Mills & Reeve: Property Matters

West Midlands Mayor: What does it mean for real estate in the region?

The new mayor of the West Midlands is certainly a significant and geographically diverse role:  Andy Street will be representing around 2 million people across 7 local councils (Birmingham, Coventry, Dudley, Sandwell, Solihull, Walsall and Wolverhampton) and will be controlling an investment fund budget of £1.1 billion over 30 years (£36 million a year).  So what does this mean for real estate in the region?

One measure of assessing how successful the mayor will be is property-based:  the ability and speed with which he is able to deliver major infrastructure and housebuilding projects.  Examples include making the most of the £4.4 billion High Speed Two Growth Deal promised for the West Midlands, delivering 165,000 new homes by 2030, focussing on building on brownfield sites first (including compiling registers of brownfield land for housing and business regeneration and spending £200 million on the preparation and decontamination of brownfield land), speeding up  the planning and building process (via possible measures such as a tax on vacant land being held for development) and creating “flourishing high streets and town centres”.  The latter involves working with businesses and councils to set up Business Improvement Districts and assessing whether the Enterprise Zone Model with business rates relief and simplified planning could encourage the regeneration of high streets and town centres.  Real estate is also a key part of Andy Street’s other goal of getting companies to bring highly paid jobs to the West Midlands, with an emphasis on making  the region the advanced manufacturing “workshop of the world”.  This includes ensuring there is sufficient employment land available for manufacturers to expand/open new sites, encouraging the growth/relocation of businesses, professional and financial services and facilitating the development of life sciences faculties and businesses to the West Midlands. 

It’s early days and there was limited policy detail in the mayoral manifestos.  The mayor’s powers are, at the outset at least, relatively limited.  Power is currently sourced from central government and the West Midlands Combined Authority.  We will therefore watch with interest to see what impact the new mayor will have on real estate locally.  However, what is already clear is that the mayor will have a vital role in aligning various growth strands and strategies.  He will also provide leadership and a valuable voice in articulating key messages on behalf of the region, lobbying for support, having the ear of central government and pushing for internal and external investment to the West Midlands.

Greater Manchester Mayor: What does it mean for real estate in the region?

It did not come as much of a surprise to anyone when Greater Manchester elected Labour’s Andy Burnham as our first Mayor – but what powers does he now have and what effect will this have for real estate in the region?

One of Burnham’s first announcements when elected was the re-writing of the GM Spatial Framework – the controversial plan for 227,000 new houses plus office, industrial and warehousing space across the region. The new Spatial Framework is being co-ordinated by the Salford Mayor, Paul Dennett who has an unenviable task as he will still need the backing of the ten local authorities to any new plan.

In addition the new Mayor has confirmed that Greater Manchester’s £300m ‘housing investment fund’ will be refocussed from the City Council’s investment in city centre apartments to affordable housing spread across the region.

He also put a call out to developers asking for them to work with him to ‘revitalise and reshape our town centres’.

Manchester has undergone an incredible transformation in the last 20 years. However, the City Council have been criticised for not extending this regeneration outside of the city centre. It will be interesting to see whether the new Mayor, bringing his experience as an MP in the deprived area of Leigh, will be able to do this.

Housing White Paper: a quick fix for a broken market?

The Housing White Paper ‘Fixing our broken housing market’ was published in a flurry of media activity. Headline-grabbing soundbites aside, the paper sets out the Government’s proposals to boost housing supply in the short and long term, creating a more efficient housing market. Something is offered to players at every level in the market and key stakeholders in local government and industry alike will play a fundamental role in delivering these proposals.

Painting a negative picture of the current state of the housing market, the Government proposes a comprehensive approach to tackle ‘failure at every point in the system’, with proposals split into four steps:

1 - Planning for the right homes in the right places

• Ensuring all local authorities put in place an ambitious, up-to-date development plan
• Simplifying the planning process, with more transparency
• Consulting on introducing a standardised objective approach to assessing housing requirements at local level
• Maximising availability of brown field and surplus public land for housing development (but notably no proposals to erode Green Belt protection, with changes to its boundaries only considered in ‘exceptional circumstances’)
• Encouraging higher density housing in urban areas.

