Bell & Scott's Strategic Land Update

In 2007 we launched our Strategic Land Team, the first in Scotland to focus on legal advice on strategic land deals.

The Team has been strengthened recently by the promotion of Neil Fraser to Associate and the appointment of Jamie Hunter as a Solicitor in the Team. Neil trained at Bell & Scott and has been working on strategic land deals with the firm for a number of years. His promotion is well-deserved recognition of his expertise and hard work. Neil’s details are available on our website here. Jamie joined us from Shepherd and Wedderburn, having trained with Aberdeenshire Council where he provided advice to the planning department. His appointment adds significantly to the team’s planning law capability. His details are available on our website here.

For further information about the Strategic Land Team and Bell & Scott see our website.

This e-update is issued quarterly and will also be available to download from our website.

Strategic Land Update seeks to cover a wide range of topics of relevance to those interested in strategic land issues. In this issue, we comment on:

If you wish to discuss any of the items in this edition or require advice on strategic land issues please contact either Bruce Anderson: DD: 0131 718 2399 e: b.anderson@bellscott.co.uk or Caroline Docherty: DD: 0131 718 2383 e: c.docherty@bellscott.co.uk

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Jensen owned a farm which included steading buildings. Mr and Mrs Tyler owned a neighbouring farmhouse and garden and had a right of access across Jensen’s farm. The route of the access passed close to Jensen’s steading buildings. Jensen proposed to sell the steadings and the ground over which the route passed for use as a housing development.

The access route was defined in an earlier written agreement and could not be unilaterally varied by Jensen. Negotiations between Jensen and the Tylers for a new access route were not successful. The Title Conditions (Scotland) Act 2003 provides that the Lands Tribunal can vary such access rights (and other forms of title conditions). Jensen applied to the Tribunal for a variation of the access route but his application was opposed by the Tylers. The Tylers indicated that they would withdraw their objection provided:

the new section of the route was metalled (the existing route was not);
the existing provision regarding repair/maintenance of the route was adjusted in their favour, essentially so that the Tylers could force Jensen and his successors to carry out maintenance work to the whole route (the Tylers agreed to remain liable for 15% of the cost of works as set out in the existing deed); and
they obtained an exclusive right of access over the new section of the route (the old route being non-exclusive).

The Tribunal decided that Jensen’s requested variation of the route was reasonable, granted his application and declined to impose the conditions requested by the Tylers.

This case is good news for developers and those selling or promoting land for development. It is not uncommon for the title to land to contain awkward conditions that affect its future use. In theory, title conditions last forever, and it is no great surprise when one discovers that an earlier deed made insufficient allowance for changing the use of a site. No developer wants to find that there is an access route, or height restriction, or a pipe crossing the site that effectively sterilises a section of it, reduces the net developable acreage, may impact on the amenity of the development, and may increase the infrastructure costs. Difficulties with title conditions can be particularly relevant for those engaged in long term development - the area affected may form a critical part of the development or may be essential in assembling a site capable of delivering a development of a size that meets the aspirations of the planners. Not taking the land is not always an option.

In this case, the troublesome title condition was an access route. It was not a difficult case of interpreting the extent or quality of the right of access (which was quite clear from the written deed) but simply that the access route now prejudiced Jensen’s proposed use of his land. Did he have the right to move it and could the Tylers effectively ransom Jensen for their permission? The case drew out the following points:

The Tylers were protected from being made materially worse off by the variation of the route. However, that does not mean that they were entitled to introduce new conditions into the access right. They have no “ransom”.
The Tylers’ request that the new part of the access have a metalled surface could also look like a “ransom” type request. However, the Tribunal considered whether the specification of the new route was as good as the old route. This was to see if the Tylers’ position would be worsened by the re-routing. Jensen’s technical proposals clearly showed the specification of the new route to be sufficient.
If Jensen had not been able to provide the specification of the new section of road, it would not necessarily have been fatal to his case. It may be acceptable to simply say that the specification will be to the satisfaction of the planners. Obviously, it will usually be best to provide a clear indication of all that is proposed.
It is not necessary for the person wishing to move the route to have first obtained planning permission. However, it would be helpful if the applicant (as Jensen did) was able to show that there was a good prospect of planning being obtained.
In explaining the need to move the route, it was sufficient that the ground was required for development or to protect the amenity of the units to be developed and sold.
That said, the variation of the route would not be permitted until the new route had been constructed.

