Bell & Scott Property Update, July 2005 Welcome to the July 2005 issue of Bell & Scott Property Update. In this month's issue we comment on a case on the requirement for Environmental Impact Assessments. We also comment on the Scottish Executive’s Planning White Paper, the BPF declaration on subletting in England and the possible knock-on effect for developers in the recently published Consultation Paper on the implementation of the landlords’ provisions in the Antisocial Behaviour Act. Recent Decisions EIA – Welcome News for Developers   Planning authorities must consider requirement for Environmental Impact Assessments This case was brought by a cinema operator, who sought to challenge planning permission permitting the erection of another cinema nearby, presumably for commercial reasons. Outline planning permission for business use of a large area had been granted; then outline planning permission for leisure use (including a multiplex cinema) was granted for a part of this large area; and lastly reserved matters consent for the cinema itself was granted. The challenge was based on whether or not the planning authority had considered the requirement for an environmental impact assessment (EIA) at the relevant stages of the process. The planning authority had not considered the need for an EIA when the outline business park consent was granted (as it was not obliged to at that stage under EU law); it had considered the need when the leisure park outline consent was issued (it determined one was not needed) and it had considered the need for one when the reserved matters consent was being considered (again it had determined that an EIA was not required). The appellant sought judicial review of the reserved matters consent and the “screening” opinion of the planning authority, in determining that an EIA was not required, on various grounds, all of which were rejected by the court. The appellant then appealed and again, its appeal was rejected. The main strand of the judgement confirmed that it was a matter for the planning authority’s judgment as to whether or not they had sufficient information at an outline planning stage to determine whether a development would have significant environmental effects and therefore require an EIA. This determination was only challengeable on a Wednesbury basis, meaning, in simple terms, that its conclusion would have had to be so unreasonable that no other reasonable planning authority would have concluded likewise. A very difficult test to meet. Stephanie Mackenzie, an Associate in our Environmental Team comments: this case is welcome news for developers, who might have concerns that councils are not giving robust enough consideration to the need for EIAs and that this might ultimately result in a developer’s consent being quashed. Whilst inevitably exactly what the planning authority has taken into account at each of the different stages of the planning process will be different in each case, this decision shows that a planning authority is entitled to consider the need for an EIA at any stage of the planning process and is permitted (and arguably obliged) to consider the existing planning consent in place in assessing the likely environmental impact of an activity for which a new consent is sought. Much was made by the bench in this case of the fact that the determination was made in the planning authority’s “opinion” and that they were entitled to take into account previous consents, and previous screening exercises, as material considerations. It is also clear that, regardless of what it eventually decides, in order to protect a planning consent from future challenge, it is important that a planning authority considers very carefully whether or not an EIA is required. Case referred to: R (on the application of The Noble Organisation Limited) v Thanet District Council) The full text of the decision is available from the British and Irish Legal Information Institute at: http://www.bailii.org/ew/cases/EWCA/Civ/2005/782.html News

Modernising the Planning System

The way forward for Scotland ’s planning system?

 The Scottish Executive White Paper, “Modernising the Planning System”, was published at the end of June. It contains wide-ranging proposals for reform of the Scottish Planning System. An Executive summary is available at: www.scotland.gov.uk/Publications/2005/06/27113519/35294.
The full text of the White Paper is available at: www.scotland.gov.uk/Publications/2005/06/27113519/35231.

Bruce Anderson, a partner in our Acquisition and Development team, comments:

This is an extensive package of proposals deserving careful consideration by all involved in the development industry. The buzz words (and buzz phrases!) conveying the Executive’s vision for the planning system are “fit for purpose”, “more efficient”, “more inclusive”, “sustainable”, “restoring confidence in the Planning System” and “a fairer more balanced system” but, behind the inevitable generalities, the paper contains a host of detailed proposals which, if implemented, will amount to a fundamental reform of the system at every level.

