CPD Flashcards
Webinar: Homes England
Manual for Streets
10/02/2023
The Golden Thread
Sustainable - Self-Contained - Deliverable Places
underlying Vision-led approach
“Vision and Validate / Decide (not Predict) and Provide”
3 underpinning foundations -
“Triple Access Planning”
Accessibility =
Spatial Proximity (Land Use System)
Physical Mobility (Transport System)
Digital Connectivity (Telecoms System)
National Design Guide
A Well-designed Place
(Climate - Character - Community)
Well-designed movement network should:
- be accessible for all
- offer genuine choice of diff modes of transport
- limit impacts of car use
- promote physical activity and social interaction
- support green infrastructure, in particular, street trees
Well-designed public space should:
- be well-located, supported by variety of activities and social interaction
- have a hierarchy of spaces
- be safe, secure and attractive for all
- support trees and other planting
National Model Design Code -
Analysis / Vision / Code - Consultation - Coding
“Design code: A set of illustrated design requirements that provide specific, detailed parameters for the physical development of a site or area. The graphic and written components of the code should build upon a design vision, such as a masterplan or other design development framework for a site or area”
3 principles to create sustainable places:
- encouraging multiple means of travel
- creating connectedness
- thinking about how well we use what we have
Webinar: Homes England
Viability and Development Appraisals for Shared Ownership
09/02/2023
- the principles of a shared ownership viability model
- the important of different inputs and assumptions
- key practical and contextual issues to focus on
Schedule of homes:
no. homes, NIA, circulation (flats 25%), gross area, OMV, initial sale (25%), retained equity, rent %, rent pa
Capital costs:
acquisition cost, works build, on-cost (inc interest)%
Capital funding:
grant HE £ recoverable, grant RTB % non-recoverable, sales income (initial sale), long-term borrowing
Assumptions:
management cost per unit, maintenance contribution, maintenance period yrs, voids and bad debt, property inflation, cost inflation, rent inflation, staircasing, staircasing start year, staircasing end year, staircasing ceiling, cashflow period, interest rate/discount rate
Calculations:
initial sale %, retained %, staircasing %, staircasing period, staircasing % pa (% of whole home), staircasing % pa (% of retained element)
Hurdles:
borrowing, PV, NPV, cost to value (100%), IRR
hurdle/actual/pass or fail
Operational cashflow:
year, value of property, full rent payable, staircasing (=1), % full rent paid, gross rent, staircasing receipt, management cost, maintenance cost, reclaimed grant, voids and bad debt, net income
60 years
(payback say year 40)
top tips:
1. staircasing assumptions have a major impact on viability and it is important to understand the risk to your organisation if it does not happen as predicted
2. house price inflation is an additional assumption that is not normally relevant to the NPV in rented tenures
3. affordability as well as marketability are important considerations
4. get agreement - it is important to have a formally agreed set of financial assumptions to assess scheme viability
Webinar: 20-Minute Neighbourhoods
09/02/2023
Webinar: Homes England
Viability and Development Appraisals for Social Housing
08/02/2023
- the principles of a social housing viability model
- the important of different inputs and assumptions
- key practical and contextual issues to focus on
Schedule of homes:
no. of units, beds, int area, circulation space (25% flats), total area, open market value, rent
Scheme costs:
acquisition (land cost inc VAT), works cost (psm), on-cost (15%)
Scheme financing:
Homes England grant, RTB 1-4-1 receipts, borrowing requirement
Financial assumptions:
management cost, maintenance cost, sinking fund, voids and bad debts, rent inflation, cost inflation, interest rate/discount rate, cashflow length
Financial viability:
cost to value ratio hurdle (100%), interest cover %, interest cover deficit, loan repayment year (50), NPV, NPV per unit, IRR
hurdle / actual / pass or fail
Cashflow:
year, rent, management cost, maintenance cost, sinking fund cost, voids and bad debts, net rent
60 years
Loan:
year, opening balance, interest cost, net rent, annual surplus/deficit, closing balance
60 years
NPV:
year, net rent, discount factor, PV (beginning year 1), NPV
60 years
IRR:
cashflows
60 years
Top tips:
1. size matters - homes that are larger than they need to be are typically less viable as a result
2. clarity is key - there should be a formally agreed set of financial hurdles that apply at the scheme level; it should be clear when to say no
3. viability does not = affordability - even though a scheme may be viable it may still be unaffordable to your organisation due to interest deficits
4. get agreement - it is important to have a formally agreed set of financial assumptions to assess scheme viability
Webinar: Self-Commissioned Homes in Practice (Homes England)
07/02/2023
Self-build:
- people directly organise the design and construction of their homes
- very few actually do the main construction work
Custom build:
- working with a builder, specialist developer or “enabler” to deliver homes
- sites offer “ready-to-go” serviced plots, or
- home purchaser design home to match their spec prior to sale/construction
Community-led housing:
- collective self-build, co-housing, housing delivered by Community Land Trusts
UK £13,000 homes a year, 10%
Above/around 50%: Austria, Germany, Italy, Belgium, Poland, Japan, Australia, Hungary, Norway, Finland
can be affordable, small/large projects
new Homes England unit to promote awareness, engage with industry stakeholders, create serviced plots, work with LAs and RPs, Help to Build equity loan
Top tips:
1. a self-build and custom housebuilding policy in the Local Plan secures long-term commitment and certainty
2. empower communities to produce locally-specific schemes - types/tenures/designs
3. self-commissioned homes have many benefits, and the unit is here to support you to meet your obligations to deliver/enable successful projects
Webinar: Homes England
Land Assembly Using Compulsory Purchase Powers
06/02/2023
Land assembly is an integral part of the wider project programme
statutory powers can help
1) assembly of major sites
2) small but critical acquisitions
3) cleaning title
4) appropriation
who can apply for CPO?
