The Neighbourhood Planning Bill (NPB) was introduced to the House of Commons on 7 September 2016 and is currently going through Parliament. It is the latest piece of legislation to be introduced with the aim of speeding up and streamlining the planning process. It also looks to support and facilitate future house-building projects. It contains a number of provisions but we highlight two interesting proposals below.
The first provision is that the NPB seeks to address the cost and time involved with discharging pre-commencement planning conditions. As developers know complying with pre-commencement conditions (which require developers to take action before work starts on site) can be an expensive and time-consuming process. In order to address this and ensure that pre-commencement planning conditions are only used when strictly necessary, the NPB proposes to restrict the imposition of pre-commencement conditions unless the applicant agrees.
The NPB also includes a power to allow the Secretary of State to make regulations which prescribe the kind of conditions which may or may not be imposed on a grant of planning permission and in what circumstances, providing he is satisfied that this is necessary to ensure that the conditions imposed by the LPA meet national policy. Alongside the launch of the NPB, the Government launched a public consultation to seek views on the proposals. The consultation has now closed and we are awaiting the Government's response.
While it would still be available to the LPA to refuse planning permission if an applicant refused to agree to a necessary pre-commencement condition (that was required to protect heritage or the natural environment, for example) the new provisions in the NPB will oblige LPAs to think more carefully about the conditions they impose when granting planning permission. The new provisions should result in fewer and less onerous conditions being imposed on developers and it is hoped that this will help to speed up the process of getting work started on site for consented schemes. The changes will also give developers stronger grounds on which to question the necessity of any pre-commencement conditions that have been imposed on them.
Recovering development value and compulsory purchase
The second provision which is worthy of note for developers at this stage is that the NPB proposes a change to the calculation of compensation payable in relation to land acquired under a compulsory purchase order. As a rule, compensation is assessed in the "no-scheme world" which assumes that the scheme underlying the compulsory purchase was cancelled on the valuation date (usually the date of possession of the land by the acquiring authority). Previously, the extent of the underlying scheme was defined using the Land Compensation Act 1961 and a large volume of caselaw.
The NPB inserts a new section into the Land Compensation Act which states that where regeneration or redevelopment will be enabled by a “relevant transport project”, the underlying scheme can be considered to include that transport project. This means that if a new road (which is part of a wider regeneration scheme) uplifts the value of surrounding land which is later compulsorily acquired, the effect of the new road can be disregarded when assessing the value of the land for compulsory purchase. However, the scheme will only include the relevant transport project if the project was part of the published justification for the scheme and is first opened for use after the period of 5 years from the NPB coming into force.
The implications of this amendment for developers is that they need to be careful when buying land after 8 September 2016 which may be acquired by compulsory purchase at a later date because if the price they paid for the land takes account of an uplift in value due to a related transport project, they may not be able to recover the full value of this uplift if the land is later compulsorily purchased. In other words, developers need to ensure that when they are purchasing land which could be subject to a future compulsory purchase order, the purchase price they pay for the land does not include any uplift in value from a related transport project. In order to establish this, developers should make sure that they are aware of any proposed regeneration and transport schemes that apply to the wider area around the plot of land they are purchasing.
On a more positive note, this amendment also means that developers who will be working with local authorities to bring forward schemes using compulsory purchase may not have to underwrite the local authority to pay as much compensation for any land whose value has been increased by a “relevant transport project”.