 2 - Building homes faster

• Boosting the capacity of local authorities’ planning departments by increasing fees and additional Government funding  
• Deterring unnecessary planning appeals by introducing fees
• Co-ordinating Government investment on infrastructure, targeting the £2.3bn Housing Infrastructure Fund
• Speeding up utility connections to reduce home building delays
• Holding local authorities to account through a new housing delivery test.

 3 - Diversifying the market

• Increased backing for small and medium sized builders through the existing Home Building Fund
• Supporting custom build homes through greater access to land and finance
• Introducing an Accelerated Construction Programme to bring new contractors into the marketplace to rival traditional builders.
• Encouraging institutional investors to invest in Build to Rent

 4 - Helping People Now

• Short term continuing support for Help to Buy and Starter Homes Schemes
• Investing in the Affordable Homes Programme
• Making renting fairer for tenants, including introducing family friendly tenancies and considering banning letting agents’ fees
• Developing a sustainable, workable approach to funding further supported housing

Whether the proposals prove ambitious enough to fix a system that by the Government’s own admission is ‘broken’ remains to be seen. Notably, many of the proposals aim to build upon existing schemes or put the wheels in motion to consult on more radical measures. More radical solutions that would see encroachment upon the Green Belt clearly remain politically charged.

The proposals offer something to stakeholders at each stage in the housing supply chain, recognising that their support will be crucial in delivering these wide-ranging plans. Such an approach can only be welcomed.  

 

Published on behalf of Freddie Sutton whose contact details can be found by clicking here.

Transparency of land ownership: attempt to level out the playing field?

The current system for registration of land ownership leaves much to be desired. There is a lack of coherency, with data available on various government websites such as the Land Registry and the Planning Portal. Some of the information is readily available and free, whereas in other cases a fee is payable, the information arrives much later by post, and when it does, it takes the form of a long legal document which is hard to read.

It is difficult for a lay person to establish a clear picture of a potential development site. For example, a person looking at a title register may quickly see who holds the legal ownership but may not notice that an option to purchase exists or that the land is subject to a restrictive covenant which means that a third party controls development on site.

This makes it harder for smaller businesses and self-builders to identify a ‘valuable’ piece of land, enter the market or expand beyond the areas they know well.

In the White Paper “Fixing our Broken Housing Market”, the Government announced a new programme to improve the availability of land and property data. The Land Registry will aim to provide speed, simplicity and an open approach to data and to achieve comprehensive land registration by 2030. Free-of-charge commercial and corporate ownership data and more information about wider interests in land will be available.

This is a welcomed move and will assist by:

• Showing clearly who owns, controls and has an interest in land;
• Helping to identify who stands to benefit from a planning permission;
• Granting faster and simpler access to data which may help in assessing land value.

The stakeholders most likely to benefit from these changes are smaller businesses and self-builders,  with fewer resources and less market experience.

With laudable aims of transparency, simplicity and speed, we hope that the proposed changes will make a difference in practice.

The author of this post is Agata Dennis and contact details for her can be found by clicking here.

The SGCL Landed Estates Conference London 8 February 2017

Yesterday, Lauren Parker and Nichola Ross spoke at the Landed Estates Conference held at the Grange Fitzrovia hotel.  This annual event, attended by well over 85 lawyers and other professionals from around the country, reviews taxation and property issues pertinent to owners of landed estates and agricultural land.

Lauren, a principal associate in our Private wealth sector specialising in advising owners of landed estates on tax and partnership matters, talked on the topic ‘Tax structuring for land development’. She gave an overview of the taxes to be considered in various scenarios, and illustrated how planning ahead can ensure that the tax liability on any development land is minimised.

