Category: Landlord and tenant

New Cabinet, Poor Doors, No Windows

La Sagrada Familia = our planning system. Never finished, it now has new architects.

I don’t know what new extrusions, reversals or pauses to expect from Robert Jenrick, Esther McVey and the rest of the MHCLG ministerial team yet to be announced.

I do know that Robert Jenrick was a member of the Commons Public Accounts Committee which published a report Planning and the broken housing market (19 June 2019). From the introduction:

“The government has an ambitious target of delivering 300,000 new homes per year by the mid-2020s, but inherent problems at the heart of the housing planning system are likely to jeopardise this target. If the Government delivers 300,000 new homes per year, this would be a significant increase in the rate of house building, with the number built a year averaging only 177,000 in the period 2005–06 to 2017–18. While the Ministry of Housing, Communities and Local Government (the Department) has made some recent reforms to the planning system, much more needs to be done and it still does not have a detailed implementation plan for how it will scale-up house building.”

He knows something of the task ahead.

The report also says this:

“We were concerned about poor quality in the building of new homes and of office accommodation converted into residential accommodation through permitted development rights. The Department stressed that it was critical that quality was good enough. It agreed that there are issues—particularly when dealing with large office blocks— that the number of homes created out of that office block can be too high, with inadequate space standards and build quality. The Department told us that it has committed to a review of permitted development rights which turn commercial properties into residential accommodation. This review will look at the quality of those homes and what should be built.”

In the lead up to the new premiership, May’s Government seemed to have a renewed focus on the quality of homes and communities. I wanted to write something on the various strands within this theme, if only to capture a series of links to documents, before we lose the thread in a slew of new announcements.

Minimum dwelling sizes

My 23 March 2019 blog post We Have Standards referred to previous Secretary of State James Brokenshire’s March 2019 statement that he intended to “review permitted development rights for conversion of buildings to residential use in respect of the quality standard of homes delivered. […]. We will also develop a ‘Future Homes Standard’ for all new homes through a consultation in 2019 with a view, subject to consultation, to introducing the standard by 2025.”

Theresa May suggested in her 26 June speech to the Chartered Institute of Housing that, whilst it would ultimately be a matter for her successor, the nationally described space standard should apply “by regulation” to all new homes. As explained in my 23 March 2019 blog post, it is presently for each local planning authority to decide whether to incorporate the standard in their local plan as a policy requirement such that an applicant for planning permission then needs to demonstrate compliance.

“I do not accept that, in 2019, we can only have sufficient and affordable housing by compromising on standards, safety, aesthetics, and space.

That is why I asked the Building Better, Building Beautiful Commission to develop proposals for embedding beautiful, sustainable and human-scale design into the planning and development process.

I look forward to reading the interim report next month.

It is why the Ministry of Housing will shortly be launching a consultation on environmental performance in new build homes, with a Future Homes Standard that will give all new homes world-leading levels of energy efficiency by 2025.

And it is why I want to see changes to regulations so that developers can only build homes that are big enough for people to actually live in.

It was the Addison Act that brought modern space standards to English housing law for the first time.

During the Bill’s second reading, the architect of the standards, Sir Tudor Walters, urged MPs to “take care that the houses planned in the future are planned with due regard to comfort, convenience, and the saving of labour”.

It is a message we would do well to return to today.

Because in the years since, the pendulum has swung back and forth between regulation and deregulation, leading to a situation today where England does have national standards – but ones that are largely unenforceable and inconsistently applied.

Some local authorities include the Nationally Described Space Standard in their local plans, making them a condition of planning permission.

But others do not.

And even where they are applied, as planning policies rather than regulations they are open to negotiation.

The result is an uneven playing field, with different rules being applied with differing levels of consistency in different parts of the country.

That makes it harder for developers to build homes where they are needed most.

And it leaves tenants and buyers facing a postcode lottery – if space standards are not applied in your area, there is no guarantee that any new homes will be of an adequate size.

Now I am no fan of regulation for the sake of regulation.

But I cannot defend a system in which some owners and tenants are forced to accept tiny homes with inadequate storage.

Where developers feel the need to fill show homes with deceptively small furniture.

And where the lack of universal standards encourages a race to the bottom.

