Month: December 2016

That Written Ministerial Statement

Gavin Barwell’s 12 December 2016 Neighbourhood Planning: Written Statement  has attracted criticism not just for its content, but for inserting significant changes to the operation of the NPPF without prior consultation and without indeed making an amendment to the NPPF itself. 
Paragraph 49 of the NPPF provides that:
“Relevant policies for the supply of housing should not be considered up-to-date if the local planning authority cannot demonstrate a five-year supply of deliverable housing sites.”
ie the presumption in favour of sustainable development in paragraph 14 is triggered. This means:
“where the development plan is absent, silent or relevant policies are out-of-date, granting permission unless: 

    * any adverse impacts of doing so would significantly and demonstrably outweigh the benefits, when assessed against the policies in this Framework taken as a whole; or 


    * specific policies in this Framework indicate development should be restricted”


The December 2016 written ministerial statement provides, “…that relevant policies for the supply of housing in a neighbourhood plan, that is part of the development plan, should not be deemed to be ‘out-of-date’ under paragraph 49 of the National Planning Policy Framework where all of the following circumstances arise at the time the decision is made:

* This written ministerial statement is less than 2 years old, or the neighbourhood plan has been part of the development plan for 2 years or less;


* the neighbourhood plan allocates sites for housing; and


* the local planning authority can demonstrate a three-year supply of deliverable housing sites.”


It seems that consultation will take place in due course that will refine the policy, but in the meantime it takes immediate effect:

“Following consultation, we anticipate the policy for neighbourhood planning set out in this statement will be revised to reflect policy brought forward to ensure new neighbourhood plans meet their fair share of local housing need and housing is being delivered across the wider local authority area. It is, however, right to take action now to protect communities who have worked hard to produce their neighbourhood plan and find the housing supply policies are deemed to be out-of-date through no fault of their own.”

So, suddenly local authorities have an additional “get out of jail” card even where they cannot demonstrate a five-year supply – if the proposal is in a part of its administrative area that (1) has a neighbourhood plan that has policies for the supply of housing (including allocation of sites) and (2) if the local authority has at least a three-year supply of sites.


Local authorities with a dubious housing land supply position may now be immediately tempted to secure that neighbourhood plans within their area contain policies that echo their own housing supply/allocation policies!

Those determining applications and appeals will now need to grapple with the additional questions of whether the relevant neighbourhood plan includes policies for the supply of housing (a phrase that will be examined by the Supreme Court in February in the Hopkins Homes/Richborough Estates litigation) as well whether there is a three-year supply of deliverable housing sites (of course in some situations there may be a five-year supply but not a three-year supply, if the allocated sites have a long lead-in period but the lack of a three-year supply will be irrelevant if the five-year supply is there). 