- legislation defined which bodies
- usual for Council to partner with developer for delivery
- developer usually expected to meet cost of CPO and compensation
which powers to use:
Regeneration:
Town & Country Planning Act 1990 LA CPO
Housing Act 1985 Housing Authority CPO
Housing & Regen Act 2008 Homes Eng CPO
Local Gov Act 1976 LA Rights
Infrastructure:
Development Consent Order Any promoter CP & other powers
Transport & Works Act Order Any promoter CP & other powers
Utilities Utility provider CPO Easements/Wayleaves
s226 TCPA 1990
DLHC guidance:
“This power is intended to provide a positive tool to help acquiring authorities with planning powers to assemble land where this is necessary to implement proposals in their Local Plan or where
strong planning justifications for the use of the power exist. It is expressed in wide terms and can therefore be used to assemble land for regeneration and other schemes where the range of activities or purposes proposed mean that no other single specific compulsory purchase power would be appropriate.”
CPO process:
Order
- prepared and submitted to SoS for approval
- identifies land required and all affected owners and occupiers
- affected parties notified and able to object to SoS
Inquiry:
- SoS asks Planning Inspectorate to hold an inquiry to hear objections and promoter’s justification
- Inspector reports to SoS with findings
Powers:
- Inspector decision or SoS considers Inspector’s report and makes a decision to approve the Order or not
- if approved, notice given to affected parties and Order becomes operative
- 6 week period for challenges on point of law
Negotiate for land
Formal Council decision to use CPO
Formal title research (land referencing)
Seal and submit CPO for approval
Objection period
Public inquiry
Confirmation of CPO
Legal challenge period 6 weeks
Serve land acquisition notices 3 months
Acquire land and start building
Settle compensation
From resolution to CPO 9-18 months
Land entry +4/5 months
Compelling case:
public benefits of scheme
need for CP to deliver
within authorised purpose
proportionate
Gov guidance:
CPO guidance and Crichel Down Rules:
manual for authorities seeking to use CPO powers under Acquisition of Land Act 1981
guidance on specific powers inc TCP Act 1990
The Compulsory Purchase (Inquiries Procedure) Rules 2007
Tests:
policy support
wellbeing
alternatives (site, scheme, design tweaks)
deliverability (delivery structures/partner)
negotiations
Equality Act, Equalities Impact Assessment (EQIA)
Top tips:
1. engage with landowners early and use CPO as a backup to negotiations where necessary
2. prepare at the outset, and don’t take an approval of a CPO as a given
3. use the most appropriate power
4. follow the DLUHC guidance - the inspector at the inquiry will use it as a yardstick
5. helping landowners and occupiers deal with relocation or acquisition makes your job easier too
Webinar: Homes England
Planning Inspectorate Intro to Working with Local Gov
03/02/2023
PINS Executive Agency of DLUHC
3 service areas: Appeals, Applications (National Infrastructure), Examinations (Local Plans)
Local Plans:
- set the strategic planning framework for the area inc spatial strategy and directing growth
- set out areas to be/not to be developed
- set out policies to be applied when deciding planning apps
- deliver new homes by:
(1) identify need for housing over plan period - 15 years
(general, affordable, older persons’, travellers)
(ii) set out numerical requirements to be met
(iii) allocate land
(iv) inc policies requiring delivery of certain types of homes as part of resi schemes e.g. affordable housing
(v) provide certainty in the market
Exam process:
- submission for examination
- inspector apptd
- review the plan, evidence, representations
- identify main matters and issues for examination
- hearings
- main modifications
- report to the local authority - end of exam
- adoption by LPA
Inspector’s role:
2 jobs
- Legally compliant
- Sound (based on NPPF tests -
positively prepared
justified
effective
consistent with national policy)
New digital service
Top tips:
