Localism gets real
This article was first published in Estates Gazette, 8 Sept 12.
Much has been written about the Localism Act 2011 ("the Act") and its effect on the planning regime. But what does it mean for landowners, property developers and everyone else involved in the wider real estate world?
While the Act makes some changes to existing laws, such as those relating to tenancy deposits and council tax, and puts the final nail in the coffin of home information packs, it also introduces new concepts with which landowners, developers and their advisers will need to familiarise themselves. These are:
- neighbourhood forums;
- assets of community value;
- community right to buy (bid); and
- new enforcement provisions for "concealed breaches" of planning control.
The Act introduces a new body into the planning process. In areas without town or parish councils, a "neighbourhood forum" can take the lead on local planning issues. Several community groups have already been set up as neighbourhood forums. This requires formal designation by the local authority. A forum needs at least 21 members and they must all live or work in the area, or be a local councillor. The designation of a forum lasts for five years.
Neighbourhood forums, parish and town councils can prepare a neighbourhood plan. They do, however, need permission from the local authority to designate a neighbourhood plan area.
Developers and landowners should get involved with neighbourhood forums to keep as close as possible to the local community, and to provide their input into the development of neighbourhood plans.
Assets of community value
Each local authority must maintain a list of land in their area that is of "community value". This might include community centres, libraries, swimming pools, village shops, markets, or pubs. The Act aims to give people "the opportunity to take control of assets and facilities in their neighbourhoods by levelling the playing field by providing the time for them to prepare a proposal". The Act gives the community the chance to bid for these assets when they are offered for sale, thus enabling properties of social importance to come under local control.
Over the past few years there have been many instances of local communities taking over the running of amenities such as the village shop or post office. The Act seeks to formalise this opportunity.
Assets for inclusion in the register of assets of community value can be nominated by the community. Before including an asset, the local authority must be satisfied that the current use:
- furthers the social wellbeing or social interests of the local community; and
- that it is realistic that the use will continue to exist; or
- that such a use has existed in the recent past and could realistically exist within the next five years.
If a property is designated as an "asset of community value", that will impose a moratorium on any proposed disposal to enable the local community to formulate a proposal to buy the asset (see below). It is important for landowners and developers to identify whether any land that they propose to sell, buy or redevelop is an "asset of community value" as this could delay or impede dealings with a property.
Community right to buy (bid)
When a "relevant disposal" of an asset of community value is proposed, the local community has the chance to come forward with a proposal to acquire it. There is, however, no obligation on the owner to accept a bid.
A "relevant disposal" is defined as a sale of the freehold with vacant possession, or the grant or assignment of a lease (with vacant possession) with at least 25 years to run. There are limited exclusions from the definition of "relevant disposal" to cover transactions such as transfers not for value.
Where a relevant disposal is proposed, the owner must notify the local authority in writing of its intention. There is then an interim moratorium of six weeks to allow community groups to be considered as potential bidders. If no bid is made by the community in that period, the asset can be disposed of. However, if the community expresses an interest, then there is a six–month moratorium to allow them to get their bid together.
The community right to buy falls short of a formal right of first refusal, which is why it is often referred to as a "community right to bid".
If the asset is not sold at the end of the interim or full moratoria, the asset can be sold within the remainder of an 18–month period (starting when the local authority was notified of the intention to enter into a relevant disposal) without triggering a further "right to buy" notification.
The moratoria could cause considerable delays to a proposed development. Only time will tell how many community groups will be able to raise the funds to buy their community asset and then run it.
Concealed breaches of planning control
Before the Act was passed, two high–profile breaches of planning control brought this matter to the public's attention. One concerned what appeared to be a hay barn, for which planning consent had been obtained, but which was in fact a three–bedroom house: see Welwyn Hatfield Borough Council v Secretary of State for Communities and Local Government  EWCA Civ 26. Having lived in it for more than four years, the landowner applied for a certificate of lawfulness of use. The landowner lost his claim.
The second case – R (on the application of Fidler) v Secretary of State for Communities and Local Government  EWHC 143 (Admin) – concerned a house that had been built without planning permission, which the owner then "hid" behind bales and tarpaulin. After four years, he removed the bales and was served with an enforcement notice demanding that the house be pulled down. Again, the landowner lost.
These cases brought the notion of "concealed breaches" to the fore, so the Act strengthened local authorities' powers of enforcement where there has been a "deliberate concealment" of a breach of planning control. In these circumstances, the local authority can apply to the magistrates court for a "planning enforcement order" (PEO), which will allow it to bring enforcement action outside the normal enforcement deadline of four to 10 years. The court must be satisfied that the breach has been "deliberately concealed" and must consider it just to grant the PEO. The Act does not define "deliberate concealment".
The spectre of enforcement action being taken years after the event will mean that full enquiries will need to be made of proposed sellers regarding historic breaches of planning control.
Time will tell
This is a fast–moving area, as local groups start to set up neighbourhood forums. Time will tell how the Act will settle down and what impact it will have on the real estate market.