It seems that the Government does not intend to amend the NPPF but to leave it to be read alongside the written ministerial statement. So much for the intent behind the NPPF in the first place, as described rather sceptically by the Court of Appeal in Hopkins/Richborough  (17 March 2016):
“”The “Ministerial foreword” concludes by stating that “[by] replacing over a thousand pages of national policy with around fifty, written simply and clearly, we are allowing people and communities back into planning”. Some judicial doubt has been expressed about that assertion. As Sullivan L.J. said in Redhill Aerodrome Ltd. v Secretary of State for Communities and Local Government [2015] 1 P. & C.R. 3 (in paragraph 22 of his judgment, with which Tomlinson and Lewison L.JJ. agreed), “[views] may differ as to whether simplicity and clarity have always been achieved, but the policies are certainly shorter”. In an earlier case in which this court had to consider the meaning of the policy in paragraph 47 of the NPPF, City and District Council of St Albans v Hunston Properties Ltd. [2013] EWCA Civ 1610, Sir David Keene had expressed the view (in paragraph 4 of his judgment, with which Maurice Kay and Ryder L.JJ. agreed), that “[unhappily] … the process of simplification has in certain instances led to a diminution in clarity”.” (paragraph 8)
The lack of any intention to amend the NPPF is particularly disappointing given the fact that the Government consulted  in December 2015 over other proposed changes to the framework, which remain in hiatus pending the forthcoming Housing White Paper. If the document is to be updated, why not do the job properly (and clear up other ambiguities at the same time), rather than to allow people and communities to be shut out again from the process by having a supposedly comprehensive policy statement that is anything but?
Policy making by written ministerial statement  is understandably attractive for politicians. Indeed, since the changes to the Government’s consultation principles in January 2016  we can presumably expect much less consultation:
“Do not consult for the sake of it. Ask departmental lawyers whether you have a legal duty to consult…Do not ask questions about issues on which you already have a final view. “
A legal duty to consult often does not arise – if, for example, there is no specific statutory requirement, if there has been no prior indication that has lead to a legitimate expectation that there will be consultation or if the proposal is not a plan or programme to which the Strategic Environmental Assessment Directive applies.  
The Government’s 28 November 2014 written ministerial statement that introduced the vacant building credit and affordable housing small sites threshold predated the Government’s amended consultation principles. It may well be that there was in fact no duty on the Government to consult. However, if a public body chooses to carry out consultation it must abide by judge-made rules of lawful consultation – the Sedley principles:
a)  Consultation must take place when proposals still at a formative stage;
b)  The public must be given sufficient information to allow for intelligent consideration and response;

c)  Adequate time must be given for consideration and 
response;

d) The consultation responses be conscientiously taken into 
account in finalising the proposal.

The adequacy of the consultation undertaken ahead of the 2014 statement was of one of the grounds of challenge in West Berkshire Council v Secretary of State  (Court of Appeal, 11 May 2016). Whilst the Court of Appeal found the consultation process to be lawful, that had not been the conclusion of Holgate J at first instance. No wonder the advice is now: if you don’t have to consult, don’t. Depressing for those who might hope that open debate leads to better policy making and fewer unintended consequences.

Simon Ricketts 29.12.16

Personal views, et cetera

Trees In Court: A Festive Special

Trees stir emotions. Dwarfing us in their scale and their natural lifespan, they are integral to, define and inspire our built and natural landscapes. Their leaves connect us with the changing seasons. But they can be inconveniences: their roots, their debris, sometimes even their very presence.

The £1m lime tree
Who would spend £1m litigating over problems alleged to arise from a single lime tree in a suburban London Street? This is a recent piece from The Lawyer. HHJ Edward Bailey’s 29 July 2016 county court judgment  refusing the owner of the tree (a subsidiary of Grainger Trust plc) access over the neighbouring lawyer’s property (because the answer is of course a lawyer) under section 1 of the Access to Neighbouring Land Act 1992, to prune it, runs to 27 pages. All of the papers relating to the litigation, including transcripts and evidence, are at www.disputewithgrainger.com, a website created for the purpose by the neighbour. A £100,000 interim payment on account of his costs was due to be paid by Grainger yesterday. 
Sets the bar pretty high for future neighbour disputes it must be said. 
Trees & PFI
Where does the line of least resistance lie where a local authority’s PFI contractor faces increased highways maintenance costs due to the presence of trees?
Sheffield City Council, abetted by its contractor Amey, has been engaging in a systematic programme of tree felling and replacement along its highways. 

A somewhat speculative challenge was brought to the process by local residents in R (Dillner) v Sheffield City Council  (Gilbart J, 27 April 2016), following an interim injunction that was granted at short notice.

Gilbart J is in lyrical form, starting his judgment with the following background:

“Sheffield is one of the great cities of Northern England. Parts of it lie within the Peak District, which abuts its western aspect. It lies where several rivers and streams (the Rivers Don, Sheaf, Loxley, Rivelin, and Porter, Meers and Owler Brooks) flow eastwards off the Pennines. Many of its roads and streets (and especially in the suburbs running westwards and south-westwards from the City Centre) have trees planted along them, in the verges or other land within the highway. Like many of the great cities of the north of England, it suffered during the deindustrialisation of the late 20th Century and the financial stringency endured by local authorities over the last 30 years or more. The upkeep of its roads and streets were not immune to the testing climate that created for local authorities, and a backlog of maintenance developed.

