Neighbourhood dispute

Chris Windle delves into the world of law and insurance and finds issues surrounding ministerial statements on neighbourhood plans, the Housing White Paper and the 2015 Insurance Act

Ask a developer for a list of their dislikes and somewhere near the top will come uncertainty. At a time when homes are in desperately short supply it is the last thing they need, but a statement by the housing and planning minister Gavin Barwell has sent it rippling through the industry.

Ushered out quietly in December the statement was, understandably, buried by the seismic news events occurring on, it seemed, a weekly basis in 2016 (the pace has not slackened much in 2017 either). But it could have a huge impact on housebuilders’ ability to deliver the homes the country requires. And, indeed, Barwell’s government says it needs.

Moving of the goalposts
In short, the statement states that, as of December 12 2016, relevant policies for the supply of housing in a neighbourhood plan should not be deemed out- of-date under paragraph 49 of the National Planning Policy Framework (NPPF) where all of the following circumstances arise:

• the written statement is less than two years old, or the neighbourhood plan has been part of the development plan for less than two years
• the neighbourhood plan allocates sites for housing
• the local planning authority can demonstrate a three year supply of deliverable housing sites

To the untrained eye this does not seem like a dramatic change in policy but Christopher Stanwell and Andrew Morgan, partner and senior associate in DAC Beachcroft’s planning team, say it has “generated unrest among housebuilders due to concern that it signifies a moving of the goalposts as to when the presumption in favour applies under NPPF paragraph 49”.

(Pictured) Ian Graves, legal director at Shakespeare Martineau, says a new ministerial statement brings the necessary site supply down to three years opening the door to the adoption of neighbourhood plans, which, he says, rarely come down in favour of extensive development

Ian Graves, legal director at Shakespeare Martineau, agrees and points out that the change has been made without consulting the industry. “The government's rationale for the change in policy appears to be that it’s unfair that communities who have been proactive and worked hard to bring forward neighbourhood plans frequently find that their plan is being undermined because the local planning authority cannot demonstrate a five year land supply of deliverable sites.”

But bringing the necessary site supply down to three years, he explains, opens the door to the adoption of neighbourhood plans, which, give or take the odd exception, rarely come down in favour of extensive development. “Where a recently adopted neighbourhood plan allocates sites for housing, the presumption in favour of sustainable development in the NPPF will only operate when the local authority has less than a three year supply of housing land, instead of the previous five years. This may undermine the arguments in favour of some schemes currently on appeal. It’ll also make development on non-allocated sites in neighbourhood plan areas much more difficult, even where it can be argued that the site in question is sustainable.”

(Pictured) Claire Fallows, a partner at Charles Russell Speechlys, says: “The increasing number of neighbourhood plans is causing issues in light of the weight that they can carry."

Claire Fallows, a partner at Charles Russell Speechlys, is on the same planning page: “The increasing number of neighbourhood plans is causing issues in light of the weight that they can carry. As a formal part of the development plan, where a neighbourhood plan is in place, the local planning authority (LPA) may resist development that is contrary to it, even though the local plan is out of date and the LPA does not have sufficient housing land coming forward.”

She adds: “The ministerial statement allows recent neighbourhood plans to be considered up to date provided they allocate some sites for housing and the LPA can demonstrate at least a three year supply of sites. The secretary of state is also calling in some applications where there is conflict with a neighbourhood plan and the LPA wishes to grant consent. This is leading to uncertainty for housebuilders in affected areas.”

This could lead to a two tier planning system. Wealthier communities where people have more time and resources to devote to putting together neighbourhood plans will be able to curtail the building of new homes. This will do nothing to address affordability issues in these areas and risks the burden of development falling disproportionally on poorer locations.

In light of the objections raised by the industry, and the lack of consultation, legal firm Eversheds Sutherland is acting for several claimants – including housebuilders such as Redrow and Linden Homes. The claimants asked for the statement to be withdrawn and assurances that the recently published Housing White Paper will be subject to public consultation.

Consultation is open on the paper until May 2. Unfortunately December’s ministerial statement still stands and so does the action against it. The lack of consultation on the statement is particularly concerning the industry since, if it is upheld, it could provide a precedent for major policy changes in the future. As Housebuilder went to press a Judicial Review Pre-action Protocol letter stating the concerns and objections of the claimants had been sent to the minister’s lawyers, who, in turn, disagreed with their position. Eversheds Sutherland has, therefore, lodged proceedings in the high court in a bid to obtain a judicial review.

While the industry waits with bated breath for the outcome the Housing White Paper has given them plenty to think about.

Stuart Andrews, partner and head of the national planning team at Eversheds Sutherland, welcomes proposals in the paper to increase supply by forcing local authorities to assess housing need and deliver on their responsibilities. However he says it falls short in two areas.

