Real Estate Bulletin: Spring 2017

A welcome from the editor...

Welcome to the Spring edition of the Real Estate Bulletin. This quarter, we revisit cases about whether land can be listed as an Asset of Community Value and whether 'all' means 'all' or 'any'.

We look at new cases on the interplay of public rights of way and registration of Humpty Hill (yes, really) as a town or village green, a return to injunctions for a flagrant infringement of a right to light and the measure of compensation when a "no development" covenant is modified.

We also cover some interesting landlord and tenant issues.

The Bulletin brings together highlights from our popular quarterly update training sessions, so if you are local to the East Midlands or pass through every now and again and would like details of our next event in July, please get in touch.

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Case Law Update Development - Assets of Community Value: Banner Homes v St Albans 

Council Key points:

Assets of Community Value (ACV) were introduced by the Localism Act 2011 Community groups have the right to bid for and buy local land that is considered to have community value - ie its actual current use furthers the social wellbeing and interests of the local community and it is realistic to think that the land can continue to be used to further such wellbeing and interests

Such actual use does not have to be lawful

Once land has been listed as an ACV, the landowner is restricted from disposing of it for a period of time. Land will be listed for a period of five years during which the restrictions on sale apply Winter 2015.

By way of update, Banner owns a field in the green belt which it wants to develop for new housing. The field was listed as an ACV in 2014 and Banner has made various attempts to review the listing decision - the most recent application, to the Upper Tribunal, has also been unsuccessful.

Practical implications:

For a period of five years from the date of listing, if BH want to sell the land, it must give notice to the Council of its intention to sell. Community interest groups would then have six weeks to ask to be considered as a potential bidder, and if this happens, BH is prevented from selling the land to anyone else for a period of six months.The consequences of listing are not as serious for developers as the designation of land as a town or village green, but the restrictions on sale can cause delay and inconvenience. We are seeing an increasing number of cases on ACV, although to date, these have related to more obvious assets such as pubs or other locally interesting buildings. The ACV legislation applies to open land as well, the fact that the use of the land by the community has been unlawful does not affect the ability to list it and this decision shows how those opposing development in an area can use the ACV regime to disrupt potential schemes.

If you would like further advice on all things ACV,

please contact Mark Brown in our Milton Keynes office mark.brown@freeths.co.uk; (0345 271 6764).

Mark has advised a number of clients on this topic, dealing with objections to nominations for listing on behalf of landowners, and conducting reviews of listing decisions and an appeal in the First Tier Tribunal

Conditional contracts - interpretation: Dooba Developments v McLagan

 Investments Key points:

As well as clearly defining the steps a party needs to take to satisfy conditions in the contract, the conditions themselves have to be carefully drafted

The meaning of one word can make all the difference as to whether a party can serve notice to rescind a contract or not

Practical implications:

This may not be the last we hear of this case. The drafting was finely balanced (not in a good way) and there is a lot of money at stake. You may think this all comes down to a lawyer's point, but parties to an agreement also need to be clear as between themselves as to their expectations for delivery of a scheme (or not, as the case may be!

Development - Town or Village Green applications - R (on the application of Allaway & Pollock) v Oxfordshire County

Council Key points:

Anyone can apply to register land as a Town or Village Green (TVG) where a significant number of local inhabitants have used the land as of right for lawful pastimes for at least 20 years

This use must be continuing at the time the application is made

Where an inspector appointed by the registering authority makes a recommendation, the courts are reluctant to interfere with the inspector's discretion

Practical implications:

Registration of land as a TVG has serious implications for developing the land - ie you can't! We have covered a number of TVG cases over the years - this one is useful for clarifying that inspectors and councils can take account of the fact that land is used by people from only a small area that is very close to the application site.

Landowners need to be aware of how people are using their land. It is possible to deposit Landowner Statements with the registration authority (usually the county council), which have the effect of bringing to an end any 'as of right' user of the land, but if 20 years' use has already been clocked up, there is a period of grace within which a TVG application can - and probably will! - be made.