It is in the nature of highway trees which are well established that they are intrinsically attractive (save in unusual cases), but also that, if allowed to grow unchecked, they cause problems to the proper maintenance of the roads, verges and pavements in which they sit or which they abut. Thus, the loss of a tree may be seen as regrettable in visual terms, but it may be required if the highway is to be kept in repair. The background to this case concerns the way in which Sheffield City Council (“SCC”) has sought to deal with the backlog of repairs, and in particular of how it has dealt with the presence of trees on its roads and streets”. 

The grounds of challenge followed familiar territory: inadequate consultation; the need for environmental impact assessment, and engagement of the decision maker’s duty to pay special attention to the desirability of preserving and enhancing the character of conservation areas.

The grounds were rejected:

– “provided the felling or lopping of the tree is carried out in pursuance of [a highways authority’s duty to maintain (and thus repair) [the highway], there is no requirement for consent to fell the tree “. 

– “while there is a requirement in those domestic Regulations which apply the EU Directives for environmental assessment in the case of trees, it only applies to projects of deforestation on sites of at least 1 hectare in size (0.5 ha in a National Park); see Environmental Impact Assessment (Forestry) (England and Wales) Regulations 1999 Schedule 2 paragraph 2. This project cannot be called deforestation”

– It “follows from the above that: 

(a)  the execution of works in the highway to repair it does not constitute development and therefore requires no planning permission; 


(b)  the removal or lopping of trees requires no planning permission in any event; 


(c)  the removal or lopping of highway trees in a Conservation Area requires no consent under s 211 TCPA 1990 if carried out in pursuance of the duty of the highway authority to maintain the highway, keep it in repair, and free of sources of danger or causes of obstruction; 


(d)  there is therefore no question of a development consent being required for the works; 


(e)  no planning function arises relevant to s 72 LBCAA 1990; 


(f)  at most, the fact that a tree could contribute to the appearance and character of a Conservation Area could be a material consideration. There is no evidence at all that Amey and SCC failed to take it into account. ”

Gilbart J’s closing comments:

“I repeat that nothing in this Judgment is to be read as criticising the residents of Sheffield for seeking to protect the trees in their streets and roads, whose presence many of them appreciate so much. But as with many matters, such an understandable and natural desire must be tempered by acceptance of the important duties cast on the highway authority to maintain those roads and streets in good repair. It is unfortunate in the extreme that those advising the Claimant and others who object have failed to address both sides of the argument, and even more so that the claim was advanced, and the injunction sought, without any proper analysis on their behalf of the statutory and legal context. It may be that those who will be disappointed by the terms of this Judgment will want to see a different legislative regime in place. That is a matter for Parliament, and not for this Court.”
So will Parliament now conduct a root and branch review?
Andrew Lainton’s February 2016 blog post, written when the interim injunction was granted, is, as always, worth reading.
Sycamore vs the tree of heaven
In determining in the Sheffield case that the decision by an authority to fell a tree does not engage the conservation area special duty in section 72(1) of the Listed Buildings and Conservation Areas Act 1990, Gilbart J had cited R (McClennan) v London Borough of Lambeth  (HH Judge Sycamore, 16 June 2014), which concerned Lambeth’s proposals to fell a tree of heaven at the rear of the grade II listed Durning Library building in Kennington Lane, within Kennington conservation area – with the objective, said Lambeth, of preventing structural damage to the listed building. Whilst section 72(1) wasn’t engaged, the judge held that Lambeth’s cabinet had failed to take into account a material consideration, namely that the tree was situated in the conservation area. The decision was quashed. Lambeth subsequently carried out public consultation but I think I know where the tree has gone.

