by Hardwick Legal | May 28, 2015 | Purpose Built (LexisNexis)
Three main elements:
1) Home ownership- Right to Buy
Helping more housing association tenants to buy their own home by extending the Right to Buy levels of discount to housing association tenants and requiring local authorities to dispose of high-value vacant council houses, which would help fund the Right to Buy extension discounts and the building of more affordable homes in the area. Providing the necessary statutory framework to support the delivery of an increased supply of new ‘Starter Homes’, to be reserved and offered to first-time buyers at a 20% discount on their open market value.
2) Right to Build
Enhancing the Right to Build requiring local planning authorities to support custom and self-builders registered in their area in identifying suitable plots of land to build or commission their own home.
3) Housing Supply
Giving local residents greater control over planning by simplifying and speeding up the neighbourhood planning system, to support communities that seek to meet local housing and other development needs through neighbourhood planning and to give effect to other changes to housing and planning legislation that would support housing growth. Freeing-up land for development by introducing a statutory register for brownfield land, to help achieve the target of getting Local Development Orders in place on 90% of suitable brownfield sites by 2020.
Who says what?
The Right to Build, Starter Home and Brownfield Register initiatives have largely been welcomed; however the Right to Buy extension is set to be controversial.
Local Government Association
“The current Right-to-buy system only allows councils to replace half or fewer of homes they have sold. The Government has rightly promised every home sold under these proposals will be replaced on a one-for-one basis and we need to make sure new proposals enable that to happen.””Councils understand the need to provide more homes for first-time buyers and are already taking steps to make first-time homes more affordable. New starter homes cannot be built in isolation or without any wider community needs. They must come with the infrastructure needed and include a mix of housing.”
Read the Local Government’s full response here
Association of British Insurers
“It is important steps are taken to provide more affordable homes, which are badly needed by many people. However this needs to be achieved in a sustainable way, within a planning system which is robust about refusing inappropriate development in areas of flood risk and which pays proper attention to advice from the Environment Agency.”
Read the ABI’s comments in full here
National Housing Federation (representing a large body of housing associations)
“Plans to identify and free up brownfield land, the Right to Build and Starter Homes are all moves in the right direction and will contribute to resolving the huge housing shortage we have. But we need to ensure these new homes are built where people need them and available at a price people can afford. However, the proposed Right to Buy extension and welfare reforms put these plans at risk.”
On the extension of the Right to Buy:
“An extension to the Right to Buy would mean that housing associations are working to keep pace with replacements rather than building homes for the millions stuck on waiting lists. At a time when we need to be increasing the overall amount of social housing, it is like trying to fill a bathtub with the plug taken out.
“What’s more, forcing housing associations to sell of their properties under the Right to Buy sets an extremely dangerous precedent of government interference in independent business.”
“This policy does nothing for the 11 million private renters and three million adult children living at home with their parents. If there is £22.5 billion of public money available for housing, we should use it to build the homes the next generation needs, not just gift it to the lucky few already housed in housing association homes.”
Read the National Housing Federation’s full response here
Chartered Institute of Housing
“Extending right to buy to housing associations is not going to tackle the housing crisis – in fact it could make things worse …Our concern is that in practice it would result in the loss of vital social and affordable homes. The government says each home sold would be replaced on a one-for-one basis – but we know this is not happening under the current scheme. Our research has shown that most local authorities only expect to be able to replace half or fewer of the homes they sell under right to buy. And government figures show that between April 2012 and last September councils started or acquired 2,298 homes using right to buy receipts – just one for every 11 sold.”
“The best way of helping people on lower incomes into home ownership is by increasing the supply of affordable housing. CIH is ready to work with the government on the solutions that could make a real difference, for example investing in shared ownership and supporting local authorities on land and asset management to deliver more homes.”
Read the Chartered Institute of Housing’s full response here
Royal Institute of Chartered Surveyors
“The government is clearly putting housing at the heart of its agenda. But the Right to Buy, starter homes and brownfield proposals put together still fall short of a comprehensive supply strategy for dealing with the housing crisis.
A huge amount of detail is required on Right to Buy to see whether housing associations and the people who need them are not to be disadvantaged.”
Read RICS full response here
Confederation of British Industry
“Extending the Right to Buy scheme is a clear signal the new Government will make home ownership a top priority. But it’s vital the business case is thoroughly examined through a public consultation to ensure the policy delivers the best value for money and improves the supply of affordable homes.”
“Fast-tracking the planning system to build Starter Homes on brownfield sites is a step in the right direction, and the Government must work closely with the business community to make sure the scheme works effectively for house-builders and prospective buyers alike.”
Read further comments from the CBI here
Taking stock and looking forward
What statutes and regulations are likely to be affected?