The decision is quite typical of the Lands Tribunal who are increasingly adopting a common sense approach to questions of this sort. In part, this is necessitated by the terms of the 2003 Act itself which leaves much to the discretion of the Tribunal in determining what weight they give to the various factors that may be relevant. Essentially, they have confirmed that “ransom” type demands will be given no weight. Of course, that does not mean that developers will have everything their own way – a neighbour may have legitimate concerns about the proposed alteration of a title condition. It would be a mistake to think that the Tribunal will not take these into account.

Case referred to: Lejf Kragh Jensen v Jonathon Edward Maurice Tyler and Linda Dorothy Tyler, Case Ref: LTS/LR/2007/35

Government-commissioned report into the Value of Planning Agreements in Scotland 2004-2007

May saw the release of the latest study into the topic of planning agreements. An Assessment of the Value of Planning Agreements in Scotland covered the period 2004-2007 and uncovered a wealth of information relating not just to the bald figures of planning gain contributions, but the way in which these sums were justified across the majority of Scotland’s planning authorities.

The headline value of all types of planning agreement in the study period was £159.1m generated from 1263 separate contributions. This figure reflects direct payment and ‘in kind’ contributions achieved, not just through the well known ‘s75’ provisions of the Town and Country Planning (Scotland) Act 1997, but also s69 of the Local Government (Scotland) Act 1969 and s48 of the Roads (Scotland) Act 1984. For readers who may be uncertain of the distinctions, s75 of the ’97 Act is the only one of the three under which an agreement can be registered against the land, thus placing an obligation on any landowner until discharge. s69 of the ’73 Act and s48 of ’84 Act differ in that they are more like conventional contracts which are generally binding only on those who sign up to them.

The study shows a notable increase in the sums being generated through planning agreements and identifies that the development type most likely to attract obligations - as well as that with the greatest proportion of total contributions – is a major housing development. In 2006-07, 16% of permissions in this class were accompanied by a planning agreement with 75% of all agreements originating from major housing developments. The top three areas to which the contributions were made (excluding roads contributions which were skewed by one payment of £20m for a development in Kirkintilloch) were Affordable Housing, Education and Recreation.

As with all statistics, there is only the scantest detail shown at first glance but the report warrants further scrutiny in each of the nine categories used to identify the way sums are attributed. Arguably the most interesting in terms of developers’ aims and land-use planning is the method of delivery of Affordable Housing. Of approximately £33m of contributions towards affordable housing, £25.33m was in the form of ‘in kind’ contributions which can be further sub-divided into land (serviced and unserviced) and complete housing units. Details obtained by the study team show a wide variety of practices between local authorities in terms of when, where and how they will seek to have the contribution delivered. Some, such as Scottish Borders Council, prefer to have a straightforward cash contribution which will allow for more co-ordinated housing provision across the authority area whilst others, such as Aberdeenshire, generally prefer on-site, completed units. In addition to this variation, many readers will also be aware that some local authorities, such as Fife, have affordable housing requirements - particularly ratios of affordable/conventional housing - which vary between Housing Market areas (HMA’s) within the authority.

The study found that, perhaps unsurprisingly, there was a marked difference in performance between those authorities that did not have policies for contributions and those that did.

At the most basic level, several authorities have high-level policy statements as to when planning contributions will be sought. Others, such as West Lothian and Edinburgh City also have clear formula-based policies to extract planning gain for specific council-led projects which don’t necessarily have a clear link to the impact of the development such as a denominational high school or new tram system. In West Lothian this equated to £1767 per house unit for a new denominational secondary school and £1653 per house unit for a non-denominational secondary school.

This trend for what are termed ‘innovative’ policies is thought likely to be continued throughout Scotland in the coming years and there appears to have been significant evidence of ‘innovative’ formulae which could result in the generation of several tens of millions of pounds in contributions from the Highlands to the Borders.

The benefit to the Local Authority in having officers dedicated to the development of policy and negotiation is clear from this study, with (excluding two particularly large payments to two authorities) around twice as much on average being raised by those authorities which have officers compared with those that do not. The report concludes that the employment of dedicated officers working with clear policies is an important element of best practice.