Forest Hill Park, Labour In Vain Road
is the address in Wrotham, Kent of a caravan site which has been the subject of a TPO saga. Following the felling of various protected trees, enforcement proceedings were brought and court action was settled on the basis of an undertaking given by the defendants to cease the felling. The felling resumed, the council started proceedings for contempt of court and the defendants applied to release the undertaking, on the basis that they could fell the trees in reliance on a 1983 planning permission for “development … and continuation of use of land as caravan site”. The question that came to the Court of Appeal in Barney-Smith v Tonbridge and Malling Borough Council  (Court of Appeal, 9 December 2016) was whether the exemption from the need for consent, where felling was “immediately required for the purpose of carrying out development authorised by” a planning permission, was satisfied. The court, not unsurprisingly, held that the answer was no – even though the planning permission could have been implemented in such a way as would have necessitated the tree felling, it could be implemented in a manner which left the trees untouched and therefore the exemption did not apply.
The Hampstead Heath dam

R (Heath & Hampstead Society) v City of London  (Lang J, 28 November 2014) concerned the Hampstead Heath dam project, the decision by the City of London to approve and proceed with proposals for reservoir safety works to the ponds on Hampstead Heath. The claimant regarded the proposed works which would entail the loss of over 80 trees, as “damaging, unnecessary and over-engineered”. But Lang J held that the only legal consideration under the Reservoirs Act 1975 is public safety and that the works would not be in breach of the restrictions in the Hampstead Heath Act 1871 which requires that the City of London shall forever keep the Heath “unbuilt on” as they would fall within exceptions for drainage and improvement.  

Festive Litigation
Whatever your religion or non religion, enjoy the break (if I don’t blog again in the meantime). In the US, the constitutional status of the Christmas tree reached the US Supreme Court in Court County of Allegheny v. American Civil Liberties Union (3 July 1989). The combined display outside local authority offices of a Christmas tree, Menorah and sign saluting liberty was sufficiently secular so as not to offend the establishment clause in the First Amendment of the constitution, as opposed to a nativity scene inside a court building, which was held to be unlawful. What would the Daily Mail have to say about any UK Supreme Court justices who made such a ruling one wonders? I gather that since then the US Supreme Court has remained decidedly unfestive – according to one US commentator it has since declined to intervene in cases concerning: a Menorah and Christmas nativity scene combined with Frosty the Snowman and Santa Claus; an attempt to have Christmas decertified as a federal holiday, and efforts to allow Christmas music to be played over the intercom at public schools.


What’s a lawyer to do? The High Court rises on 21 December and the new term starts on 11 January. Oh well, put another log on the fire. 
Simon Ricketts 17.12.16
Personal views, et cetera