1. We are approachable. Speak to us in any Qs. Happy to help with problems, provide training, give general advice.
2. Please keep working on Local Plans. Having one is most effective means of managing development in your area.
3. Be constructive and help Inspectors.
4. Resolve issues locally wherever you can.
Webinar: Homes England
An Intro to Green Infrastructure
01/02/2023
Webinar: Homes England
Future-Proofed Energy Solutions
- benefits of early pre-dev initial energy options analysis
- how this can be applied to local gov delivery
01/02/2023
Webinar: Homes England
Inclusive Spaces and Places for Girls and Young People
31/02/2023
Reading: LGA’s recommendations on delivery of Council housing
- Right to Buy reform
- building skills and jobs local taskforced
- expansion of MMC
16/12/2022
- Expanding council housing delivery
- Potential downturn in housing market as dependent on cross-subsidy inc s106
= bring forward and increase £12b extension of Affordable Homes Programme announced Budget 2020 (Planning for the future) with focus on social rent;
Reduce/eliminate requirement for competitive bidding;
Allocations should enable delivery of zero carbon homes;
Increase grant levels per home to maximise no. of schemes viable;
Reduce timescales in administering grants;
Additional grant investment to compensate for lost cross-subsidy from market sales
- National policy changes can put Council housebuilding programmes at risk e.g. changes to rent setting for social housing since 2015 (annual increase for social and affordable rents to CPI + 1% welcome but limited to 5 years, Councils require long-term stability)
= set long-term rent deal for LA LLs min. 10 years
- Council housing/planning/regen teams require resources to deliver devs of diff scales;
in addition to delivery of housing through Housing Revenue Account, Councils can establish SPVs;
challenges to establishing effective partnerships must be addressed to enable delivery
= additional capacity for housing delivery teams within Councils and partners with suitable mix of professions;
Coupled with access to expertise to allow Councils to assess risks and explore options for delivery and partnerships;
e.g. support for Councils to undertake options appraisals and cover set up costs/
support in accessing finance/
support in getting sides ready to market test for poss joint ventures/
delivering mixed tenure dev/
standard legal docs;
could be delivered through increased investment in existing sector-led improvement programmes delivered by the LGA/Local Partnerships/One Public Estate
- Access to other finance, borrowing and land to deliver council housebuilding programmes, in particular many sites face issue of costly infrastructure requirements that need to be delivered at start/near start of project;
- = promote innovative funding mechanisms inc UK Municipal Bonds Agency;
Provide lower Public Works Loan Board rates ;
Investment in further phase of OPE programme to inc further round of the Land Release Fund to combat barriers otherwise making land unusable for dev;
Expedite outstanding Housing Infrastructure Fund allocations and relax conditions so Councils can focus on delivery not process and enable cross virement and extended deadlines and flexibilities on completion timescales;
Open up dialogue to allow transfer of Homes England land assets to Councils at realistic land values where can be used for accelerated housing dev;
Support to de-risk large scale projects esp where significant amount of infrastructure required;
Bring forward £10b Single Housing Infrastructure Fund for public sector related schemes esp affordable housing and key worker accom
- Lack of certainty over New Homes Bonus could exacerbate financial challenges facing some Councils, particular in high growth areas
= New Homes Bonus should be funded from outside the settlement rather than by a top-slice of the Revenue Support Grant;
Clarification needed on measures to incentivise greater delivery while ensuring Councils have access to funding to provide services to new residents - Right to Buy reform
- Current policy inc restrictions around use of Right to Buy 1-4-1 receipts barrier to delivery of replacement homes
= allow Councils to retain 100% of receipts with no restrictions on use;
Give Councils flexibility to increase proportion of replacement homes’ cost that RTB receipts can be used to fund from 30% to a level more suitable to needs;
Extend time limit for spend of RTB to at least 5 years;
Enable RTB receipts to be combined with Homes England and other funding streams (would particularly help brownfield redev/other sites with exceptional costs);
Allow transfer of RTB receipts to ALMOs and/or Local Housing Companies;
Reduce discounts available and/or set locally reasonable parameters, min shouldn’t be sold below replacement build cost or where exceeds amount received in rent ;
Increase period tenant can buy to at least 5 years with additional 15 years for new builds;
Allow value of land released by Council’s General Fund to be assessed as part of cost for RTB 1-4-1 calcs in same was as if bought on open market - Availability of developable and deliverable land
- Councils can’t compete with private devs/landowners;
- Physical availability of land and/or availability of only small sites also barriers
= investment in further phase of OPE to include further round of Land Release Fund to identify surplus public land and to combat barriers otherwise making land unusable for development;
Enable Councils to acquire public land identified as surplus by current public sector owner to provide facilities inc housing at val determined by the District Valuer based on current use;
Councils to have first refusal on any public land sale
- Current legislation limits ability of Councils to capture the uplift in land values arising from granting of planning permission and provision of public sector funded infrastructure to invest in new infrastructure and public services
= consider system enabling greater land value uplift to be captured by Councils;
Could inc amending Land Compensation Act to enable Councils to acquire land through CPO at close to existing use value for sites that have been designated for infrastructure inc housing through local plan process to enable borrowing against future uplift in land values to fund the necessary infrastructure investment
- CPO powers can be used to promote dev on stalled sites for housing, however existing process is cumbersome and often subject to delay
= Streamlined CPO powers where dev has stalled;
Particularly would assist where landowner not delivered on an allocated site within a defined period/where landowner disputes are causing barriers to delivery of a site - Estate regeneration
- Estate regen schemes offer real opps to transform the way thousands of people live through improving quality of housing and neighbourhood design, however long-term and complex which requires significant upfront expenditure, meaning Council’s ambitions to deliver restricted due to cashflow constraints even though viable over life of project
= re-introduce capacity funding for an estate regen programme - Capacity of the bdg industry to deliver Council housebuilding programmes
- Could be reduction in no. of people working in bdg sector post-covid
= skills and job strategy, COBRA for jobs and skills to Gov Dept abd agencies/local gov/sector bodies can coordinate and mobilise a response which ensures national skills and job investment lands well on ground;