He says that although standardised assessment mechanisms will be introduced and incentives to follow this approach will apply to all five year land supply calculations from April 2018, they “won't close down the debate as to what is essential to establish objectively assessed need. It will simply narrow the argument. There will still be plenty of opportunity for further obfuscation and delay.”

He adds: “Equally, this doesn't mean that much if there isn't anything to require plans to be produced. The prescriptions proposed by the secretary of state will require the review of local plans at least once every five years and restated the control mechanism of potential intervention to put plans in place where communities are being ‘disadvantaged’. Local authorities with limited infill sites and large swathes of green belt will either put on their tin hats and wait for a change in policy or simply accept that the intervention of central government is more appealing than having to make the hard and unpalatable decisions themselves.”

Fallows also foresees issues: “An explanation is still awaited as to how and when the government will intervene when authorities fail to put plans in place. On the one hand, the government is keen to provide flexibility in plan making. On the other hand, the package of proposals would increase the duties and policy requirements that authorities need to take into account. Not least requiring more allocations of smaller sites.”

She adds: “Housebuilders may be concerned by the proposal to amend national policy to encourage the inclusion of clearer design expectations in local and neighbourhood plans, including by reference to design codes.” And she notes that green belt policy has not moved in a direction that will please the industry. “Despite the lobbying by developers, policy on green belt is to be strengthened to ensure that the amendment of green belt boundaries is effectively a last resort and that local policy should offset the harm by compensatory improvements.”

Michael Bothamley, head of the real estate sector at DAC Beachcroft, says the government probably missed an opportunity in the Housing White Paper.

“It could have promoted some fruitful conversations about the green belt for perhaps the first time in 70 years. It's disappointing but probably not surprising that it chose instead to leave this vital issue to one side again.”

Politics of the possible – the need to keep core Conservative support happy during the tricky Brexit negotiations ahead – probably put paid to hopes that restrictions on the green belt would be loosened. Opposition to Barwell’s ministerial statement faces a similar problem, unless the courts can force the government’s hand.

Insurance act
The Insurance Act 2015 came into effect in August last year and is having an “impact across all non-consumer insurance policies,” says Ian Gregory, a director at MPW Brokers. “It demands greater information gathering from each and every insured company so that there is a fair presentation of the risk prior to the policy commencing. A fair presentation is one that discloses, in a manner that is reasonably clear and accessible, every material circumstance which is known or ought to be known by the policyholder’s senior management, or those responsible for arranging insurance, following a reasonable search.”

(Pictured) MPW Brokers works with several housebuilders. Director Ian Gregory says The Insurance Act 2015 is having an “impact across all non-consumer insurance policies”

He adds: “In practice, this places a responsibility on those completing insurance applications to make all necessary enquiries with all senior management. Senior management includes anyone who has a key role in making decisions on behalf of the business, even if they do not sit on the board or if they do not officially have a management role.”

Apart from the extra work upfront the true impact of the legislation may not be felt for several years, says Neon Mavromatis, managing director of the construction division at broker Kerry London. “The reality is that with an Act that is a year old, on the back of marine law which is hundreds of years old, it will take some time to find out what the true impact of the legislation will be on housebuilders.”

(Pictured) Neon Mavromatis, managing director of the construction division at broker Kerry London, says: “It will take some time to find out what the true impact of the (Insurance Act) legislation will be on housebuilders.”

He adds: “We hope that the Act will ensure that the right questions are asked of housebuilders by brokers, and that the correct information is duly submitted to insurers to ensure that claims aren’t repudiated or reduced in the future.

“This is important. It’s only when there is an incident and insurers start asking for more information and posing more questions that policyholders may realise the worth of spending more time up front, asking and answering some more challenging questions. So that the basis on which they took out the policy is valid and not open for dispute.”

Mavromatis advises housebuilders to seek the advice of specialist brokers.“The best thing housebuilders can do is to develop a genuine partnership with a specialist broker. They should be completely transparent with them, not only about their historic and current activities, but also about what they’re planning over the coming six to 24 months.

“Non-specialist brokers simply won’t pick up things like the impact of bona fide subcontractor conditions, the various nuances around how defective workmanship cover operates or some of the challenges with phased developments. They are also less likely to understand the potential for amending limitations and exclusions on insurers’ generic policies, or the consequences of not changing those paragraphs.”



KEY CONTACTS

Charles Russell Speechlys www.charlesrussellspeechlys.com 
DAC Beachcroft www.dacbeachcroft.com 
Eversheds Sutherland www.eversheds.com 
Kerry London www.kerrylondon.co.uk 
MPW Insurance Brokers www.mpwbrokers.com 
Shakespeare Martineau www.shma.co.uk 


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