Real Estate Bulletin - November 2022

The government has launched a consultation seeking views on the design and implementation of the Building Safety Levy

The government has launched a consultation seeking views on the design and implementation of the Building Safety Levy. The Levy will be paid by developers and charged on new residential buildings requiring building control approval in England. The government estimates that it needs to raise £3bn from the Levy.

The Levy will be used to pay for “remediation of cladding in buildings over 11m in height”. This will, presumably, be the same test as applies under schedule 8 of the Building Safety Act 2022 (BSA), which defines how this is measured and also applies the alternative test of five storeys. The Levy will also support the government’s stated aim of protecting taxpayers and leaseholders from meeting remediation costs.

The headline of the consultation refers to the Levy being relevant to “new residential” buildings. However, the BSA and the consultation refers to the Levy as potentially applying to buildings that contain one or more dwellings or other accommodation, including temporary accommodation, e.g. a hotel. We read this as meaning it will also apply to certain mixed use schemes.

Since the original consultation, the scope of the Levy has expanded to apply to all new residential developments (regardless of height) that require building control approval. The original proposal saw only certain high-rise residential buildings in scope. Certain exclusions are proposed.

The consultation seeks views on various aspects of the Levy. You can read about the proposals in more detail here.

Autumn statement: commentary and insights

Read our expert commentary on the Autumn statement below:

Markets may be sanguine, but political temperature remains high - Our viewpoints on the Autumn 2022 Statement from client insights lead, Andy Hartwill

Autumn Statement 2022 - tax measures

Autumn Statement 2022 - HMRC tax rates and allowances for 2023/24

Call for evidence on UK Net Zero Carbon Buildings Standard

A call for evidence has been issued in relation to the UK's first Net Zero Carbon Buildings Standard (NZCBS).

Leading industry organisations including the Better Buildings Partnership (BBP), Building Research Establishment (BRE), the Carbon Trust, Chartered Institution of Building Services Engineers (CIBSE), IStructE, London Energy Transformation Initiative (LETI), Royal Institute of British Architects (RIBA), Royal Institute of Chartered Surveyors (RICS) and UK Green Building Council (UKGBC) have come together to develop the standard. The call for evidence notes that the standard “will enable industry to robustly prove their built assets are net zero carbon” and in line with national climate targets, and “will set out metrics by which net zero carbon performance is evaluated, as well as performance targets and limits that need to be met”.

The standard will be science based, developed collaboratively and openly available. The webinar that accompanied the launch of the call for evidence noted that the standard is neither constrained nor tied to government policy but that there is a hope that it aligns. It also noted that that, in itself, the standard will not be a certification scheme, but there is an intention that this is developed from the NZCBS at a later date. The aim is for the standard to be achievable and combine a top down (what needs to be achieved) and bottom up (how can this be achieved/what can be done) approach. It will address whole-life carbon and will set targets or limits for operational and embodied carbon and other metrics. It is intending to cover a wide variety of assets and be applicable to new and existing buildings.

The purpose of the call for evidence is to “contribute to the evidence to define the performance levels”, and seeks “case study data from the real estate and built environment industry”. UK built environment industry practitioners are called upon to share embodied carbon and in-use operational energy performance data for their buildings. The deadline for data submission is 16 December 2022, and the standard development team are seeking those able to support operational energy and embodied carbon modelling in January 2023.

Hillside Parks Limited v Snowdonia National Park Authority [2022] UKSC 30

This Supreme Court decision concerned a 1967 planning permission for the development of 401 houses (based on a master plan showing the layout of the houses and roads) in an area known as ‘Balkan Hill’ in Aberdyfi. The planning authority is Snowdonia National Park Authority.

In what the judgment referred to as “glacial” progress, only 41 houses have been built at the site since 1967 and these were developed under a series of additional planning permissions. The Supreme Court had to decide whether the developer of the site was entitled to carry out further development at the site pursuant to the 1967 permission or whether the development carried out in accordance with other permissions meant the developer could no longer rely on the 1967 permission.

Some key takeaways:

• The Supreme Court held the developer could no longer develop the site pursuant to the original 1967 permission. The dwellings built to date meant it was now physically impossible to develop the site in accordance with the original permission. The Supreme Court noted that the test of physical impossibility applies to the whole site covered by the unimplemented planning permission, not just the part of the site on which a landowner now wishes to build.

• The Supreme Court noted that “where a planning permission is granted for the development of a site, such as a housing estate, comprising multiple units, it is a question of interpretation whether the permission authorises a number of independent acts of development, each of which is separately permitted by it, or whether it is to be construed as a permission for a single scheme which cannot be disaggregated in this way”.

• In relation to an argument that later permissions were variations of the original development scheme, the Court’s view was that where there is a full planning permission for one entire scheme and a developer wishes to depart from it in a material way, a fresh planning permission will be required. The Court noted that this is a consequence of the very limited powers that a local planning authority currently has to make changes to an existing planning permission. The judgment also highlights that the Levelling Up and Regeneration Bill proposes giving the local planning authority power to grant a planning permission that varies an existing permission but only if the local planning authority is satisfied that "its effect will not be substantially different from that of the existing permission”.

• In relation to a development, a failure or inability to complete a project for which planning permission has been granted does not make development carried out pursuant to the permission unlawful. However, the Supreme Court noted that (in the absence of clear express provision making it severable) a planning permission is not to be construed as authorising further development if at any stage compliance with the permission becomes physically impossible. Any other interpretation would lead to practical difficulties, uncertainty and unfairness, for example from those who had already purchased completed units.

• Despite the developer’s arguments to the contrary there is no principle in law that a planning permission can be abandoned. Planning permission runs with the land and affects third parties. Introducing a doctrine of abandonment, which is not provided for in the legislation, would be inconsistent with the requirement of public accessibility.

Hillside Parks Limited v Snowdonia National Park Authority [2022] UKSC 30.