Delivery of Council/Combined Authority multi-agency local skills and jobs taskforces to coordinate local and national careers advice/employment/apprenticeships/skills/business support easy for residents and employers to access physically and online (a flexible local funding pot should roll in fragmented funding so provision can be delivered quickly and joined-up);
Enable local pooling of public Apprenticeship Levy funds so areas can strategically plan, address supply and demand issues, widen participation to disadvantaged grops;
Provide assistance to small and medium housebuilders and/or self-employed tradespeople to help them find work on public sector sites, Gov to broaden employment support and work wit local gov to scale up effective local programmes as well as those run by charities, housing associations, colleges, recruitment agencies - Wider use of Modern Methods of Construction
- Challenges in establishing finance due to lack of long-term data on durability of MMC homes, so difficult for MMC builders to demonstrate value to funders etc., uncertainty is concern and more info needed on longer-term maintenance costs
= greater assurances to Councils to enable them to bring MMC homes to scale while helping to provide data to improve investor confidence;
could involve underwriting risks of MMC, as set out in Farmer Review;
build sector knowledge through delivery of training for elected members and senior officers in Councils - Investment in existing stock and acquisitions
- Gov must make provisions for investment (post-Grenfell major challenge);
Long-term viability of each Council’s HRA depends on being able to make this reinvestment as well as on factors such as rental income;
Council housing sector could provide best practice examples for building safety, fire safety and meeting carbon targets
= fiscal stimulus package inc improving existing housing stock for bdg and fire safety and to meet carbon targets, Gov to bring forward £3.8b Social Housing Decarbonisation Fund;
Dev of strategies to help property owners and managers meet the 2050 zero-carbon trget with the provision of seed capital where necessary;
Improved energy efficiency and increased use of renewable energy to be part of any revised Decent Homes Standard to kick start retrofit of homes;
Alignment between a new DHS and Clean Growth Strategy to bring all social homes up to an EPC Band C by 2030;
Councils should have the tools to become exemplars for using new smart tech and sustainable construction methods supported by appropriate investment
Webinar: DJB sols
Overage & Clawback
- definitions
- methods
- relevant case law
23/11/2022
Overage clauses and clawback provisions are designed to achieve full value in relation to land being sold where a subsequent purchaser achieves additional value at a later time. As a consequence of the Herstmonceux case in 1986 Treasury guidelines provided that government land should normally be sold with planning permission. However, where there are delays in resolving uncertainties over planning permission it may be appropriate to dispose of land early and in such cases introduce clawback provisions to achieve full value.
However, some forms of overage and clawback, e.g. ransom strips, may be inappropriate for government bodies. See also R v Braintree District Council ex parte Halls [2000] 36 EG 164 where a local authority which sold a council house subject to use as a single private dwelling sought to charge 90% of profits to discharge the covenant. This was held to be ultra vires its powers under Schedule 6 Housing Act 1985.
Overage may act either positively in that if additional value is received additional money will be given to the seller, or negatively, i.e. the purchaser will not develop or does not have a sufficient interest in land. In such case, there is no need for any overage clause as the seller has control over the situation and can charge what he likes.
Local authorities are given powers under S.123 of the Local Government Act 1972 to dispose of land in any manner they wish, including sale of their freehold interest, granting a lease or assigning any unexpired term on a lease, and the granting of easements. The only constraint is that a disposal must be for the best consideration reasonably obtainable (except in the case of leases of 7 or less years in duration) unless the Government consents to the disposal.
Generally it is expected that land should be sold for the best consideration reasonably obtainable. However, it is recognised that there may be circumstances where an authority considers it appropriate to dispose of land at an undervalue. Authorities should clearly not divest themselves of valuable public assets unless they are satisfied that the circumstances warrant such action. The Consent has been issued to give local authorities autonomy to carry out their statutory duties and functions, and to fulfil such other objectives as they consider to be necessary or desirable. However, when disposing of land at an undervalue, authorities must remain aware of the need to fulfil their fiduciary duty in a way which is accountable to local people.
Generally it is expected that land should be sold for the best consideration reasonably obtainable. However, it is recognised that there may be circumstances where an authority considers it appropriate to dispose of land at an undervalue. Authorities should clearly not divest themselves of valuable public assets unless they are satisfied that the circumstances warrant such action. The Consent has been issued to give local authorities autonomy to carry out their statutory duties and functions, and to fulfil such other objectives as they consider to be necessary or desirable. However, when disposing of land at an undervalue, authorities must remain aware of the need to fulfil their fiduciary duty in a way which is accountable to local people.
SDLT and LTT will attach to positive overage but not to negative.
The duration of the overage clause depends very much on its facts. Some clauses refer to 80 years. It is suggested that this is excessive and arises through confusion with the previous statutory perpetuity period of 80 years.
Between the original parties there will be a contract and the covenantor will be able to fully enforce. Third party purchasers must however take the benefit of the covenant. This may always be done by an express assignment. In any case, as we will see many covenants are automatically annexed to land. The problem lies in relation to the burden passing to subsequent purchasers as this cannot be contractually assigned. Some form of property rights which is binding on the purchaser will therefore need to be created. The commonest methods, which we will look at, are: -
(a) positive covenants and restrictions
(b) restrictive covenants
(c) ransom strips
(d) a charge or mortgage
Positive covenants and restrictions
The problem here is that in freehold land a positive covenant will not burden third party purchasers. See Austerberry v Oldham Corporation [1885] Ch.D750. There are many ways of circumventing this, e.g. estate rentcharges and the doctrine of mutual benefit and burden, i.e. if a right is claimed a corresponding obligation must be taken on. The classic example of this is in relation to maintenance of private roads and drains in small estates. This is not suitable however in relation to overage.
