Completion notices have always been a blunt tool, little used by local planning authorities. The Housing White Paper proposes sharpening them, but to what end?
If we blow the dust off a bit we can remind ourselves that the current completion notice procedure in sections 94 and 95 of the Town and Country Planning Act 1990 is as follows:
– Development must have been begun within the time limit on the planning permission and that time limit must have now expired.
– If the LPA considers that the development “will not be completed within a reasonable period” they can serve a completion notice stating that the planning permission will cease to have effect after a period specified in the notice which must be at least 12 months.
– Any notice is only effective if confirmed by the Secretary of State, who may extend the 12 months’ period. Any person served with a completion notice who objects within a time limit set out on the notice (must be at least 28 days) has a right to a hearing before the Secretary of State before he reaches his decision.
– If the notice takes effect, the planning permission becomes invalid at the end of the specified period, but this does not affect any development carried out under the permission before the end of the period.
The procedure is very seldom used, for various reasons:
– It doesn’t do what it says on the tin. It does not secure completion of the development. If development has stalled, the developer is already having pretty fundamental problems. The threat of a completion notice is not going to lead to a developer finding significant amount of money to overcome those problems – indeed it could jeopardise a solution being found if funders are spooked.
– Instead, use of the procedure is likely to lead to an uncompleted development – it should perhaps be called an uncompletion notice. Furthermore, the courts have resisted to date any notion that if, by the end of the specified completion deadline, only part of a building has been built, the part built is in any way no longer unauthorised (Cardiff County Council v National Assembly for Wales, Davis J, 22 June 2006 – in that case, an unsightly part-built garage, which the Council sought unsuccessfully to enforce against after the deadline in the completion notice).
– The test as to whether the development “will be completed within a reasonable period” is too vague, particularly in relation to major projects. What is it to be judged against?
– The need for approval by the Secretary of State adds to the potential for delay and uncertainty.
So what is the Government now proposing? As part of its collection of “Holding Developers And Local Authorities To Account” measures, the white paper contains the following:
“2.42 We want to ensure local planning authorities have more effective tools to deal with circumstances where planning permission has been granted but no substantive progress has been made. We propose to simplify and speed up the completion notice process, whereby if development on a site has stopped and there is no prospect of completion, the local authorities can withdraw planning permission for the remainder of the site. This would make it easier for local authorities to serve a completion notice, helping to stimulate building or clear unused permissions from their planned supply of land. “
Views are sought by 2 May on two proposals:
“A.107 The Government proposes to amend legislation to remove the requirement for the Secretary of State to confirm a completion notice before it can take effect. Local authorities know their circumstances best, and removing central government involvement will help shorten the process, and give authorities greater control and certainty. The opportunity for a hearing will be retained where there are objections.
A.108 We also intend to amend legislation, subject to consultation, to allow a local authority to serve a completion notice on a site before the commencement deadline has elapsed, but only where works have begun. This change could dissuade developers from making a token start on site purely to keep the permission alive. However, it is important that this would not impact on the willingness of lenders to invest.”
These proposals are hardly radical. The Government published a report on completion notices back in July 2001, that it had commissioned from Cardiff University and Buchanan Partnership, no longer on the web as far as I know, which back then made these recommendations (to which it appears the Government never responded):
* Greater thought should be given to tailoring the time period in the standard condition relating to the commencement of development to fit the situation. In particular, the period could be reduced to two years for minor development.
* The Government’s advice, then in Circular 11/95, against including a condition requiring that the whole of an approved development be completed should be reviewed.
* No justification for referral to the Secretary of State, and this should be replaced by a right of appeal.
* Better publicity for the system could lead to its greater use.
The first recommendation in the white paper echoes the 2001 report and is hardly controversial. There should be no reason to require confirmation by the Secretary of State if objections to the notice haven’t been received.
The second recommendation is more worrying, when looked at in conjunction with the separate proposals in the white paper, that:
– the applicant should “provide information about their estimated ‘start date’ (month/year when a substantive start would take place) and ‘build out rate’ (the number of homes built per financial year) for all proposals for or including housing development”
– developers should “provide local authorities with basic information (in terms of actual and projected build out) on progress in delivering the permitted number of homes, after planning permission has been granted”
– large housebuilders should be required to publish “aggregate information on build out rates”
Owners and developers are normally vigilant to keep planning permissions alive by carrying out a material operation prior to the implementation deadline on the permission, reflecting the frequent reality that detailed architectural and engineering work post-permission, as well as the funding structure to underpin a development, often including necessary pre-lets in the case of commercial floorspace, take longer than the deadline for implementation (in relation to which the default period is now proposed to be reduced to two years). Missing the deadline means going down a very long snake to submit a fresh application for planning permission.
The white paper proposal envisages that an LPA could serve a completion notice at any time after the developer has carried out a material operation, even before the implementation deadline has expired. What would there be to prevent an LPA serving completion notices as a matter of routine where development appears to be slower than was previously indicated, or than housebuilder averages? The white paper itself questions whether this would “impact on the willingness of lenders to invest”. The answer is that it surely would as there would be no certainty for a lender that if the borrower developer defaults on its loan the lender will have time to step in and secure the completion of the development under the same permission – or work through another solution with the borrower. The underpinning certainty of the permission is lost. Two years to implement a permission is no period at all and if relatively minor works within that period may not suffice to keep the permission alive, banks will undoubtedly want to consider the risk profile vis a vis particular authorities very carefully.
Why not look at more constructive opportunities with the information to be provided about actual or projected build out rates? For example:
– Remember the section 106BC procedure? Revised section 106 arrangements alleviating affordable housing requirements ceased to apply to those parts of the development that had not been completed within three years. That sort of structure could be considered by LPAs in section 106 agreements where justified.
– Any viability review mechanism could be expressed as only operable if specified amounts of development had not been achieved by defined milestones.
– Encourage LPAs to tie any funding they control, eg use of CIL monies for the benefit of the scheme, to timely build out progress.
So much can be achieved by planning obligations and conditions, instead of spending time working out how to hack at the problem with what is hardly the sharpest tool in the box.
Personal views, et cetera