Nichola, a principal associate in our Food and agribusiness sector, spoke about the ‘Key considerations on buying/selling farms”.  In a break from traditional topics such as overage,  Nichola stressed the importance of proper preparation for any land transaction and challenged the audience to consider the sales pack and due diligence as ‘key considerations’.  By highlighting recent deals in the sector, she illustrated how the ability to provide bidders with a full disclosure pack at the pre offer stage, by way of a data room, was changing the concept of ‘Caveat Emptor’ with the seller dealing with questions raised by a buyer only once the ‘deal had been done’.

The recent case of The Crown Estate Commissioners v Wakley and Wakley has reminded practitioners of the importance of the accuracy of ‘replies to enquires’ and the need for a seller to provide “warts and all” information or be specific where no information is given on a point – especially in relation to the state of repair of buildings and equipment.

The above has been posted on behalf of Nichola Ross, who's details may be found here.

Build to rent

The long-awaited Housing White Paper was published the same day as the British Property Federation (BPF) held its annual National Residential Investment Conference.   The BPF has long promoted institutional investment in residential property, being a vocal advocate of the private rented sector (PRS) now morphing into the Build to Rent (BtR) sector.  BtR is becoming a recognised alternative asset class, attracting a range of investors and developers to meet a growing demand for rented homes. 

Speaking before publication of the White Paper, panellist Sir Edward Lister, Chair of the Homes and Communities Agency (HCA) was open about the Government’s commitment to supporting new housing growth, whilst being tight-lipped about the Secretary of State’s forthcoming announcements. Many of our clients are already benefiting from the HCA’s active participation in a number of key housing projects, with sizable loans advanced to forward fund essential early infrastructure works.

The BPF were visibly delighted that the Government’s proposals give much prominence to BtR.  The keynote speech from a senior DCLG civil servant on behalf of the Housing Minister emphasised the commitment in the White Paper: “For lenders, institutional investors and capital market participants, the Government is offering a clear and stable long-term framework for investment, including products for rent.  In return we call on lenders and investors to back developers and social landlords in building more homes”. 

The industry will have the opportunity to shape the future of the BtR sector in further legislation via the consultation on Planning and Affordable Housing Build to Rent, published the same day:

Please click here for "Planning and Affordable Housing for Build to Rent - A consultation paper".

The conference presentations were united in their enthusiasm for the provision of new homes, of all types by a wide variety of providers for the whole range of the market  – from traditional national housebuilder product, through specialists’ providers of student accommodation and retirement living communities, to modern methods of construction dwellings for the social housing sector backed by one of the leading life and pension funds.

The White Paper’s key messages, carried through the conference, are that there has to be a full range of actions to enable and speed up the delivery of considerably more new housing, and it is for the housing sector, in all its various parts, to do this.

What does 2017 hold for new housing?

With some confidence, we predict that housing will stay at the top of the Government’s agenda this year.  We are promised a Housing White Paper imminently (albeit publication seems to be delayed) and most likely a Housing Bill to follow and significant funds are being made available for delivery.  There are also interesting reports of investment in manufacturing and technology innovation for more off-site construction.

There is plenty of financial support to keep the delivery of new homes moving forward, with millions available in a range of Treasury announced Funds, including:

• £2.33bn in the Housing Infrastructure Fund;
• £2bn in the Accelerated Construction Fund;
• £7bn in an expanded affordable housing programme, which will support a range of affordable housing tenures.   

Achieving housing numbers is a key focus for Local Plans.  Whitehall policy shifts will have to be taken into account in Local Plan-making.  Delay in publication of the White Paper has led to several Councils delaying their Local Plan processes, given concerns that something more, or different, will be required of them, with the advent of more planning reform and an anticipated drive to increase the numbers of new homes.   Doubtless there will be clashes between local planning authorities around their duty to co-operate in Local Plan-making (such as the recent friction reported between Basildon and Brentwood following the announcement of a new garden village (arguably) controversially located on the borders between them) and judicial criticism of some authorities’ behaviours, as the year progresses.

