The Coronavirus leaves Housing Associations with the economic and social challenges of a lifetime.
Housing Associations are focusing their response to the outbreak on key priorities including keeping their residents safe, supporting their staff and working with their key stakeholders including local authorities and the NHS to support critical services.
Development sites are in various degrees of limbo and building supplies are in short supply. In light of this, taking steps to ensure that planning permissions are implemented may seem far from a priority during the pandemic. However Housing Associations play a significant role in securing housing supply and this role will only become more crucial to support the economic recovery after the crisis is over.
The reality is that a number of years of hard work go into preparing a site for the first brick to be laid with planning being one of the key stages. Significant delays in sites coming forward through the planning system will have a massive impact upon the scale of housing delivery that could take years to recover from. This will impact the hundreds of thousands in housing need as well as the numerous organisations and individuals involved in delivering housing.
Planning permissions are costly and time consuming to secure, often in the face of local opposition and slow bureaucratic processes. When planning permission is granted, development must take place in accordance with the conditions attached to it along with any associated legal agreements and Community Infrastructure Levy (CIL) requirements.
In years gone by the rule of thumb was six to nine months for a site to be delivered through planning from initial conception to the grant of a decision. In recent years, this timescale has extended from eighteen to thirty months with significantly higher costs.
The National Planning Policy Framework (NPPF) provides that planning conditions should be kept to a minimum and conditions that are required to be discharged before development commences should be avoided, unless clearly justified. Notwithstanding this guidance, planning permissions routinely contain conditions which require details to be submitted prior to commencement, contamination remediation, landscaping details and drainage strategies being common examples.
If Housing Associations or their contactors are unable to implement a planning permission before planning conditions can be complied with, they may have to reapply and incur the time, cost and inconvenience of doing so.
Keeping a planning permission ‘alive’ where development has not commenced by the specified timescale and before pre-commencement conditions have been complied with is not straightforward. Section 73 of the Town and Country Planning Act 1990 (TCPA) (determination of applications to develop land without compliance with conditions previously attached) cannot be used to extend time limits and section 96A of the TCPA for non-material amendment is unlikely to be available. Local planning authorities have no discretion in this regard.
There have been various calls for the government to implement changes to the planning system including British Property Federations blog but in the absence of specific planning relief, what can Housing Associations do now to keep their development and regeneration schemes going?
Development is to be taken to have begun on the earliest date on which any ‘material operation’ comprised in the development begins (section 56 of the TCPA). Material operation constitutes, amongst other things, any work of construction in the course of erection of a building, the digging of a trench which is to contain the foundations, laying of any underground main or pipe to the foundations or operation in the course of laying out or constructing a road or part of a road.
Whatever material operation is carried out, be careful to ensure that the works are genuinely contemplated by the planning permission and are sufficient to commence the development. The pegging out of the line of a road has been proved as satisfactory manifestation of the intention of builders to begin development whereas 10 garden canes placed on site was not.
It is essential to take photos, measurements and detailed notes of the works undertaken. These may be required as evidence to demonstrate to the local planning authority that the operations were carried out lawfully and in compliance with the planning permission later on.
Discharge pre-commencement conditions
Whilst planning conditions play an important role in ensuring that a development is acceptable, they will typically make it difficult to meet target deadlines for implementing planning permissions.
Where pre-commencement conditions have been partially implemented, it may be possible to negotiate potential changes to timescales for the submission of further surveys or remediation reports to later stage of the development. Alternatively local planning authorities may be prepared to accept section 96A applications to amend pre-commencement conditions to standard conditions where those conditions are not material.
It is imperative going forward that those conditions that might have been left to argue another day in a bid to ensure the planning ticket was granted are addressed now. Going forward we would strongly recommend pushing such conditions with planners as early as possible.
Section 106 agreements and CIL
Implementing a planning permission will have a knock on effect for planning obligations and CIL liability which in the absence of certainty of future sales are likely to impact on cash flow in the short term and overall scheme viability.
To minimise this difficulty we recommend liaising with local planning authorities at an early opportunity to discuss whether they are willing to modify section 106 agreements so that payments or non-financial obligations are delayed to later phases of the development or discharged altogether.
We are currently engaged with the majority of local authorities across the Country and their legal teams are engaged in deeds of variations. The key is to ensure that their instructing officer has agreed the concept of any proposed changes.
CIL is a fixed sum set locally and payable on developments that create new or additional internal areas. Unlike section 106 agreements the administrative arrangements including timing of payments cannot be negotiated. That said, many local authorities are taking pragmatic approaches and have published temporary policies to effect payment by instalments, suspending late payment interest and enforcement action.
Contracts and grant agreements
It’s also important to review overarching purchase and grant agreements. Commencing a development under a Homes England arrangement may result in timescales being triggered and further payments needing to be made. It may be advisable to agree variations to the original contract such as changing any start of site definition to ensure that implementation is not a trigger. We have worked with clients on such considerations.
In the absence of national guidance each local planning authority is likely to take their own view based on their local priorities and resources. With their own housing land supply targets to fulfil, local planning authorities will want to keep up the supply of housing schemes though the planning system and are making tentative steps to re-establish decision making through remote planning committees and increased delegation to officers.