- Town and Country Planning Act 1990
- Housing Acts 1985 and 1996
- Housing and Regeneration Act 2008
- Planning and Compulsory Purchase Act 2004 Neighbourhood Planning (General) Regulations 2012 No.637
- Housing (Right to Buy) Regulations 1997 No. 619
Will this apply to England and Wales?
The legislation will cover England and Wales – but will initially be applied only to England. Any application to Wales will be a decision for the Welsh Government. The Provisions relating to planning will apply only to England.
What consultation has taken place so far?
Consultation on Starter Homes and Government Response – March 2015:
https://www.gov.uk/government/consultations/stepping-onto-the-property-ladder
Building more homes on brownfield land: consultation proposals – January 2015:
https://www.gov.uk/government/consultations/building-more-homes-on-brownfieldland
Consultation on Right to Build, and Government response – March 2015:
https://www.gov.uk/government/consultations/right-to-build-supporting-custom-andself-build
Neighbourhood planning: Government response to consultation – December 2014:
https://www.gov.uk/government/consultations/technical-consultation-on-planning.
Source: LexisNexis Purpose Built
by Hardwick Legal | May 15, 2015 | Purpose Built (LexisNexis)
What impact could the Consumer Rights Act 2015 (CRA 2015) have on the property sector?
Brie Stevens-Hoare QC of Hardwicke examines the likely implications of the new legislation.
CRA 2015 is likely to impact on sections of the property sector, particularly residential property but it is possible it will also impact on commercial property in some ways.
To what extent are individuals considered ‘consumers’ in the context of property transactions?
It is important to note first that a consumer is an individual—in other words a human being not a corporate entity. Consumers are those individuals who are parties to the contract for purposes which are wholly or mainly outside their trade, business, craft or profession. Where someone takes a residential tenancy or purchases a residential property to occupy rather than let they will be a consumer, unless they act through a company. No doubt there will also be arguments about whether someone agreeing to purchase or lease premises out of which they will operate their business is entering that agreement for purposes which are mainly within their trade. That transaction would of course be specially for the purpose of allowing them to operate their business but their business would not necessarily be entering such arrangements. Until that issue is determined it will be unclear whether acquisition of interests in business premises could, in some instances, be affected by CRA 2015.
Would a seller or landlord fall under the definition of ‘trader’?
A trader is simply a person or company entering the contract for purposes relating to his/its trade, business, craft or profession. Companies and individuals may be traders. It follows if any vendor or landlord is in the business of dealing with property or letting even in a small way they will be traders. It is unlikely one-off transactions would result in someone being designated a trader but there is plenty of scope for argument that business rationalising their property portfolio are entering transactions related to their business. The letting or selling of property may be only one of a number of business activities.
It follows that anyone who carries on business as a landlord dealing with multiple residential lettings is generally going to be a trader.
Could a ‘consumer contract’ or a ‘consumer notice’ include property contracts/leases/notices?
Contracts for the sale of property, covenants in transfers, the grant of leases and leases themselves have the potential to fall within the definition of ‘consumer contract’. If the parties to a contract are a trader and a consumer respectively, the contract is a consumer contract. If the contract is a consumer contract then any notices under the contract relating to the parties rights and/or obligations thereunder or purporting to limit the trader’s liability are consumer notices. It follows the usual form of notices that are used in landlord and tenant relationships will be subject to another level of statutory scrutiny.
If caught by the full force of CRA 2015, how would this affect the property sector?
The provisions of CRA 2015, relating to unfair terms, are likely to have the widest impact in the property sector. Those provisions are in CRA 2015, Pt 2, particularly ss 61–69. Those sections deal with unfair terms in any type of consumer contract—ie one between a trader and a consumer. The substantive effect of the provisions is largely in line with existing consumer protection against unfair terms and is unlikely to cause a major upset. However, the provisions relate to notices about the parties rights given pursuant to a contract, including a lease. Where terms and notices fail to complete and are therefore unfair they are not binding on a consumer. The consumer is nevertheless entitled to elect to rely on a notice if they choose. A lack of good faith will result in a provision being characterised as unfair. The subject matter of the contract and all the circumstances are relevant to assessing fairness. It should be noted there is power to introduce regulations that render certain terms unfair. If there is a belief that an industry is tending to use particular terms which are unfair it is likely these provisions will be used.
Contracts for the hire of goods are covered in CRA 2015, P1, Ch 2 as they are a type of goods related contract. The inclusion of ‘goods’ such as furniture and equipment with the terms of a lease could well result in that contract being designated ‘a contract for the hire of goods’ in that respect. CRA 2015, ss 9–14 imply certain terms as to quality, fitness for a specified purpose and compliance with descriptions and the like. In addition, there is an implied terms as to the traders’ right to give possession of the goods for the relevant period and the consumers’ right to enjoy quiet possession.