Direct covenants and restrictions
Here each new purchaser enters into a direct covenant with the original seller or their successor. They are therefore contractually bound. A restriction should be placed on the register (in registered land) to the extent that no disposition is to be registered unless the transferee produces to the Land Registry a deed of covenant in that form.
Restrictive covenants
Restrictive covenants are of dubious value for various reasons. Long term, in particular, they may be discharged under section 84 Law of Property Act 1925, for instance if obsolete or if they prevent reasonable use and enjoyment of land. In event of discharge by the Property Chamber, damages may be awarded but may be limited. Moreover, in any court proceedings an injunction will not necessarily be awarded to prevent breach and again damages will be limited to the loss of value to neighbouring land. If there is little or no loss in value there will be no enforceability.
The Trigger Events
The most typical uplift is the grant of a planning consent. The main advantage of this approach is certainly in that it is an ascertainable event the knowledge of which is publicly available and the terms of which are ascertainable to anyone who enquires of the local authority. The main let disadvantage from the landowner’s point of view is that the grant of consent does not itself give the landowner cash. It gives it the means of obtaining cash, for example by borrowing on the security of the increased value. From the overage owner’s point of view, it is possible that a future consent may produce greater value to that linking overage to a specific planning consent or perhaps the first planning consent to be granted may not necessarily secure the best value for the overage owner.
A number of other matters need to be considered at the point. A major development will normally go ahead by initially obtaining outline consent subject to subsequent approval of a number of reserved matters by the local authority. When these have been approved, a detailed consent is granted. A detailed consent is often easier to value than an outline consent and it may be preferable to link the overage to that.
Certain developments will not require planning permission, for example, under the Town and Country Planning Act (Permitted Developments) Order 1995 as amended.
Another issue in overage and clawback relating to the uplift in value is that the value of the overage land may accrue because it is part of a larger assembly of land. The land itself may provide access to some other plot perhaps as a ransom strip or it may need to be taken into account for example for the provision of public open space without itself being used for valuable development. It may be desirable that on the trigger in relation to a part of a property, a new base value is determined by reference to the then value of the property.
The final type of overage that will be looked at is by way of a charge.
The overage works by the grantor giving a charge to secure the amount of overage payment. Nothing occurs until the trigger event, e.g. planning consent, occurs. The charge will then automatically secure the payment. If the payer does not pay, the recipient can sell the land and take payment out of the proceeds. He will have the same rights and remedies as any other mortgagee.
Overage, clawback and uplift are terms used interchangeably. They describe agreements made between a seller and purchaser of land or property and provide for the seller to receive a share in the uplift in value of the land if a certain future event occurs.
The payment is in addition to the agreed purchase price and is usually expressed as a percentage of the increase in value of the land.
You will need to consider the following:
* Period of time: how long should the overage provision last? It is for whatever number of years that can be agreed, for example it could be for 25 years.
* The percentage – this is the share of the increase in the value of the land from the agricultural value to the value with the benefit of planning permission. The percentage must be sufficient to justify imposing the overage or clawback provision. For example it could be 30%.
* Trigger – when will payment be triggered. This is often on a sale of the land with the benefit of planning permission or implementation of the planning permission.
* Protection – you will need to consider carefully how to procure the payment in the future if for example it changes hands.
* Tax – need to obtain tax advice. There are Stamp Duty Land Tax implications for the buyer.
Reading: CPO
- CPO legislation
- CPO process
- CPO compensation
20/11/2022
s.1 Localism Act 2011: “A local authority has power to do anything that individuals generally may do.”
Individuals cannot compulsorily purchase land so an underlying statutory power is still needed.
Compulsory purchase legislation deals primarily with procedures
CPO powers are contained in a number of statutes.
Highways Act 1980 Part VII – variety of powers to compulsorily acquire land – of particular note power to acquire land for the construction of a new highway or improvement of an existing highway.
Housing Act 1985 Part XVII – power to acquire land for housing purposes. – useful as final option in an empty property strategy (arrangement with RP/developer can make it self-funding).
Planning (Listed Buildings and Conservation Areas) Act 1990 Chapter V – power to acquire a listed building in a state of disrepair where a repairs notice is not complied with.
Town and Country Planning Act 1990 – Part IX
S.226(1): A local authority to whom this section applies shall, on being authorised to do so by the Secretary of State, have power to acquire compulsorily any land in their area . . .—
(a) if the authority think that the acquisition will facilitate the carrying out of development, re-development or improvement on or in relation to the land, or
(b) which is required for a purpose which it is necessary to achieve in the interests of the proper planning of an area in which the land is situated.
BUT a local authority must not exercise the power under paragraph (a) of subsection (1) unless they think that the development, re-development or improvement is likely to contribute to the achievement of any one or more of the following objects:
(a) the promotion or improvement of the economic well-being of their area;
(b) the promotion or improvement of the social well-being of their area;
(c) the promotion or improvement of the environmental well-being of their area.
CPOs can be privately funded – e.g. where a developer has plans for a major development scheme which the LPA wishes to see developed but does not own all the interests in the land.
Powers used inc
s,.111 Local Government Act 1972 – power to do any thing “which is calculated to facilitate, or is conducive or incidental to, the discharge of any of their functions”
s.1 Localism Act 2011 – includes powers to do things a natural person may do – inc doing the thing for commercial purposes and doing it otherwise than for the benefit of the authority, its area or its residents.
