In times of economic uncertainty the desire to preserve value wherever possible is more important than ever. Developers who have invested significant time, energy and money in securing planning permissions will be particularly keen to ensure that the value of their investments are not lost.
Prior to this crisis the need for development, particularly residential development, was acute and this need remains real and unmet. As the economic engine begins to crank back into action the need for viable sites to sustain employment in the construction sector, and all of its ancillary industries, will be crucial.
In order for the country's economic recovery to resemble the sharp 'V' hoped for then the planning system must adapt to our new reality quickly and deliver a pipeline of new and where required amended existing schemes to fuel our economic recovery.
This note summarises some of the main planning responses to the COVID-19 crisis. It addresses measures already put in place and others which are not yet formalised but which we propose could help to kick start an economic revival.
The story so far: new law, and new permitted development rights
The Coronavirus Act 2020 gives powers to the Secretary of State to issue regulations to allow local planning authorities to conduct meetings by virtual means until 7 May 2021. Regulations have now been drafted to give effect to these powers.
The 1972 Local Government Act requires councillors to be present to decide applications. The new act makes provisions for “persons to attend, speak at, vote in, or otherwise participate in, local authority meetings without all of the persons, or without any of the persons, being together in the same place”.
This mirrors the chief planning officer's recent advice encouraging local planning authorities to "take an innovative approach, using all options available to you to continue your service. We recognise that face-to-face events and meetings may have to be cancelled but we encourage you to explore every opportunity to use technology to ensure that discussions and consultations can go ahead. We also encourage you to consider delegating committee decisions where appropriate."
Permitted Development Rights
A new, temporary permitted development right now allows a temporary change of use for pubs, restaurants and cafes to operate as a food takeaway. The new PD right is available from 24 March 2020 until 23 March 2021 and requires notification to be given to the LPA that such right has been or is to be exercised. Upon the expiry of the time period or upon cessation of the temporary use (whichever is the earlier), the lawful use reverts back to its original lawful use. This PD right, as with other PD rights, is not available if the operative planning permission contains a condition which excludes the ability to exercise PD rights.
Extending this lifeline to a sector that was already struggling before COVID-19 was a sage move. Regularising this alternative use appears to be have been widely taken up with many pubs offering takeaway food and basic provisions from their own suppliers during this crisis.
The story not yet told: keeping planning permissions alive; amending section 106 agreements and CIL
Following the 2008 economic recession the Government intervened to support growth by ensuring applicants could proceed, at the earliest opportunity, with the developments for which they had secured planning permission. This was achieved by implementing a temporary measure which provided a simple process for seeking more time to implement an existing planning permission thus avoiding the need, cost and risk of obtaining a new planning permission.
Murmurings indicate that the Government is currently considering implementing similar measures or even adopting the Scottish model which legislated an automatic extension of time of planning consents for a year.
While these changes are quite rightly not a top priority for Government just now, it is hoped that sooner rather than later they will be looking at every opportunity to stimulate the economy. In the meantime, however, the only way to keep a planning consent alive is to implement it and, to preserve unimplemented parts of outline planning consents, to submit an application for reserved matters approval. If the deadline is relatively soon it is worthwhile considering now what, if any, pre-commencement conditions remain to be discharged, what material operations may be carried out to implement the consent, what the preparation and lead-in time is for any reserve matter applications as well as any applications for non-material minor amendments to remove minor obstacles to implementation.
Section 106 Agreements
The level of concern regarding the ability to discharge section 106 agreements will rightly depend on where in the cycle of development a project currently stands. If a trigger for compliance has not yet been hit then there is no immediate concern. However, if a financial contribution has been triggered but the payment is not required until the expiry of specified time periods (i.e. a date 12 months from a trigger event) during which construction has been suspended due to COVID-19, the payment will nevertheless still be required. Equally, if despite all good intentions work on site has stopped due to the crisis and a minimum level of works has not been achieved (and the section 106 does not include force majeure provisions) the requirement to carry out an early stage financial viability review to consider whether an increased amount of affordable housing may be triggered.
At present there are no proposed legislative changes or ministerial statements relating to the waiver, release or delay in compliance or review of any specified section 106 obligations. And, despite evidence that we are heading toward a recession and the hope and anticipation that central and local governments will be keen to facilitate developments rather than engage in litigation, the liability for compliance nevertheless remains. It is worth reviewing the terms of any section 106 agreements where this may become an issue, engaging with local planning authorities to explore the possibility of varying section 106 agreements before a breach occurs.
Following the 2008 global financial crisis the Government introduced provisions to attempt to tackle economically unviable schemes which had stalled during the recession. The Growth and Infrastructure Act 2013 amended the Town and Country Planning Act 1990 to include provisions for the making of an application to modify, replace, remove or discharge affordable housing obligations in section 106 agreements which made the scheme unviable and to appeal against a refusal to grant such consent. These measures allowed developers to come back to the negotiating table in light of a depressed market and revisit what could reasonably be provided without hampering development entirely. Considering the reintroduction of these provisions should be a planning priority.
Community Infrastructure Levy
CIL payments will continue to fall due with liability triggered by the implementation of a planning consent (even if the collecting authority allows for phased payments). Therefore, a balance will need to be struck as to whether or not to commence development for the purposes of maintaining the planning permission, given that this will trigger a CIL liability for chargeable development.
LPA's may wish to consider whether the crisis justifies the introduction of exceptional circumstances relief if not already provided for in their charging schedule. In applying exceptional circumstance relief the charging authority must consider that paying the full levy would have an unacceptable impact on the development’s viability. The effect of the crisis on property values and viability remains to be seen but demonstrating such 'unacceptable impact' is entirely imaginable, at least in the short term.
There is good reason for optimism and the planning sector is already responding positively to the challenges faced by this crisis. For instance, the London Borough of Waltham Forest, in the spirit of business as usual, has already granted planning permission for a 750 home development at a committee meeting that used video link to include officers and other parties.
In the past decade the planning regime has increasingly been viewed as a key tool to instigate economic growth and stability. Now more than ever is the time to sharpen those tools.
Practical guidance for COVID-19
Read the latest COVID-19 related updates on our hub.