No summary can do justice to the proposals but I have picked out some of the highlights:-

• New hierarchy identifying developments as national, major, local or minor, to each of which different decision-making and appeal procedures will apply.
• The second National Planning Framework, to be published in 2008, will provide a stronger context for development plans and planning decisions and will be used to identify “national” developments.
• The reinforcement of the primacy of development plans.
• A statutory requirement for development plans to be updated every five years.
• The introduction of single tier plans (except in the four largest city regions where there will be strategic development plans above the local plan level).
• Single “proposed plans” instead of the present system of consultative and final drafts.
• Simpler and more prescribed forms of development plans.
• Abolition of outline planning permission.
• New guidance on the use of planning agreements.
• New public register of planning agreements.
• Introduction of unilateral undertakings by developers.
• Reduction in period for appeals from six months to three months.
• Reduction in duration of planning permissions from five years to three years.
• Mezzanine floors to require planning permission.
• Early refusal of ill-founded appeals.
• Limitation of new evidence allowed at appeal.
• Statutory requirement for pre-application consultations with local people for major developments (and some others).
• Transfer of responsibility for neighbour notification to planning authorities.
• Increased use of hearings prior to planning decisions.
• Increased scrutiny of planning decisions.
• Planning authorities required to give reasons for decisions and to notify objectors of decisions.
• New measures to deal with development proposals in which the local authority has an interest.
• Enhanced enforcement provisions.

The most notable omission from the proposals is, of course, the introduction of third party rights of appeal for which all in the development industry will be grateful.

Overall, I think the proposed reforms are to be welcomed but much will depend upon the detail which, naturally, is not provided in a consultative document such as the White Paper. Even for those who approve of many of the proposals in principle, the Paper will raise many questions on detail in the mind. For example, how exactly will development plans be given an even more prominent place in the decision-making process than the “supremacy” they currently enjoy? How will development plans be given sufficient status to ensure that developers will be able to rely on them as the equivalent of outline planning permission (given that that is the basis on which the Executive proposes to dispense with outline planning permissions)? What will the updated guidance on the use of planning agreements contain? How, if at all, will the many problems relating to planning gain be addressed (at present the Paper is largely silent in that respect)? What will happen if an authority fails to update its development plan within the new statutory five year period? I could go on… It would seem advisable to use the consultation process not only to suggest modifications of the proposals (if appropriate) but also to suggest appropriate answers to the questions that it raises rather than leaving the Scottish Executive to fill in the detail unaided!

Lastly, the White Paper acknowledges that, not only will legislative change and changes in Scottish Executive policy and guidance be required to implement the proposals, but there will also have to be a change in culture which will require considerable additional resources and support for local authorities. It is to be hoped that that is followed through in practice as, if it is not, it is difficult to see the generally good intentions of the proposed reforms being successfully implemented to produce the much improved system which we all know is needed.

Comments are due to be submitted to the Scottish Executive by 16 September. Bell & Scott will be preparing a response and I would urge everyone in the industry to do the same. If you would like to discuss any of the issues I should be delighted to hear from you

Market Rent Rules

BPF declaration against requirement to sublet at higher of passing and market rent

Dolina Caie, an Associate in our Retail and Leisure team comments on the BPF’s recent declaration in relation to sub-letting and assignation:

Following the recent decision that upward only rent reviews will not be subject to a legislative ban, the Office of the Deputy Prime Minister recently announced that it would be conducting a review of the law on sub-letting and assignment.

Fast on the heels of that announcement, 20 of the UK’s largest commercial property owners (including Land Securities and Prudential) have signed up to a declaration to permit sub-letting by tenants at the market rent. The declaration, drawn up by the British Property Federation (BPF), states that from 30 April 2005 all new Occupational Leases that permit sub-letting will not contain a provision requiring sub-lettings (whether of the whole or part) to be at the higher of passing rent and the market rent.