The scope and meaning of ‘service’ for the purpose of identifying a ‘contract to supply a service’ is not readily apparent. The property sector should expect some to argue that the services that service charges relate to fall within that description, and possibly even the provision of the property itself. The restrictions that apply to service contracts are in CRA 2015, ss 50–57. Those provisions require the use by the trader of reasonable skill and care, the charging of reasonable prices and transparency. In addition, those sections give the consumer a number of statutory remedies which may be exercised in addition to any contractual remedy. The consumer has potential rights to repeat performance of services and a price reduction.
While people get to grips with CRA 2015, what should property lawyers be advising clients?
If your landowning client’s purchaser or tenant is a company you can tell them that they can relax as CRA 2015 will not apply in the absence of a consumer. If the purchaser or tenant is an individual you should tell them they may need to consider CRA 2015. They should consider the provisions relating to unfair terms in connection with the contract generally. Further, if the contract includes the sale or letting of furniture, equipment or other chattels, consideration should be given to the provisions relating to contracts for the sale of good and the hire of goods. Further, if the contract provides for any associated services, such as cleaning, maintenance and the like, the provisions relating to contracts for services may be relevant.
It is useful to make clear that transparency, fairness and reasonableness in all the circumstances are the key behaviours that are being encouraged by the legislation and it will help a client to have a paper trail demonstrating their consideration of all the factors before reaching decisions about what terms are fair and reasonable.
Interviewed by Nicola Laver.
The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor.
Source: LexisNexis Purpose Built
by Hardwick Legal | May 13, 2015 | Purpose Built (LexisNexis)
Following the general election 2015, Johnny Kelly, associate in the real estate group at Mishcon de Reya, considers what the election result could mean for the property sector.
What does the result mean for your practice area?
One form of uncertainty is replaced by another. Before the election, markets were nervous about a mansion tax and possible capital flight if the non-dom rules were changed, plus the usual pre-election uncertainty about the prospect of change.
In view of the result, these issues may have gone away for a bit. But there is now fresh reason for uncertainty. The new government is committed to an EU in-out referendum in 2017. It no longer needs to do a deal with the Liberal Democrats, who might have vetoed a referendum.
So for the next two years, businesses won’t be sure how far they can plan ahead. Will this have an effect on investment? Many business leaders seem to think leaving the EU would be a bad move.
From the manifesto pledges, what is on the horizon for your area?
Investment in infrastructure would help make developments viable. Conversely, reduction in public spending, maybe in the form of job cuts, will reduce the spending power of consumers and homebuyers and could affect businesses too. Businesses need premises so the impact for the real estate industry is obvious.
Extending Help to Buy will boost the demand side of housing. However, continued protection of the green belt and complete local control over planning will help to keep a lid on the supply side. As Cathedral Group CEO, Richard Upton said in an article last week:
‘[…] politicians are still obsessed with the demand side of the [housing] equation, when we so obviously need to concentrate on supply.’
Is there any immediate action practitioners should take in light of the result?
If you are developing real estate, get under the skin of the local planners to understand if there’s really support for your project. Trying to push through a scheme against concerted local opposition can take so long that you could miss the market.
Invest for the long term not the short term—and be prepared for a bumpy ride!
For more on what the election result could mean for the property sector see: What’s on the (Tory blue) horizon for the Property Industry?
Interviewed by Lucy Karsten.
The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor.
Source: LexisNexis Purpose Built
by Hardwick Legal | May 13, 2015 | Purpose Built (LexisNexis)
With the political dust settling from the general election, Richard Harwood OBE QC of 39 Essex Chambers considers what the election result could mean for the planning sector.
What does the election result mean for planning?
The election of a majority Conservative government will encourage the development industry which has sought a pro-business approach and political stability. That will make planning increasingly busy.
The appointment of Greg Clark as the Secretary of State for Communities and Local Government signals a continuation of the Department for Communities and Local Government’s twin promotion of the growth agenda and localism. He was Eric Pickles’ Minister for Planning for several years and signed the foreword to the National Planning Policy Framework, so planning reforms can be expected to carry on.
From the manifesto pledges, what is on the horizon for planning?
House building starts are up from 124,000 in 2009–2010 to 160,000 in 2013–2014. That will need to be pushed further, by a combination of using the tools to implement the policy and simplifying the planning system to encourage schemes to be brought forward. The approach of brownfield first, release of surplus public sector land, garden cities where local communities want them, and protecting the Green Belt gives a strong steer where that development can take place. Whether sufficient tools are there has to be considered, and that points to further reform of planning, compulsory purchase and compensation.
Neighbourhood planning is firmly established as part of the planning system.
Energy development will be strongly promoted, except for onshore wind which will lose any new subsidises.
Is there any immediate action practitioners should take in light of the result?
Take neighbourhood planning seriously, re-read the foreword to the National Planning Policy Framework and get out of onshore wind.