It will be up to my successor in Downing Street to deal with this.

But I believe the next government should be bold enough to ensure the Nationally Described Space Standard applies to all new homes.

As a mandatory regulation, space standards would become universal and unavoidable.

That would mean an end to the postcode lottery for buyers and tenants.”

[Creating space for beauty: The Interim Report of the Building Better, Building Beautiful Commission was published in July 2019, sans its now reinstated chairman Sir Roger Scruton, who will be able to influence the tone of the Commission’s final report, due in December 2019. The interim report is a wide-ranging discursive read ending with 30 “policy propositions”. There is much good stuff about, in Theresa May’s words, “embedding beautiful, sustainable and human-scale design into the planning and development process”. None of its policy propositions urge prescription as to dwelling size, although there is this passage within its commentary:

“Above all, polling and pricing data show that people are looking for homes that meet their needs and are in the right place. Every academic or commercial study we have been able to find has shown that, other things being held equal, bigger homes are worth more and so are better connected ones. For example, a study of every single property sale in six British cities showed that in, say, Liverpool, every additional bedroom brought an additional £15,000 of value. Similar patterns were visible in Leeds, Newcastle, Manchester, Birmingham and London. In their response to our call for evidence, the RIBA also highlighted their polling research into user needs that highlighted the importance of generosity of space, high ceilings, windows that flood principal rooms with light and detail that adds character”.]

Some I know disagree, but to my mind Theresa May’s statement missed the real target in relation to minimum dwelling sizes. At present authorities can apply the nationally described space standard if they so choose. But what authorities cannot prevent (other than by removing the relevant permitted development rights in the first place by way of Article 4 Direction) is the creation of very small dwellings pursuant to the General Permitted Development Order, the adequacy of the accommodation to be created not being one of the matters in relation to which prior approval is required under the Order. Either this needs to be a matter for which prior approval is required or it needs to be addressed by way of separate regulation.

Other minimum standards in relation to permitted development rights schemes

There is still so much misunderstanding as to the operation of permitted development rights. General horror has been expressed as to the permitted development appeal in Watford for the proposed conversion of a light industrial unit to apparently windowless bed-sit/studio accommodation, allowed by an inspector in his decision letter dated 5 July 2019:

“Overall, I recognise that the proposed units are small and that, for example, living without a window would not be a positive living environment. However, the provisions of the GPDO 2015 require the decision makers to solely assess the impact of the proposed development in relation to the conditions given in paragraph PA.2. The appellant has also made clear that they are not proposing any external works at this stage.”

Photo: Watford Observer

The absence of any control over size of the proposed dwellings is indeed appalling, see my point above. But I am prepared to bet that the developer, now that he has prior approval to the use of the building as dwellings, will come back with an application for planning permission for the installation of windows and for the general recladding of the building. If it had all been applied for as one planning application, the authority would no doubt have objected to the principle of the change of use – just look at the sequencing of applications with most PD schemes and there is surely nothing wrong in that – the permitted development right just relates to use – and of course does not override other regulatory requirements.

Part B of the Building Regulations requires that every habitable room up to 4.5m from ground level either (1) has an openable window with dimensions of at least 45cm by 45cm, no more than 110cm above the floor or (2) (on the ground floor) opens directly onto a hall leading directly to an exit or (above the ground floor) with direct access to a protected stairway. Adequate ventilation is also required.

Since 20 March 2019 the Homes (Fitness for Human Habitation) Act 2018 also imposes specific requirements on landlords letting residential property for a period of less than seven years. In determining whether a dwelling is unfit for human habitation regard will be had to, amongst a range of matters, natural lighting and ventilation. MHCLG has published specific guidance for landlords as to the operation of the Act.

In considering whether further legislation or guidance is needed, ministers will need to consider carefully the extent to which the planning system should duplicate systems of protection provided in other legislation and where genuinely there are gaps that would allow unacceptable outcomes.

The Future Homes Standard

What of James Brokenshire’s reference in March of consultation on a proposed Future Homes Standard this year, with a view to introducing the standard by 2025? This was a reference to the commitment in the then Chancellor’s Spring budget to:

“A Future Homes Standard, to be introduced by 2025, future-proofing new build homes with low carbon heating and world-leading levels of energy efficiency. The new standard will build on the Prime Minister’s Industrial Strategy Grand Challenge mission to at least halve the energy use of new buildings by 2030“.