First World Problems: Basements

Does anyone actually need to excavate a basement? Despite, or because of, the cheek by jowl impacts on neighbours arising from the construction process and/or concerns as to structural implications, basement excavation does have one benefit – of regularly testing various areas of planning law. 
Permitted development rights
We have yet to see whether Team Javid/Barwell have the same enthusiasm for permitted development rights as Team Pickles/Lewis, with their three tier approach to development management: permitted development rights without the need for prior approval; permitted development rights with the need for prior approval where specific issues arise, and planning permission “for the largest scale development” (budget, 2014). 
Basement development exposes the difficulties with the permitted development process. Indeed the case of Eatherley v London Borough of Camden  (Cranston J, 2 December 2016) has blown a huge hole in the concept of permitted development rights as its conclusions could be applied to all but the most minor forms of development. It will surely have implications for the Government’s more ambitious, but currently stalled permitted development proposals summarised in my 15.6.16 blog post  .
As summarised by Cranston J, the central issue was “a question about the extent to which subterranean development can be carried out relying on the current regime of permitted development rights. The question is of general interest but arises particularly frequently in central London because of economic and social factors, in general terms, the increasing pressure for space. It is a matter of controversy in the planning world and there is a split between local planning authorities as to the correct answer”. 
Class A, Part 1, Schedule 2 of the Town and Country Planning (General Permitted Development) (England) Order 2015 grants deemed permission for the “enlargement, improvement or other alteration of a dwellinghouse” subject to defined limitations. 
The judge held that the proposals involved excavation works which, as a matter of fact and degree, constituted “an engineering operation” which did not benefit from any permitted development right:
“In my judgment the planning committee asked itself the wrong question with its focus on the works being “entirely part” of the overall development, which would “by necessity” involve engineering works. It concluded that because this was the case it followed that the works did not constitute a separate activity of substance. That is not the approach laid down in the authorities. The Council’s conclusion that the engineering works were not a separate activity of substance followed from a misdirection. It should not have asked itself whether the engineering works were part and parcel of making a basement but whether they constituted a separate activity of substance. The Council needed to address the nature of the excavation and removal of the ground and soil, and the works of structural support to create the space for the basement.” 
So now, objectors to projects that are being pursued in reliance upon permitted development rights will be alert to elements of the works that can be said to be engineering works that would require a separate planning permission. 
The judgment is topical – in November 2016, DCLG published Basement Developments and the Planning System – Call for Evidence  which “seeks evidence on the number of basement developments being taken forward: how these developments are currently dealt with through the planning system; and whether any adverse impacts of such developments could be further mitigated through the planning process. This review is not considering whether or not basement development should be permitted, but rather how the planning process manages the impacts of that development where it is permitted. ” The deadline for consultation responses is 16 December 2016.
Other uncertainties of the (similarly worded) equivalent part of the predecessor Order were considered in Royal Borough of Kensington and Chelsea v Secretary of State  (Patterson J, 17 June 2015):
 – whether the limitation in the Order if “the enlarged part of the dwelling house would have more than one storey” is referring to the dwelling house as enlarged by development, i.e. includes the original dwelling house, or whether it is referring to that part of the dwelling house permission for which is given by Class A of the GPDO. The judge held that it was the latter, simply excluding anything more than a single level basement.
– whether the limitation in the Order if “the enlarged part of the dwelling house would be within 7 metres of any boundary of the curtilage of the dwelling house opposite the rear wall of the dwelling house” is referring to the dwelling house being developed, i.e. the application dwelling house, or to another dwelling house opposite the dwelling house being developed”. The judge held that it was the former. 

Article 4 directions
One clear flaw in the Government’s reliance on permitted development rights is the relative ease with which LPAs can disapply the process through Article 4 directions (without giving rise to any rights to compensation if the direction is expressed to come into force at least a year after it is made). In relation to both of the cases referred to above the relevant LPAs have now put directions in place.
On 3 October 2016 the London Borough of Camden confirmed a direction made under Article 4(1) of the GPDO, covering the whole of the borough. From 1 June 2017 planning permission will be required for basements. The direction covers: 
“The enlargement, improvement or other alteration of a dwellinghouse by carrying out below the dwellinghouse or its curtilage of basement or lightwell development integral to and associated with basement development, being development comprised within Class A, Part 1 of Schedule 2 to the Order and not being development comprised within any other Class.” 