Any further comments you wish to add?
Eric Pickles managed to take a grip of the planning system and the last two years have seen distinctly different approaches being carried into practice. That has been down to Eric Pickles and his team and we can expect that strong political control to remain and perhaps intensify under an all-Conservative administration.
Source: LexisNexis Purpose Built
by Hardwick Legal | May 12, 2015 | Purpose Built (LexisNexis)
After the election dust has settled - which will likely involve new brooms for Labour, Lib Dems and UKIP - what will be on the cards for the property industry over the next five years?
Mansion Tax
Labour’s proposed mansion tax on properties over £2 million is less likely. Instead, the family home will be taken out of Inheritance Tax for all but the richest by raising the threshold for married couples and civil partners to £1 million.
Buy-to-Let
Private landlords will be relieved to hear that Labour’s proposals to regulate the industry by introducing 3 year tenancies with rent control are not an immediate concern.
Right to Buy
The Conservatives propose to extend the scheme to:
- 500,000 housing association tenants who currently have no right to buy their home; and
- a further 800,000 who currently qualify (but only for less generous discounts of £16,000 or less).
The scheme will be funded by requiring councils to sell off their most valuable housing stock as it becomes vacant and replace it with cheaper property.
The proposals are somewhat controversial and have been criticized by housing associations and industry bodies alike. There are a number of major issues which will need to be surmounted if such proposals are to go ahead, including:
- Many housing associations are charitable bodies bound by rules not to dispose of assets for less than full value and to further their charitable objects - the principal one being to provide housing to those in poverty. Selling homes at an undervalue to promote home ownership likely falls outside even the widest interpretation of this object.
- Many schemes built by housing associations were funded with debt or equity finance and are reliant on a rental income stream.
Custom/Self-Build
Historically, a number of barriers have led to significantly fewer homes being self-built in the UK versus the rest of Europe. Such barriers have included:
- limited access to suitable plots of land;
- access to development finance; and
- regulatory hurdles.
The Conservatives have pledged to double the number of custom-built and self-built homes by 2020.
At the moment there is no obligation on local authorities to make plots available for custom/self-build homes. The Self-build and Custom Housebuilding Act 2015 (SCHA 2015) which came into effect in March 2015 requires local authorities to keep registers of those interested in custom building their homes. The aim is for local authorities to build up a picture of demand for custom/self-built homes in their area. Applicants will probably need to show a connection with the local area to be eligible (eg period of residence).
Further regulation and guidance can be expected setting out the detailed operation of the local registers early in this Parliament. Regulations will be informed by the consultation responses and the practical experience of the 11 test local councils see: Consultation response.
The Government’s ultimate aim - following such consultations and trials - is to reach a point where it can legislate for local authorities to be subject to a legal obligation to allocate land to local people for the purpose of building or commissioning their own homes under the Right to Build Scheme.
Custom/self-build homes are also exempt from the community infrastructure levy and the government is looking at a range of planning reforms for self-builders and reducing other costs through changes to s 106 affordable housing contributions.
The Homes and Communities Agency is supporting a number of developments providing plots for custom build in Middlesbrough, Milton Keynes, Basildon, Telford and Basingstoke. See further: HCA Custom Build.
Human Rights Act
The Human Rights Act is in the firing line with the Conservative pledge to scrap it and introduce a British Bill of Rights which they claim will:
“[restore] common sense to the application of human rights in the UK…. Which will protect…..the right to a fair trial…… But it will reverse the mission creep that has meant human rights law being used for more and more purposes…..”.
For followers of the development of Article 8 of the European Convention on Human Rights in the context of possession claims in Manchester City Council v Pinnock [2010] UKSC 45, [2010] All ER (D) 42 (Nov) and more recently Lawal and another v Circle 33 Housing Trust [2014] EWCA Civ 1514, [2014] All ER (D) 266 (Nov)…watch this space.
(LexisPSL subscribers can read more here:https://www.lexisnexis.com/uk/lexispsl/property/document/412012/5DRY-J241-DYW7-W49P-00000-00/Life%20after%20Pinnock%E2%80%94human%20rights%20and%20social%20landlords
Is there any immediate action practitioners should consider taking in light of the result?
If you advise Housing Associations:
- consider working with clients to identify those schemes likely to be affected if Right to Buy extension proceeds; and
- assess what mitigation measures may be put in place (particularly around structuring and financing).
If you advise local authorities / builders / developers:
Consider advising clients and developing package documentation for financial and legal agreements in:
- public private partnerships;
- custom build;
- marketing materials;
- online register template;
- training;
- help desk process; and
- direct bid mechanism for the Custom Build Serviced Plots Loan fund.
See further http://www.selfbuildportal.org.uk.
Source: LexisNexis Purpose Built