There has not yet been any consultation. The House of Commons Business, Energy and Industrial Strategy Committee, in its 9 July 2019 report, Energy efficiency: building towards net zero, urged a greater sense of urgency:

“We welcome the announcement of a Future Homes Standard. Any attempts by housebuilders to water down the standard should be blocked by the Government. The only barrier precluding housebuilders developing to higher standards before 2025 is a preoccupation with profit margins and shareholder returns. Despite receiving billions in taxpayer funds, most housebuilders will only raise the energy standards of their stock if forced to do so. Progressive housebuilders who want to go further are being held back by the laggards who actively lobby the Government to boost their profits, rather than help meet carbon reduction obligations.

We recommend that the Government legislates for the Future Homes Standard as soon as practically possible—and by 2022 at the very latest—to guarantee that no more homes by 2025 are built that need to be retrofitted. We recommend that the Government considers policy drivers at its disposal to drive early uptake. At a minimum, the Government should put in place a compulsory ‘learning period’ from 2022 in a subset of properties in preparation for the full-scale deployment. The Government should oblige bigger housebuilders to undertake regional demonstration projects to show how they will achieve the standard.”

Communities framework

MHCLG published a “communities framework” on 20 July 2019, entitled By deeds and their results:

How we will strengthen our communities and nation , expressed to be the “next step in refreshing the government’s aspirations for stronger, more confident communities. It provides a framework to build on a range of government activity that is contributing to stronger communities in different ways – from the implementation of the Civil Society Strategy and Integrated Communities Action Plan, to our efforts to boost productivity and inclusive growth through the Industrial Strategy and by supporting local industrial strategies across the country.”

It promised that the Government will:

“• Hold a national conversation with communities across England about their view of who we are as a nation, their vision for the future of their community and our country, and what local and national government can and should be doing to support their community to thrive.

• Establish a series of Civic Deal pilots to test how the Ministry for Housing, Communities and Local Government and the Department for Digital, Culture, Media and Sport put into practice the principles set out in this document in partnership with local areas.

• Publish a Communities White Paper to renew government’s focus on building stronger communities across England. The scope of the White Paper will be developed in partnership with communities and informed by the national conversation and Civic Deal pilots.”

Poor Doors

I referred in my 23 March 2019 blog post to widespread concerns over development projects where affordable housing tenants are prevented from using facilities provided for private market housing residents, for example children’s play areas and entrance/lift lobbies.

The basis for such arrangements may well be economically rational to the developer (preventing service charge leakage and/or preserving a sales premium in relation to the market units), to the registered provider (which would not be in a position to impose service charges high enough to cover the cost of the facilities provided for the market housing) and to the local planning authority (usually keen to protect the profitability of the development so as to secure the maximum amount of affordable housing that can be viably be delivered). But of course there can be wider, more damaging, implications.

On the same day as the communities framework was published, an MHCLG press statement Brokenshire unveils new measures to stamp out ‘poor doors’ announced there would be “measures to tackle stigma and help end the segregation of social housing residents in mixed-tenure developments…planning guidance will be toughened up and a new Design Manual will promote best practice in inclusive design.”

Meanwhile, as to we wait to see what the new ministerial team at MHCLG delivers, the Mayor of London’s new London Plan edges forward. We await the inspectors’ conclusions following their examination sessions but in the meantime the Mayor has published a Consolidated suggested changes version of the plan July 2019.

A specific policy has now been included to require that proposals likely to be used by children and young people should include good quality, accessible play provision that “is not segregated by tenure” (policy S4 B (f)).

Conclusion

With due deference to the list of banned words circulated by Mr Rees-Mogg:

Due to the ongoing change in ministers, with the old lot out, apparently unacceptable and no longer fit for purpose, I can only speculate as to the future of these initiatives. Hopefully I will ascertain more very soon.

I understand your concerns.