The Royal Borough of Kensington and Chelsea made an Article 4 direction on 19 March 2015 which came into force a year later.
Restrictive policies
To the extent that planning permission is required, where the proposed works fall outside the scope of permitted development rights, LPAs have been tightening their policies so as to be able to take a more restrictive approach. 
Lisle-Mainwaring v Royal Borough of Kensington and Chelsea  (Lang J, 24 July 2015) was an application (supported by a basement excavation contractor!) to quash RBKC’s adoption of a revision to its development plan so as to include a basements planning policy  , claiming that the council and the plan inspector “failed to take account of a material consideration, namely the permitted development rights for basement development, and the risk of greater reliance on them if the BPP were adopted, without the benefit of any planning control over construction noise and loss of amenity”, failed to consider “reasonable alternatives” to the policy under the SEA Directive and failed to consult adequately on the new policy. (Ms Lisle-Mainwaring also of course painted her house in candy-cane stripes as part of a bizarre protest against opposition to her proposed three storey basement, thereby creating even more work for the planning bar). 
The 2015 basements policy prevented double basements in most circumstances and restricted the construction of basements under the garden to no more than 50% of the garden area (previously 85%). RBKC has since adopted, on 14 April 2016, a more detailed basements SPD  as well as a code of practice on noise, vibration and dust 
(Of course, policies should not be applied regardless of specific circumstances. By a decision letter dated 18 September 2015  an appeal was allowed for a double basement as part of the redevelopment of the former Kensington Tavern site, albeit partly on the basis of a fallback position by virtue of existing planning permissions). 
First world problems
Celebrity super basements are of course a particular headache for RBKC. 
Brian May continues to lobby  and litigate  against, we have had Jimmy Page reportedly  objecting to a super basement proposal by Robbie Williams, and of course the saga of Foxtons founder’s plans for “new subterranean space for leisure facilities to include a swimming pool and conversion of the existing undercroft into a car museum” at his home in Kensington Palace Gardens, opposed by, amongst others, the French and Japanese embassies and Indian High Commission. 
The dispute as to whether planning permission and listed building consent for the works had been validly implemented and whether lawful development certificates had been lawfully issued came to court in Government of the Republic of France v Royal Borough of Kensington and Chelsea  (Holgate J, 27 November 2015), with the court finding for Hunt. I believe that the case is now heading to the Court of Appeal.
It all makes for interesting press of course – and certainly interesting law – but would most of us would choose to spend our money three storeys down were we to win life’s lottery? 
Simon Ricketts 5.12.16
Personal views, et cetera

Affordable Housing & Viability: London Leads

Full credit to Sadiq Khan for pressing ahead with his heavily trailed draft Affordable Housing and Viability SPG  despite the Government’s inexplicable delay in publishing the Housing White Paper (whatever its contents prove to be). The deadline for consultation responses to the draft SPG is 28 February 2017. As the draft warns, when the Government’s detailed proposals in relation to starter homes are published, presumably as part of the white paper, there will be knock-on implications for the SPG – after how can the percentages in the draft SPG possibly survive the imposition of a mandatory starter homes top slice?
The SPG will be guidance rather than policy (although I suspect that the distinction may over time prove largely semantic when non compliant schemes come before the Mayor for sign off) and LPAs are “strongly encouraged” to follow it for schemes of ten or more dwellings. The SPG will supersede section 3.3 (Build to Rent) and Part 5 (Viability) of the March 2016 housing SPG. The rest of that SPG remains current. It will inform the drafting of the new London Plan, a consultation draft of which is expected in Autumn 2017. 
What follows will become very familiar I’m sure to all of us negotiating London section 106 agreements. The level of prescription may prove helpful in narrowing the scope for re-inventing the wheel, subject to the attitude that LPAs take to what after all is only draft non-statutory guidance. 
The ‘threshold’ approach
The draft SPG introduces a ‘threshold approach’, whereby schemes meeting or exceeding 35% (by habitable room) affordable housing without public subsidy will not be required to submit viability information. 
Schemes are divided into “route A” and “route B”. 

Route A schemes are:
. applications which do not meet the 35% threshold and required tenure split;

• applications which propose affordable housing off-site or as cash in lieu contribution; 

• applications which involve demolition of existing affordable housing (in particular estate regeneration schemes); 

• applications where the applicant claims the vacant building credit applies. 