It is critical that those looking to buy land of this nature for development carry out an inspection of the site, ideally at different times of the day and during the week and at weekends, to ascertain the extent to which the public use the land. Specific enquiries can be made of the registration authority about any pending TVG applications, but if you think a site is vulnerable, it is advisable to provide for this in your contract and give yourself the option to walk away if an application is successful

Development - Injunctions for rights of light infringement: Ottercroft v Scandia CareKey points:Recently, the Supreme Court tried to steer judicial practice away from awarding injunctions for infringements of neighbours' rights and towards awarding damages

However, the behaviour of the defendant will very much be taken into account and may well be the deciding factor in ordering the removal of the offending development rather than payment of compensation

Covenants restricting development - Compensation: Re Surana's application

Key points:

A building scheme is a scheme of restrictive covenants that each resident of say, a residential estate can enforce against each of the others

Restrictive covenants can be modified or discharged by making an application under s84 of the Law of Property Act 1925Compensation may be payable to other residents

This compensation is usually assessed on the basis of the diminution in value of the other residents' properties but sometimes, it may represent a share of the development value of the land

Practical implications:

Pressures on land use and the need for housing are ever-increasing. Developers looking to build schemes in breach of covenant may not relish the thought of an application to modify or discharge the covenants, given the time, expense and uncertainty involved. Sometimes, however, this option is worth considering if it means you can avoid paying out compensation that is assessed as a percentage of the development value.

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Landlord & Tenant Round Up Licence to assign - withholding consent: No.1 West India Quay (Residential) v East Tower

 Apartments Key points:

Landlords are usually obliged, by statute or contractually under a lease, not to unreasonably withhold or delay giving consent to a tenant's application to assign the lease

The clock starts to run when the landlord is properly served with the tenant's application

Tenants should treat service of applications in the same way they treat service of formal notices and serve in accordance with the terms of the lease or with any relevant statutory provisions as to service

Service charge - duty to consult: Leaseholders of Foundling Court v London Borough of Camden Landlords of residential properties are under a statutory duty to consult tenants in order to be able to recover certain service charge costs

Failure to consult means the amount a landlord can recover is capped at £250 per leaseholder for works and £100 per leaseholder for other services, unless the landlord has obtained an exemption from the First Tier Tribunal

The decision in the Foundling Court case provides useful guidance when there are subtenants

Practical implications:

Superior landlords must consult not only with their immediate tenants but also with any subtenants before carrying out qualifying works or entering into qualifying long term agreements. This makes sense given that the subtenants ultimately pay for the cost of the works or services, but could be a huge administrative burden where there are multiple subtenants. However, it's worth it in light of the statutory cap!

Intermediate landlords in the position of CC would be well advised to co-operate with their superior landlord in terms of consultations and providing information about individual subtenants and not fall into the trap of thinking their own liability would be capped at £250 or £100, as this might not apply if their actions lead to subtenants not being properly consulted

Lease renewals - rent: two new cases

Key points:

Business tenants may have a statutory right to a new lease at the end of the contractual term

The terms of the new lease are usually agreed between the parties but if they can't agree, the court will decide

This includes determining the level of rent payable under the new lease

Flanders Community Centre v London Borough of Newham

Practical implications:

An appellate court will only interfere with a lower court's decision if there has been an error or law or a serious procedural error. It will not revisit the facts put to the lower court, which is why expert evidence can be crucial. In disputes relating to unusual premises or unusual lease terms, the parties should give the court as much help as possible on the effect of such peculiarities - something that should also be taken into account when carrying out market rent reviews of such properties

Britel Fund Trustees v B&Q

Practical implications:

Again this case highlights the importance of comparable's, particularly in relation to rent free periods and of the hypothetical tenant for a new lease. The terms of the new lease are also critical - introducing new terms, such as a break right, even by agreement, can impact on the rent.