Planning due diligence is essential when purchasing land with the benefit of planning permission. Purchasers and lenders alike need to ensure that where property is sold with the benefit of planning permission, it has been or is capable of being implemented and is suitable for the proposed use.
Due diligence includes reviewing the planning history of the property, ensuring that there are no breaches of planning control, planning conditions have been discharged and that there are no outstanding obligations or payments under planning agreements.
Establishing a coherent planning history is rarely straightforward, particularly for schemes which are being developed over multi phases where several planning permissions may have been granted and varied by overlapping or inconsistent planning permissions over time.
Assessing whether a planning permission is capable of being lawfully implemented has greater importance as a result of the recent Supreme Court decision in Hillside Parks Ltd v Snowdonia National Park Authority . Housing associations and developers need to be alert to this decision as it may impact on their development proposals.
Once lawfully implemented a planning permission endures for the benefit of all persons with an interest in the land. Where land has the benefit a planning permission which has already been built out and a subsequent planning permission is granted which is inconsistent with the first permission, the ability to lawfully implement the second permission on the same area of land is dependent on whether implementation of the second permission is physically impossible. This is known as the ‘Pilkington Principle’.
The facts of the Hillside case are complex. In 1967, planning permission was granted for 401 houses, based on a masterplan showing the layout of the houses and connecting roads. The planning permission was a full planning permission which was never fully completed. A series of separate planning permissions were granted at the site (known as drop or slot in applications), some of which were described as ‘variations’ to the original permission. None of these subsequent planning permissions were consistent with the 1967 masterplan, for instance they gave the owner approval to build houses on the connecting roads.
In 2017, Snowdonia National Park Authority told Hillside, who were undertaking works at the site pursuant to the 1967 permission, that it was not entitled to complete the development because the works that had occurred under the subsequent drop in permissions rendered development under the original permission physically impossible.
Hillside appealed Snowdonia’s decision but they found little sympathy in the Courts. The Supreme Court affirmed the Pilkington principle and in dismissing the appeal found that it would be unlawful to continue to rely on a planning permission if development of the land to which the permission relates, makes it physically impossible to carry out further development under the original permission.
The Court found that the various subsequent planning permissions granted since 1967 did not compromise independent acts of development on separate parts of the site, capable of being implemented separately to each other. Nor did the planning permissions which were described as ‘variations’ authorise a new development of the whole scheme.
Implications for development proposals
Drop in applications are commonly used to vary existing planning permissions because they allow changes to be made to individual parcels of land within a wider development site without having to re-visit the development principles established under the original consent. They allow individual phases to come forward which meet the specific requirements of the developers of individual parcels of land on larger schemes.
Strategic land proposals, site acquisitions and sales are all potentially impacted by the Hillside decision. Those involved in the development industry should consider the following principles in light of this judgement:
- Drop in applications can still be used but care must be taken to ensure that amendments are compatible with the original planning permission if there is a continued need to rely on that permission;
- Where the original permission still needs to be relied on, a new site wide planning application is likely to be required to make changes. This will inevitably lead to increased application fees, have implications for the community infrastructure levy and require the completion of a new section 106 agreement. All of this could incur increased costs and delays,
- Developers should consider building flexibility into development proposa.ls and consider using outline or hybrid applications for multi phase schemes to allow for changes within the approved parameters as the development progresses,
- Sellers of land forming part of a larger site should impose conditions in sale agreement to limit the scope of planning applications that the purchaser can subsequently make on their land, that might be materially inconsistent and render the sites wider permission, which the seller is relying on, unimplementable.
- Ending where we started, when purchasing land forming part of the larger site with the benefit of a site wide planning permission, the purchaser should undertake due diligence to assess whether that permission is suitable for their requirements
For more information, please contact Hannah Langford.