Land Referencing
Identify all ownerships and interests within the scheme
Defines the red line
Any special category land (eg statutory undertakers, Crown land, open space)?
Stopping up?
Negotiations
Start early and keep up throughout CPO process
Last resort
Consistency with deals
One point of contact
Identify “problem owners”
Innovative in deals – eg sale and leaseback, relocation packages, implementation agreements
ADR / mediation
Caution – Vicarage Field CPO, Barking and Dagenham
Documents
Planning permission including s106 agreement (if required)
Indemnity agreement (if required)
Statement of Reasons – see Government guidance Section 12
Committee report
Make the CPO
Make as soon as practicable following CPO resolution – see Vicarage Fields
Serve copy on all owners/occupiers
Newspaper notices and site notices
Objection period commences (min 21 days)
Any objections?
Confirmed CPO
Time Limits
3 years from confirmation of the CPO
5 years from the date of making of the DCO (unless otherwise specified)
Methods
General Vesting Declaration
Notice to Treat and Notice of Entry
Temporary Possession (DCO)
GVD
Notice of intention to make GVD must give min. 3 months’ notice prior to vesting
Title is deemed to vest automatically on the vesting date
Does not acquire long tenancies which are about to expire or minor tenancies
Cannot be used for property already subject to a notice to treat
Ideal for vesting large numbers of properties in one or multiple phases
Can be used to vest unregistered land/unknown ownership
Notice to Treat
Notice to Treat – states that the acquiring authority is willing to ‘treat’ i.e. negotiate a settlement
Notice of Entry – served with or after NTT; entry must be taken within 3 years of NTT or as agreed with owner
Entry can be taken 3 months after the NTE
More flexibility than GVD
Can be used to extend life of the CPO
Compensation – heads of claim
Market value of the land taken (before the value of the CPO project is taken into account)
Disturbance payments – e.g. removal costs
Home loss payments – distress of being forced from a residence
Severance and injurious affection for retained land
Land adversely affected by the construction and/or use of works but where no land is acquired
Surveyor and legal fees
Compensation – Timing
NTT – interest is fixed at the Notice to Treat
Entitlement arises on day of possession
GVD – entitlement arises on vesting date
If not agreed, 6 years for referral to Upper Tribunal
Advance payments can be sought at any time after the possession or vesting date
Webinar: RICS
Compulsory purchase disputes
- RICS ADR scheme
18/11/2022
ADR need:
- May not agree but has to be a deal, can be very emotive
- Property owners don’t want complicated negotiations hanging over them for years, process for expert witnesses etc.
- May be not be able to afford to move to next business/home until resolved
- Access to justice issue
- Courts can be costly, slow, formal
- About amount of compensation, not whether there should be a CPO
- Low value claims had no cost-effective method for resolution (less than £100,000 – tribunal can cost more than £100,000 to make a claim so may be not worth the risk)
- No action had been taken to enable parties to take CPO matters to the lower tribunal and so RICS and other pros began to explore potential for quick and cost-effective ADR solution
- Learned appetite for ADR for solution for larger, more complex disputes too
- Final version approved by RICS 2022
ADR process:
- Talks for a long time about reforms to the Lands Chamber that would better facilitate lower value CPO disputes
- ADR filling this gap
- Independent determination:
A quick and final resolution of a disputed issue, avoiding lengthy and costly litigation
The is useful for disputes that are solely about the value of compensation to be paid
Can answer a question quickly and impartially and explain rationale for conclusion reached
- Mediation:
This helps parties to work together to achieve a mutually agreed, rather than an imposed, settlement
This is useful where there is more than 1 issue involved and/or the sums involved are very high
- Weeks rather than years
- Not overly prescriptive
- E.g. town centre regenerations can affect properties of lower-value, businesses/homeowners may have strong views on value of their properties as run businesses for decades but lack experience of property world, LAs want to do a deal and move on but can’t persuade the claimants that realistic and fair offer, LAs need to use public money wisely/developers don’t want to overpay as affects affordability of scheme;
organisation running CPO may have own ADR scheme but trust issue as claimants will see as a fait accompli, whereas RICS independent trusted org, don’t lose face as third party determination/
mediation focuses minds of each party and often both sides willing to move a little and an agreement is reached, which frees tribunal up for more complex cases which need tribunal to determine the situation e.g. if no case law precedent for circumstances
Appointment:
- Every ADR function requires both parties to agree to use e.g. agree lease with arbitration clause
- Asking acquiring authorities to buy in to ADR as part of process/policy/guidance and to offer to clients
- Requires clients and claimants to agree to use
- Working with MoJ to make ADR mandatory, looking at small claims, proposals to look into for other civil litigation matters
- Tribunal will expect you to use ADR
- But form of ADR may advantage one of the parties so can’t be agreed
- Here, 2 straightforward approaches
- Smaller regen schemes acquiring authorities encourage those affected to get vals by local firms
- This process gives comfort to surveyors
- Wide variety of pros involved in regen schemes, gives confidence
- Allows negotiations to progress
- Where acquiring authority needs precedent, needs to go through court
- Mediation helpful as parties base positions on what they know/think they know, mediation shares information
Webinar: RICS
Development appraisals
- site appraisals
- risk management
- example residual valuation
18/11/2022
Dev appraisal: best way to unlock value, justifies investment in land
RICS GN Valuation of Development Property 1st ed Oct 2019
Should be read alongside RICS Global Standards (red book) Jan 2022
The Dev Process:
Site appraisal:
- Purpose: to identify the essential characteristics of a site
- What needs to be taken into account in design of development
- What will enhance/impede development?
