restrictions on the power
While it is understandable that a “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 right(s) or to negotiate a deal for the right(s) to be released by agreement.
While 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 is unlikely to be a major factor in the decision to use the power.
A solution in certain circumstances
Obviously not all developers can take advantage of section 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 many problems.
Practical tips for developers
- Check the extent and nature of the rights that may be affected
- Check the planning and land ownership history of 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 they will support the use of section 203 if negotiations fail
Why this matters
Private land rights are normally considered to be sacrosanct. While the case law has started to lean in favour of developers – away from injunctive remedies and towards damages awards – they 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, rights to light and other easements. This statutory power does not extinguish those rights, but allows them to be completely ignored (but for the nominal compensation entitlement) if the right circumstances for a nearby redevelopment arise. If the requirements of section 203 of the 2016 Act are met, this could save considerable time and expense, and potentially unlock development sites.
Who needs to know?
- Private and public developers of land
- Purchasers of properties close to land ripe for development
Helen Miller is a senior solicitor in the planning team and Helena Davies is a director in the real estate litigation team at DWF LLP, and Tom Kibblewhite is a chartered surveyor and director at Watts Group