REAL INSIGHT - Property Update - November 2010
Planning regime in a Pickle
A High Court ruling that Eric Pickles MP unlawfully abolished regional strategies (RSs) could safeguard the development of thousands of new houses. However there may only be a limited window of opportunity for developers to benefit if the Government sweeps away RSs in the forthcoming Localism and Decentralisation Bill.
Cala challenged Eric Pickles’ decision in July to abolish RSs on two grounds: that the Secretary of State went beyond his powers granted by the Local Democracy Economic Development and Construction Act 2009 and that the decision to revoke the RS required strategic environmental assessment. Although they won on the first ground, the judge said that the second ground would also have been successful.
Although the judge did not quash a warning letter sent in May to all local planning authorities stating the intention to remove regional strategies in due course, the High Court has since stayed a subsequent letter from the chief planner asking planning authorities to still have regard to the earlier letter. While the RS housing targets are back in play for the time being, some planning authorities may choose to refuse permission on the basis that any appeals may be determined under the new localism framework.
To read Daniel Farrand's recent article in Planning magazine, please click here.
Room to manoeuvre
The Court of Appeal has ruled that landlords of assured shorthold tenancies (ASTs) who fail to comply fully with statutory tenancy deposit schemes (TDS) will not be sanctioned so long as they do so by the time of any court hearing. Furthermore, tenants who ‘ambush’ landlords by issuing proceedings without first complying with pre-action directions and sending a letter of claim will be unlikely to recover all their costs.
Pending the decisions in Universal Estates v Tiensia and Honeysuckle Properties v Fletcher it has been difficult to advise investors on the status of ASTs. A landlord taking a deposit after 6 April 2007 must protect it in a TDS and give the tenant prescribed information detailing the protection within 14 days of its receipt.
The sanctions for breaching the rules are:
- financial penalties (a fine of three times the amount of the deposit, payable to the tenant); and
- the landlord may be prevented from recovering possession using the “notice-only” accelerated possession ground.
Ruling in favour of the landlords in both cases, it was held that if the deposits were protected by the time of any court hearing, the landlords would not be made subject to the sanctions.
‘Stealth tax’ for CRCs
The Coalition Government announced as part of the Comprehensive Spending Review that the Carbon Reduction Commitment (CRC) Energy Efficiency scheme will be simplified, with the first allowance sales to participants now taking place in 2012 rather than 2011. Participants may now have to purchase allowances for two years in one go, substantially increasing the cost.
The CRC scheme is intended to encourage large users of energy to become more energy efficient. Organisations which qualify for the scheme must purchase "allowances" from the Government to cover their carbon emissions based on a forecast they must make of their energy consumption. At the end of each CRC year, the actual energy consumption must be reported and sufficient allowances must be surrendered to cover the carbon emissions.
The Government has now decided that revenues raised from the sale of allowances will be used to support public finances rather than be returned to participants as "recycling payments" proportional to their actual emissions based on a league table. It intends to retain the performance league table but it remains to be seen how the simplified scheme will operate.
A new consultation (available here) on the changes was published this month, with responses due by 17 December.
Insolvency recap
On Thursday 9 December, Mishcon de Reya will host an insolvency seminar focusing on recent market developments such as the new LLP regime, asset recoveries, professional negligence claims, litigation funding and optimising your legal spend. The event takes place at our Summit House offices from 5:30-7:00pm, with speakers including partners Mike Stubbs, Richard Gerstein and Stuart McMaster. Please click here for further details or RSVP to Colleen Noctor by email or on +44 207 440 4720.
Join the Club
Mishcon de Reya advised an overseas purchaser on the acquisition of London’s five star St James's Hotel and Club for a price in the region of £60 million. The team, led by partner Ian Paul and assistant Arnaud Montagna on the real estate side and partners Ross Bryson and Nick Davis on the corporate side, advised on all real estate, corporate and employment aspects of the deal. The acquisition underscores Mishcon’s track record in acting for overseas buyers coming to the UK market.
The IT crowd
The Firm has advised Matterhorn Capital on its first acquisitions within the UK data centre market. These include a 6.6 acre site in Chesham, Buckinghamshire from UBS, with planning permission for a 240,000 sq ft data centre, and an 11.7 acre site at Bury Green in Essex with planning permission for two data centres totalling 103,000 sq ft. The team was led by partner Daniel Lipman and included Philip Freedman CBE QC (Hon), head of planning Daniel Farrand and solicitor Nick Kirby.