- Surrounding area must be considered, as well as site itself
- Technique: visit site and walk around, observing and noting characteristics e.g. public/private access, boundaries, neighbourhood, type of vegetation
- Usually appraisal will be noted on a large-scale map
Considerations:
- General nature of site – urban, suburban, Greenfield?
- Intrinsic site characteristics – orientation – sun/shade
- Exposure – prevailing winds (e.g. skyscraper/if topography higher than road level), weather, flooding (if topography lower than road level)
- Ground conditions – nature of soil – light, heavy, disturbed, stable
- History of site – effect on nature of site, esp re foundations and drains, e.g. contamination/reduced load-bearing capacity/reduced quality of soil
- Slope – gradient, direction – single or multi-slopes e.g. natural drainage of water at site
Specifics:
- Vegetation – trees, hedges – position, species, old, mature, young, condition
- Water – streams, ponds, lakes – size, location, condition, depth, use
- Pattern of natural surface water drainage
- Likeliness of flooding – weather, climate, time of year e.g. waterlogging, below sea/road level
- Views out of site – good and bad at various points
- Pollution – noise, fumes = traffic, on and off site activities
- Rights of way across site – tracks, public or private
Area:
- New dev of a site should be a good neighbour to local area
- Is local area poor? Could site be a stimulant to area?
- What are uses of local bdgs? Will proposal fit in well, or clash?
- What is character of spaces of adjoining devs? Good, bad, large, small, formal, informal?
- What is character of bdgs of adjoining devs? Age, condition, construction? E.g. technology gives an idea of load-bearing capacity of soil/cost-effective techniques
Site:
- How are boundaries defined? Method, effect of method?
- What is nature of hard landscaping? Method, effect of method?
- Photograph site if possible. Appraisal is set to establish a framework for the dev of the site to enhance site and its relation with local area
- Many devs are poorly appraised – evidence can be found in all cities
Planning consent:
- One of most important parts of dev process
- May be in place
- Responsibility of landowner? Fairly simple, may need revised consent
- In many cases, planning consent comes after landowner and developer agreement
- Purpose of planning: “to secure the most efficient and effective use of land in the public interest, and to ensure the facilities are built where they are needed, and to protect and enhance the environment by means of a comprehensive statutory system of dev control in the public interest”
- Town and Country Planning Acts
- City Development Plans/Master Plan
- Core Strategy
- Sanction Plans and NOCs
- May be objections e.g. traffic, police, fire; must be compliant
Planning unlocks value?
- Can’t monetise without planning
- The need for dev e.g. housing need
- The Town & Country Planning Acts
- Floor Area Ratio/Floor Space Index
- Ground Coverage i.e. footprint of bdg
- Mandatory Setbacks
- Environmental Clearance if no problems affecting flora and fauna
- No Objection Certificates from diff gov depts i.e. traffic
- Sustainability factors for the Dev Appraisal:
Charges for infrastructure, to be borne by dev or not
Other obligations
Densities e.g. of populations
Infrastructure
Dev players:
- Landowner
- Developer
- Planning officer
- Architect
- Site agent
- Project manager
- Bdg contractor
- Funder
- LA
- Central gov
- End user/occupier
- Visitors
- Surveyor
- Letting agent
- Lawyer
Financial appraisal (depends on dev players, look at holistically):
- Market appraisal
- Site identification/acquisition
- Design of scheme
- Securing finance e.g. equity, debt, buyers investing before dev
- Physical construction
- Marketing and disposal
Research:
- Supply and demand
- The property dev life cycle
- Site appraisal
- Planning
Project inception:
- Pre-dev, dev and post-dev periods (diff finance requirements e.g. costs)
- Site acquisition methods or developer procurement
-
Method of valuation:
- Comparative method
- Basic residual approach
- The framework
- Sensitivity analysis (what is acceptable to client?)
Cash flows:
- Period by period
- DCF or accumulated
(dev appraisal software, need an understanding of how works, pros and cons with softwares)
Basic approach:
Costs:
Reporting the val:
- Depends on instruction given, purpose and basis of val clearly stated, where basis other than MV adopted must be fully explained
- All assumptions must be stated and comments on effect of assumptions where material, particularly important as “sensitive nature” of dev val/appraisal
- Good practice to present appraisal based on provable values (evidence over gut feel) alongside sensitivity analysis to show effect on land value of diff assumptions as to future rent and yield; aim to assist client in assessing likely land val by ref to present and future market trends and likely shifts in supply and demand; wherever possible, issues to be discussed with client
- In some cases client may request valuer to identify any hope value reflected in val (pop term for the element of the diff between the val of land with benefit of current planning consent and val with an enhanced assumed consent reflected in MV of land)
Risk management:
- Uncertainty of outcome whether positive opportunity or negative threat
- Management of dev scheme’s exposure to risk by taking action to keep exposure to an acceptable level in a cost effective way
- Risk man cycle:
Identiy risks
Categorise risks – monitor action
Identify responses – plan
- PIP analysis
Probability (how likely?)
Impact (the likely effect)
Proximity (when will the risk happen?)
- PRACT responses
Prevention
Reduction
Acceptance (may not be mitigatable)
Contingency
Transfer (some risks can be transferred to a third party)
- Risk appetite:
How much risk are you/your client prepared to tolerate?