Route B schemes are schemes which meet the 35% threshold and required tenure split (and which do not otherwise fall within the route A scheme definition above). Viability appraisal is not required, although there will be an “early review mechanism … triggered if an agreed level of progress is not made within two years of permission being granted” (the agreed level of progress being defined at the outset in the section 106 agreement).
The required tenure split
The required tenure split is:
– “at least 30% low cost rent (social rent or affordable rent) with rent set at levels that the LPA considers ‘genuinely affordable’ (this will generally be significantly less than 80% market rent). As part of [the] consultation, LPAs are being invited
to give guidance on what rent levels they consider to be genuinely affordable if above the benchmarks for London Affordable Rent”.
– “at least 30% as intermediate products, with London Living Rent … and/ or shared ownership being the default tenures assumed in this category. For viability purposes, London Living Rent homes in mixed-tenure schemes can be treated similarly to shared ownership, as it can be assumed that they will be sold on a shared ownership basis after a period of 10 years”.

– the remaining 40% is to be determined by the relevant LPA but must be “genuinely affordable”.

“London Living Rent is a new type of intermediate affordable housing that will help, through low rents on time-limited tenancies, households with around average earnings save for a deposit to buy their own home”. It has “ward-level caps … based on one-third of median gross household income for the local borough. The cap varies from the Borough median by up to 20 per cent in line with house prices within the ward”. The Mayor intends to limit eligibility for London Living Rent and other intermediate rent products to households on incomes of £60,000 a year or less, down from £90,000. 

“[F]or intermediate dwellings to be considered affordable, annual housing costs, including mortgage (assuming reasonable interest rates and deposit requirements), rent and service charges should be no greater than 40% of net household income. 
For shared ownership properties, to ensure mortgage costs assumptions are reasonable, boroughs, developers and registered provides are advised to assume buyers will access RPs, with a term of 25 years and a 90% loan to value ratio. The prevailing average interest rate being offered to lenders based on the terms above should be used to calculate the monthly payments. Generally shared ownership is not appropriate where unrestricted market values of a unit exceed £600,000”. 
Viability appraisal
Viability appraisal will be required to following a prescriptive approach, set out in part 3 of the draft. In relation to some familiar areas for dispute:
– “The price the RP has agreed to pay for each unit should be used in the viability appraisal and should be enshrined in the Section 106 agreement (for phased schemes the price in the Section 106 should be inflation linked)”.

– It should be assumed that all developers will incur generic average finance costs based on standard market rates.

– The IRR approach will not generally be appropriate for schemes of fewer than 1,000 units. 

– The benchmark value will be based on an existing Use Value plus premium (EUV+) approach, rather than the circularity of a market value approach. The Mayor will generally only accept an Alternative Use Value (AUV) approach where there is an existing implementable permission for that use.

The Mayor expects “all information to be made public, including council and third party assessments. Applicants will have the opportunity to argue that limited elements should be kept undisclosed, but the onus is on the applicant to make this case”. 

Review mechanisms
Section 106 agreements for route A schemes will need to require a two stage review mechanism:
– An “early review” where an agreed level of progress with the scheme is not made within two years of the permission being granted. Any surplus to be split 60/40 between the LPA and the developer and any surplus identified to translate into additional onsite affordable housing. “Thus plans should identify which units would switch to affordable accommodation in the event of an increase in viability at this early stage. If the agreed level of progress has been made, this review will not be triggered. All signatories to the Section 106 need to commit to making their best endeavours to fulfil their relevant requirements (setting out key milestones and requirements) to deliver the scheme and account may be had of the market situation at time of review”. 

– A “near end of development review which will be applied once 75% of units are sold. Where a surplus profit is identified this should be split 60/40 between the LPA and developer. The outcome of this review will typically be a financial contribution towards off-site affordable housing provision”. 

– The surplus is applied up to a total of 50% affordable housing.

The review should consider changes in gross development value and build costs using formulae set out in Appendix A to the draft SPG and which should be set out in the section 106 agreement. 
Build To Rent
Specific favourable provisions apply to Build To Rent, defined as complying with the following criteria:
“• a development, or block/ phase within a development, of at least 50 units; 

• the homes to be held as Build to Rent under a covenant for at least 15 years; 

• all units to be self-contained and let separately; 

• unified ownership and unified management of the development; 

• professional and on-site management; 

• longer tenancies offered (ideally three years or more) with defined in-tenancy rent reviews; and 

• property manager to be part of an accredited Ombudsman Scheme and a member of a recognised professional body”.