In terms of the outlook for the coming years, the report broadly anticipates that the outlook for planning contributions looks to be steady overall with a few exceptions in areas such as West Lothian and Fife where growth may be above average. This means that, in general terms, on the basis of the information outlined in the report, somewhere in the region of the £159.1m figure achieved in 2004-2007 may be replicated in the 2007-2010 period.

The main findings of this report are unlikely to come as a surprise to anyone but nevertheless it does highlight several points which have been and will continue to be hotly contested.

Of particular concern to many who develop property are the reasons for which planning contributions are now being sought. Whilst any development, no matter how small, will undoubtedly have some impact on the existing tax-funded infrastructure, there would appear to have been something of a growth in the types of contributions being sought. At first glance this would often seem to be outwith the criteria set down in Circular 12/1996. For example it is not absolutely clear how opening a brand new but small-scale hotel and retail development more than a mile from a sustainable transport link (which was declared to be vital several years earlier) should require a payment of several hundred thousand pounds towards the transport link. Likewise it is hard to follow the logic whereby every single new housing unit in a planning authority area is required to contribute to a school when many of those new units are not likely be occupied by families sending their child to that school. There seem to be cases where council projects which require to be carried out regardless of the development in question are being subsidised through a planning agreement windfall. Planning agreements were never supposed to be a fallback funding source for local authorities’ statutory obligations.

Tying the above point in with the predictions for continued income it is hard to see how these figures can be achieved in the current economic environment. They will likely have to be revised downwards to take account of a general reduction in activity and, quite possibly, a harder negotiating line from developers operating in straitened financial circumstances. Given that income from almost all of these agreements is dependent on development actually taking place - the growth in planning agreement take probably mirrored an unusually buoyant property market in the 2004-2007 period – a depressed market can only have the opposite effect. Bearing this in mind, both developers and authorities will have to consider their positions more closely than they did in the period of the study. With a number of planning agreements now being renegotiated it will be interesting to examine the impact of the economic slowdown by 2010.

Whilst there is undoubtedly a sound argument for planning agreements as a means of mitigating the effect of development this study shows they are most effective when used as part of a clear, fair planning authority policy and negotiated by well-trained officers. Those authorities that do not understand the limitations of planning agreements as well as their benefits are at risk of doing both their citizens and the economy more generally a significant disservice.

The British Property Federation (“BPF”) in conjunction with the international project and cost consultancy, Davis Langdon, have published “Funding regeneration: a guide to maximising public sector grants”. The guide is for use by developers that are looking for public funding of regeneration projects. In general, the guide simplifies the current information, which is often complex and confusing, deterring developers from applying for public sector regeneration grants. The guide covers: (1) how to apply successfully for public sector funding; (2) the main public bodies that offer regeneration funding; and (3) the funding opportunities that are currently available.

Strategic Development Planning Authority for Edinburgh City Region

The new Strategic Development Planning Authority (“SDPA”) for the Edinburgh city region was formally constituted on 25 June. East Lothian, Edinburgh, Fife, Midlothian, Scottish Borders and West Lothian councils now have a statutory duty to work together on a Strategic Development Plan for the city and its region. On 27 June, the SDPA’s new joint committee was created. It considered its own constitution and agreed an approach to setting a boundary for the SDP area. The new SDPA will be based on extensive engagement and public consultation over the coming year.

The Scottish Government has issued an updated version of PAN 65 which provides advice on the role of the planning system in protecting and enhancing existing open spaces and providing high quality new spaces.

The Scottish Ministers have published the Scottish Sustainable Communities Initiative which aims to encourage inspirational and high quality developments which will serve as exemplars for the 21st Century. The Initiative invites and guides the submission of proposals for new sustainable communities, setting out the key criteria against which proposals will be assessed including the relationship of the development to a sustainable transport network, locational considerations, principles of design and construction and environmental considerations including energy efficiency and the use of renewable resources. The publication outlines the form submissions should take and the relevant timescales for the submission and assessment process.

The Scottish Government has published responses received to consultations on key developments to be brought in under the Planning etc (Scotland) Act 2006. The responses and analysis can be accessed from the links given below:

A revised planning policy intended to bring land for housing forward more effectively in future was published by the Scottish Government yesterday. Click on the links below to read more.

The Scottish Government has issued an updated timetable for bringing into force the provisions of the Act.