What is your perceived importance of each risk?
What is the balance of occurrence vs costs/value for money in risk limitation
What is the overall tolerance to risk?
What is the Exit Strategy?
Land acquisition:
- Methods of purchase:
By private treaty – outright purchase
From Gov Agency – purchase of rights
Auction
Development Agreement (advantages?)
Leasehold (various)
Direct partnership (i.e. Joint Venture) (advantages?)
Public Private Partnership
(each have a diff financial model which will have bearing on assumptions we make)
- Methods of Funding:
Direct payment (bank transfer, “cash”)
Delayed payment
Loan (debt funding)
Equity funding
Shares (typically happens if v large)
Profit share
Overage (“open book”)
Premium payment plus Ground Rent
(mixture of methods may be used)
Improving accuracy of residual val:
- Sensitivity analysis and
Accumulated/Period by Period Cash flow
Discounted Cash Flow
Simplified process using Excel spreadsheet
Dev Appraisal software
Identify components of cost (evidence)
Planning Policy v Dev Viability
- Planning policy/land allocation
- Affordable housing
- Viability testing – approach and mechanics
Dev Appraisal is an ongoing process from inception to completion (will need to be updated throughout)
Accuracy of costs
Accurate sensitivity
Is the scheme capable of change
Webinar: RICS
Changes of use: update on PDRs and use classes
- permitted development rights
- office-to-resi conversion
- TCPA Healthy Homes campaign
12/11/2022
PDRs
- 2015 gov decided means to boost housing supply
Town & Country Planning (General Permitted Development) (England) Order 2015 (as amended)
- Research showed quality of homes poor
- s55(2)(f)TCPA1990
e.g. Use Class E
Not required to change use within same Use Class
Not classed as development
- TCP(GPD)(Amendment)Order2021
- Class MA
- May change use from Class E (commercial, business, service) to C3 (dwellings) subject to LA approval
- Must be:
Vacant for a continuous period of at least 3 months
Use within one or more of classes for continuous period of at least 2 years prior
Must exceed 1,500sqm
Can be in conservation area but cannot be listed or in national park
- Sought to find ways of extending upwards
Class A can extend blocks of flats upwards by 2 additional storeys etc.
Class AA can extend homes up to 2 additional storeys
- Class ZA allows for demolition of vacant bdgs which comprise block of flats ot detached bdgs for office industrial use Class B1
Demolished bdg can be replaced by block of flats or detached house
Pre-requisites
- PDRs subject to prior approval from LPA
- LA can consider:
Highways
Neighbours
External appearance
Natural light
Noise
- Class MA PDR also:
Contamination
Flood risk
Fire safety impacts
Conservation impacts
Loss of nursery/health services
GIA at least 37sqm
- LPA decision within 8 weeks
- Right to appeal to SoS
- Prior approval looks like a planning application now rather than fast-track process
- Planning reforms announced in “Planning for the Future” White Paper 2020 on hold
- Levelling Up White Paper Feb 2022
Alternative governance office-to-residential conversion
- RICS research, see links on slides
- Loss of employment space
- Poor resi quality
- Poor locations
- Impact on local infrastructure
- Loss of affordable housing contributions
- Netherlands:
State proactivity
Partnerships
Quant and Qual
Efficient allocation of resources & place-making
Healthy Homes campaign (T&C Planning Assoc)
- TCPA 1899 campaign garden cities, new towns, community planning, planning for climate change and healthy place-making, planning to pursue social justice
- over 10,000 homes created through PDR
- 2020 research gov on PDR found only 20% met Nationally Described Space Standards
- DLUHC have made some concessions: nationally described space standards; natural light; making it easier for councils to block new PDR homes in warehousing hubs
- TCPA research on scale of change e.g. how many shops might be converted, concerned about health and wellbeing
- Some neighbourhoods might be left without any shops or services
- Research found upper limits 70-80% of shops and commercial buildings could be lost to resi conversion
- Marmot review: poor quality housing increases likelihood of disease
- Public Health England: neighbourhoods with poor walkability negatively impacts health
- Shelter: 20% higher risk of severe ill-health, poor outcomes
- BRE: costs NHS £1.4b a year
- Place Alliance: descreases population’s resilience to major shows e.g. covid, extreme wheather
- Erodes employment opportunities, unsustainable commutes
- Gov claims changes needed because housing crisis and retail has switched online
- But
1. conversions could be made in a way that does not undermine the viability of the remaining shops
2. local people and Cllrs would continue to have a say on the future of their high streets
3. Planners would be able to ensure that new homes converted from shops and offices are of high quality healthy and safe
4. Planners could ensure that new homes converted from shops and offices actively improve the local area
5. Councils could collect funding from developers to provide the infrastructure necessary to support new residents and ensure that existing residents do not endure adverse negative impacts from new developments
- Regs for built environment fragmented between housing, planning etc
- Planning lacks a legally defined core, purpose
- There are no legally enforceable min standards on key aspects of bdg and neighbourhood quality, bdg regs and Future Homes Standard won’t cut it
- Need a shift from mitigation of harms to active promotion of wellbeing
- Healthy Homes Bill (TCPA): healthy homes principles
- Work with LA for voluntary adoption of principles
- How does PDR fit with localism and Levelling Up?
- How do planning and bdg regs dovetail together? Need for universal framework?