Simon Ricketts, Esq. 27 July 2019

Personal views, et cetera

Photo: Go UNESCO

A Reasonable Prospect of Planning Permission: The Right To Possession Under Ground (f)

Even when it’s your day job in our planning world of imprecisely worded policies and the uncertainties of local and national politics, it can be hard enough to answer the question as to whether a proposed development project has a reasonable prospect of planning permission. But what if you are a county court judge? And when the law throws in some hypothetical assumptions?

One of the grounds under section 30(1) of the Landlord and Tenant Act 1954 which a landlord can rely on in opposing the grant to of a new tenancy to an existing business tenant is on the ground that “on the termination of the current tenancy the landlord intends to demolish or reconstruct the premises comprised in the holding or a substantial part of those premises or to carry out substantial work of construction on the holding or part thereof and that he could not reasonably do so without obtaining possession of the holding.”

The courts have held that the landlord must show that (1) it has the intention to demolish or reconstruct at least a substantial part of the premises and (2) there is a reasonable prospect of being able to bring about that intention.

That “reasonable prospect” second limb of the test was the subject of Warwickshire Aviation Limited and others v Littler Investments Limited (Birss J, 25 March 2019) and I will deal with that in a moment.

However, first to note that the Supreme Court late last year caused a minor earthquake in terms of how the first limb is to be interpreted, namely whether the landlord has a sufficient “intention“.

For a long time now it has been the practice of some landlords to come up with demolition or redevelopment schemes just to satisfy the test, schemes which they are prepared to undertake to the court that they will carry out (an undertaking which they will not need to give if, as has been usual, in the face of an evidenced intention the tenant resigns itself to defeat and cuts a deal – in which case the scheme can be abandoned).

As a result of S Franses Limited v The Cavendish Hotel (London) Limited (Supreme Court, 5 December 2018), that practice has been rendered much more difficult.

The case concerned a textiles dealership and consultancy in Jermyn Street, Mayfair, comprising the ground floor and basement of what is otherwise the Cavendish Hotel. It was refused a new tenancy on the basis that its landlord “intended” to carry out an absurd set of works, arrived at because of the difficulties in obtaining planning permission for earlier proposals to create new retail units. The landlord ended up proposing a set of works that did not require planning permission. First, the proposed “internal wall dividing the two proposed retail units stopped two metres short of the shopfront at ground floor level; and there was no external door to one of the units, so that it could be accessed only through the other. Secondly, the new scheme added more extensive internal works, many of which were objectively useless. They included the artificial lowering of part of the basement floor slab, in a way which would achieve nothing other than the creation of an impractical stepped floor in one of the units; the repositioning of smoke vents for no reason; and the demolition of an internal wall at ground floor level followed by its immediate replacement with a similar wall in the same place. The cost of the scheme was estimated by the landlord at £776,707 excluding VAT, in addition to statutory compensation of £324,000 payable to the tenant.

It is common ground that the proposed works had no practical utility. This was because, although the works themselves required no planning permission, it would be impossible to make any use of them at all without planning permission for change of use, which the landlord did not intend to seek. Planning permission would have been required because the scheme involved combining premises permitted for hotel use with premises permitted for sui generis use. In addition, one of the retail units was unusable without an entrance from the street. In accordance with a common practice in this field, the landlord supported its evidence of intention with a written undertaking to the court to carry out the works if a new tenancy was refused. The sole purpose of the works was to obtain vacant possession. The landlord’s evidence was that it was prepared to run the risk that the premises occupied by the tenant would be rendered unusable “in order to secure its objective of undertaking [the third scheme] and thereby remove the claimant from the premises.” The landlord submitted that “the works are thoroughly intended because they are a way of obtaining possession. That is all there is to it.” As the landlord’s principal witness put it, the third scheme was “designed purely for the purpose of satisfying ground (f).”

The landlord argued that its motives were irrelevant – all that mattered was its intention to carry out the works. However, the Supreme Court disagreed.

Lord Sumption: “the landlord’s intention to demolish or reconstruct the premises must exist independently of the tenant’s statutory claim to a new tenancy, so that the tenant’s right of occupation under a new lease would serve to obstruct it. The landlord’s intention to carry out the works cannot therefore be conditional on whether the tenant chooses to assert his claim to a new tenancy and to persist in that claim. The acid test is whether the landlord would intend to do the same works if the tenant left voluntarily.”