The Build To Rent restriction should usually be by way of section 106 agreement and should include a clawback mechanism if the units cease to be used for Build To Rent purposes. Two potential, alternative , clawback mechanisms are being consulted upon:
– to seek to recoup the initial loss of affordable housing if the homes are sold out of the Build to Rent sector, based on an appraisal submitted at application stage showing the reduced number of affordable homes possible due to the Build To Rent model. 

– a clawback to secure a total of 35% affordable housing. 

Affordable housing within Build To Rent schemes can be by way of discounted market rent (DMR), managed by the private sector landlord. The Mayor is seeking that the DMR be at London Living Rent. 
Some relaxation of space standards may be acceptable for Build To Rent products, particularly where they are subject to a longterm covenant that they will remain as Build To Rent. 
Differences are recognised in the approach to viability for Build To Rent schemes. Particularly:
“a different approach to profit (often lower than a build for sale scheme); 
• different approaches to sales and marketing; 

• rate of sale/disposal – this will generally be faster for a Build to Rent scheme (generally a build to rent appraisal will assume a development period and then a sale to an investor or operator); and 

• potentially lower risk compared to for sale schemes”. 

Finally, the Mayor is keen to secure the following five management standards:

“- Longer tenancies (three years or more) should be available to all tenants. These should have break clauses for renters, which allow the tenant to end the tenancy with a month’s notice any time after the first six months. 

– Within these tenancies there should be formula-linked rent increases. The LPA should not stipulate the level of rent increases on market rate tenancies, but these should be made clear to the tenant when the property is let and LPAs should ensure they are not set to discourage tenants from taking longer tenancies. Rents should normally be reset on each new tenancy.

– There must be on-site management. This does not necessarily have to mean
full time dedicated on-site staff in every case, as this could be unviable and unnecessary on small schemes. However all schemes need to have prompt issue resolution systems and some daily onsite presence.

– Providers must have a complaints procedure in place and be a member of
a recognised ombudsman scheme. They must also have membership of a designated professional body, such as the British Property Federation or Royal Institute of Chartered Surveyors.

– Finally, properties must be advertised on the GLA’s London-wide portal, in due course, which can be in addition to any advertising the provider may already be undertaking”.

Registered providers/grant funding

Applicants are encouraged to have registered providers on board at pre-application stage. 
The Mayor’s grant funding will only be available for route B applications if it increases the proportion of affordable housing above the nil-grant position to a level of 40% or more.
“The Mayor’s Homes for Londoners: Affordable Homes Programme 2016-2021, sets out how grant is going to be used to increase the amount of affordable housing delivered on developer-led sites above 35%, and to support approved providers deliver programmes with at least 50% affordable housing”. 

Concluding thoughts

In 2015 private sector schemes only delivered on average 13% affordable housing. Will this approach nudge the percentage upwards? This largely depends on whether developers believe that to button down 35%, with no review as long as development is not delayed, and with no need for viability appraisal, is sufficiently achievable or attractive. If it isn’t then it will be business as usual, with viability appraisals submitted to seek to secure a significantly lower percentage. 

How will LPAs react, particularly those inclined to hold out for the 50% target? And how will the imposition of a mandatory proportion of starter homes impact on this nuanced, London-specific approach?

Is the Mayor’s target of 50% now unachievable by flagging 35% as in practice acceptable or can the use of public land and grant funding make any appreciable difference?

Pass. But at least the likely structure of section 106 agreements for route A, route B and Build To Rent schemes (or rather the Mayor’s starting position) is increasingly clear. Which means, if the approaches are commercially palatable, faster permissions and less delay to development (particularly with the spectre of reviews triggered by delayed implementation). And:

Mayor of London: 1

Secretary of State: nil.
Simon Ricketts 1.12.16
Personal views, et cetera