Real Estate Bulletin: Spring 2016

This quarter, we have a case on the implications of serving a notice to complete; an update on a case from last year about a developer changing houses (well, planning permissions) part way through a development in order to avoid infrastructure payments; landlord and tenant cases on recovering arrears from former tenants and the difficulties for landlords in getting telecoms operators off their land. There are planning points on small site exemptions from affordable housing, judicial reviews of planning decisions in the face of procedural irregularities and the interpretation of 'tailpieces' attached to planning consents. For the tax enthusiasts, we look at an unsuccessful attempt by a landowner to reduce Capital Gains Tax liability when selling off garden land

Case Law Update Contract - Notice to complete: Hakimzay Ltd v Swales Key points:

When one party to a contract doesn't complete, the innocent party can serve a notice to complete. This makes time of the essence and gives the innocent party certain options if the notice is not complied with, including terminating the contract.

Practical implications:

Development - Section 106 Agreements: R (on the application of Robert Hitchins Ltd) v Worcestershire County Council Key points: A developer can choose which planning permission to implement if there is more than one relating to a site. This could result in less onerous planning obligations. But the planning permissions need to be consistent. Last Spring RHL was granted planning permission for residential development. WCC wanted a £1.046 million contribution towards the cost of implementing the Worcester Transport Strategy. RHL disputed both the requirement for the contribution and its calculation, but agreed to make payments on an instalment basis.

RHL later sold the site to another housebuilder, who agreed RHL could submit an application for a second planning permission in the same terms as the original but with no obligation to make the transport payments. The second planning permission was granted and the buyer proceeded with the development on the basis of the second permission. RHL refused to pay any further instalments to WCC. WCC was unsuccessful in the High Court, which found that where there were two planning permissions for a site, the developer could choose which one to implement. This decision was upheld by the Court of Appeal

Practical implications:
Development - overage: Burrows Investments Ltd v Ward Homes Ltd Key points:Overage enables a seller to participate in the future enhanced value of the land it is selling. Often, the grant of planning permission, the development of the site or the sale-on of the developed site at or above an agreed price will 'trigger' the buyer's obligation to make an overage payment to the seller.
 Where the land is sold subject to overage, it is often agreed that certain disposals by the buyer will not trigger the requirement to make a payment Because the obligation to pay is a positive obligation, successive buyers of the affected land should be required to give a deed of covenant to the seller confirming that they will make the payment if it is triggered in the future.
 Practical implications:
Landlord & Tenant - default notices: Lee v Sommer Key points: Landlords need to follow a statutory notice procedure in order to claim arrears from former tenants or guarantors. Failure to serve a notice can give a former tenant or guarantor a complete defence to any claims but if they agree to settle the claim out of court and pay up anyway, they may not get their money back
Practical implications:
Landlord & Tenant - Electronic Communications Code: Crest Nicholson (Operations) Ltd v Argiva Services Ltd & Others Key points:
The Electronic Communications Code (Code) gives security of tenure to licensed telecoms operators Amongst other things, the Code restricts a landowner's ability to require an operator to remove apparatus This protection is in addition to the protection provided to business tenants by the Landlord & Tenant Act 1954.
Practical implications:
Planning  - affordable housing small site exemption: R (on the application of West Berkshire DC & Reading BC) v DCLG Key points:
Changes to the National Planning Policy Framework (NPPF) in 2014 meant that Section 106 agreements requiring a developer to provide or contribute to affordable housing should not generally be sought on sites of 10 homes or fewer. The idea behind the changes was to make smaller scale developments economically viable.
 Practical implications:
Planning - Environmental impact assessments: R (on the application of Champion) v North Norfolk District Council Key points:
The judicial review procedure allows an interested party to apply to the court to review the lawfulness of a decision made by a public body. One of the grounds of challenge is where there is alleged procedural irregularity in the decision-making process. Even where it finds there has been a flaw in the decision-making process, the court does not have to grant relief in every case, particularly where the outcome would have been the same Practical implications:

The content of this page is a summary of the law in force at the date of publication and is not exhaustive, nor does it contain definitive advice. Specialist legal advice should be sought in relation to any queries that may arise.