In consequence in future cases there will surely be a greater need for expert evidence in county court proceedings as to why a particular scheme of works has some commercial utility to the landlord other than just as a basis for a ground (f) opposition to a new tenancy.

Back to the second limb and the Warwickshire Aviation case. The case had started in the county court, with seven separate aviation-related tenants of premises at Wellesbourne Mountford Airfield all faced with ground (f) opposition by their landlord to the grant of new tenancies on the basis that it intended to demolish their premises. There was a trial of the preliminary issue as to whether ground (f) had been made out. Planning permission for demolition would be required because permitted development rights had been taken away by way of an Article 4 direction. The landlord wished to bring to an end any aviation use on the airfield and instead to promote the site for residential development. The central issue at the four day trial was whether, against the planning policy background, there was a reasonable prospect that the local planning authority would grant planning permission for demolition, in the face of policies which included support for “enhancement of the established flying functions and aviation related facilities” at the airfield. Planning consultants gave expert evidence for the two sides, with very different conclusions.

One complication was the necessary hypothetical assumption that at the time of the notional planning application for demolition the tenants would have vacated and the current aviation related uses would have ceased. Given the landlord’s objectives, the county court judge found “there appears on legitimate and substantial economic/commercial grounds to be no realistic prospect, if consent for demolition was refused, of the Defendant re-instating aviation related use of the buildings. That would be a material consideration for the decision maker to have regard to” in the light of the relevant policies and therefore he concluded that there was a reasonable prospect that planning permission would be granted.

On appeal from the Birmingham County Court to the High Court, the tenants argued that “in planning terms the landlord’s future intentions are irrelevant and do not amount to a “material consideration” within s70(2) of the TCPA and s38(2) of the PACP. They argue while the land owner may well have sound commercial reasons for wanting to increase the profitability of its landholding and prevent further aviation use, those are quintessentially private rather than public interests.”

The judge on appeal rejected the argument. The relevant policy “rather than requiring developers to retain and support existing aviation related facilities at the airfield regardless of the circumstances, only states that developers are expected to contribute to the achievement of that objective “where it is appropriate and reasonable for them to do so”. As Littler submits, those words are wide enough to allow a developer to tell the decision maker that it does not intend to return the buildings to their previous aviation related uses for commercial reasons. The decision maker will assess if that stance is appropriate and reasonable in the circumstances. If the reasons are found to be genuine (as here), in that case it would be open to the decision maker to accept the stance of the developer. The result could well be that it would not be appropriate and reasonable to expect the developer to contribute to the achievement of the objective of retaining aviation related uses at Wellesbourne in that instance. Therefore the judge was entitled to approach the matter in the way he did.

Contrary to the […] appellants’ submission, this does not mean that the entire planning system can be subverted or frustrated because a landowner would always be able to succeed in obtaining planning permission for demolition or change of use simply by asserting an intention not to continue its existing use. That submission ignores the discretion in the relevant planning policy, ignores the fact that there were a range of other uses available not requiring planning permission (this is addressed in Ground C below) and ignores the fact that the judge specifically considered whether the reasons given by Littler were substantial and genuine.”

The appeal judge agreed with the county court judge that policies in a recently adopted neighbourhood plan did not make a significant difference to the issues.

Finally the appeal judge rejected the submission that the judge at first instance had applied too stringent a test in assessing the likelihood of aviation related uses resuming if permission for demolition were to be refused.

Regardless of what the correct answer actually was on the evidence, one can see the difficulties inherent in determining the hypothetical question on which the case turned. I’m no landlord and tenant lawyer but isn’t “reasonable prospect” just setting the bar too low? Of course the landlord is going to be dead-set against a continuation of the relevant use – that’s why it has gone to the expense of opposing a new tenancy. If that is relevant, doesn’t that leave the landlord holding all the cards? Or is the reality that business tenants have to accept that their right to a new tenancy will always be precarious? Another issue for the Supreme Court one day perhaps?

Landlord and tenant lawyers, you are welcome to set me straight on any of this.

Simon Ricketts, 20 April 2019

Personal views, et cetera