In Scotland , as in England , it is common practice for commercial Leases to provide that sub-letting will be at the higher of the passing or market rent, with a link to the open market rent definition in the review clause. Landlords have therefore been able to protect themselves to some extent against any potential negative impact at review and thus safeguarding capital values. Meanwhile, many tenants have found the provision unduly restrictive, particularly when attempting to dispose of their interest in a falling market.

The declaration is a clear attempt therefore to pre-empt perhaps more stringent legislation by the Government and for this reason, if nothing else, it is to be welcomed. Given that, to date, any “legislative threat” has been aimed at the English market, it will be interesting to see whether the adoption of the declaration south of the border will inspire those same large commercial property owners to adopt it in Scotland . If letting to national retailers, for example, it’s difficult to see how they could resist. It will also be interesting to see what, if any, additional assumptions or disregards at review (beyond the disregard of passing rent under a permitted sub-lease) landlords may begin to look for.

New Concern for Landlords and Developers

Consultation on the Implementation of Parts 7 and 8 of the Antisocial Behaviour Etc. ( Scotland ) Act 2004

Heather McCracken, an Associate in our Housebuilder team looks at the recent Consultation Paper on implementing the Landlord provisions of the Antisocial Behaviour Act:

It is estimated that there are around 40,000 private landlords in Scotland , operating 170,000 dwellings – about 21% of all rented housing. Parts 7 and 8 of the Antisocial Behaviour etc. ( Scotland ) Act 2004 will give Local Authorities power to regulate private landlords when it comes into force later this year. In advance of that, The Scottish Executive has issued a consultation paper, dealing with the practical operation of the Act.  

Concerns have been expressed that the effect of the Legislation will be draconian. The consultation paper is at pains to make it clear that the intention is to apply the regulations with what it refers to as “a light touch”. In relation to compulsory registration, the thrust of the consultation is towards making it as easy as possible for landlords to register, in particular, it proposes a mechanism to allow landlords who have property in more than one area to make one application which would then be “passported” to other councils. It is also suggested that the fee for the duplicate applications would be reduced although it is acknowledged that this causes practical problems, particularly dividing the sum paid between the individual authorities.

The consultation paper also seeks to address similar concerns with regard to Antisocial Behaviour Notices, in particular the fact that the Legislation apparently allows the Council to require the landlord to take any action they choose to counteract the tenant's antisocial behaviour, whether that is legally or practically possible. The consultation paper suggests that guidance be given to Councils, encouraging them to consult with the landlord in an effort to avoid the need for a Notice and to allow them to identify what options are available to the landlord. The guidance will also advise Councils that they should not require landlords to do anything illegal. Although this approach will allay some of the concerns, there may still be a difference between what the Council considers possible and what is actually feasible for the individual landlord. Since failure to comply with a Notice is a criminal offence, some landlords may be reluctant to accept tenants if they have any doubt whatsoever about their behaviour, particularly since a conviction for failure to comply with a Notice could prevent a landlord from being a fit and proper person for the purposes of registration.

The consultation paper indicates that the purpose of the legislation is to protect tenants. It remains to be seen whether Councils will operate the system with the light touch the Executive intend. If they don’t, landlords may be discouraged from letting property. From the tenant’s point of view this will make it harder to rent which may outweigh the benefit to tenants the Legislation is intended to provide. However, there may be wider implications. In the recent past, the buy to let market has helped to support the housing market generally and the new build market in particular. If landlords stop buying property to let, that source of revenue will be lost to developers and if they start selling their portfolios that may make it even harder to sell in a market that appears to be slowing. The other potential downside for developers is that if, as seems possible, landlords are particularly quick to move out of the affordable market, local authorities will have to find other ways to provide affordable housing, either by increasing the percentage required on new developments or by requiring greater contributions to off-site projects.

The Consultation Paper is available from the Scottish Executive at: http://www.scotland.gov.uk/Publications/2005/07/08172434