The new garden villages, together with 3 new garden towns, announced in the first week of 2017 have the capacity, with previously announced garden towns, to deliver 200,000 new homes across the country. The announcement was welcomed by those promoting these new projects (even if in some cases a re-badging of some long-nascent projects).  There is a strong commitment to quality and place-making to enable the growth of sustainable communities for the future and £6 million available to support early delivery. 

2017 will also see the first Starter Homes being built on Council-sponsored brownfield sites, for first-time buyers aged 23-40, at discounts of at least 20% to open market value. We wait to see the effect on local area demand and housing prices as these new homes are offered in the market.  Some hope there will be a mix of housing for sale and the new tenure of “rent to buy”, which may still be the case, but not for this first flush.  Local authorities will spearhead the first 30 schemes, drawing on £1.2 billion of Government funding for site preparation. 

Finally, will 2017 be the year we witness a step-change in modern methods of construction, driving down construction costs and taking advantage of new investment and technologies from a range of participants in the market?  With the cost of labour, materials and time on site increasing, and the desire for affordability in all sectors of the housing market, perhaps we will see a real commitment to off-site (particularly timber-framed buildings) preparation and construction and factory-built modular or cellular buildings?  As is so often the case, time will tell. 

Posted on behalf of Christine de Ferrars Green (for her contact details and further information please click here).

Neighbourhood Planning Bill – INfrastructure is OUT

“Legislation will be introduce to ensure Britain has the infrastructure that businesses need to grow” – Queen’s Speech 2016

Back in May this year we commented on new legislation with the aim to encourage property development, which was announced in the Queen’s Speech at the State Opening of Parliament 2016. This took the form of the Neighbourhood Planning and Infrastructure Bill, the purpose of which was expected to be to deliver the homes and infrastructure the country needs. It was also indicated in the Queen’s Speech that the Bill would include a new statutory basis for the independent National Infrastructure Commission (NIC) to set out a strategic vision for future infrastructure.

The proposals for the Bill appeared to demonstrate the Government’s commitment to promoting the development of new homes and infrastructure across the UK. However, the much awaited Neighbourhood Planning Bill was launched on 7 September 2016 with the notable absence of infrastructure. Throughout the Bill there is no reference to infrastructure provisions or the role of the NIC as anticipated.

The lack of infrastructure provisions has not gone unnoticed. The House Builders Association have expressed their doubt that the Bill will meaningfully increase the supply of homes or appropriately empower local people. Rico Wojtulewicz, policy advisor for the House Builders Association has commented that “infrastructure and development cannot be treated as separate issues, especially when communities believe that the lack of appropriate infrastructure is the reason to block developments. Neighbourhood plans should provide for more homes that local communities can accept, they should never be used as a blunt tool to stop building the homes we need.”

Whether infrastructure has been abandoned from the Bill because of Brexit is unclear, but what is certain is that the Bill seems to be a far cry from the planning bill that the country was hoping for. One possible explanation is that the striking of infrastructure from the Bill is due to the fact that the Government recognises that there is a real need for separate legislation to cover infrastructure. The general consensus is that this could form part of the Autumn Statement, so watch this space!

Of grave concern: burials on private land

The number of burials that take place in the UK on privately owned land is relatively small. Indeed many people are surprised to learn that it is possible to arrange a burial on your own land, rather than in a churchyard or cemetery. However, if you did want to arrange a burial on your own land, what permissions might you need, and what records should you keep to ensure that future owners of the land are made aware of the presence of a grave?

Since the Land Registration Act 2002 it’s no longer possible for details of burial to be ‘noted’ on the title documents of a property, where the title to that property has been registered at the Land Registry.

The title register that is held by the Land Registry records specific rights and interests relating to a property, but not everything that affects land can be registered at the Land Registry. The law relating to burial plots on private land is one such example.

However, there are other requirements to be considered.

The consent of the owner of the freehold of the burial site must be obtained, and it is also necessary to check that there are no restrictive covenants affecting the property which prohibit burials.

The person responsible for the burial must obtain a Certificate of Authority for Burial. This will be issued by the local authority’s Registrar of Births, Marriages & Deaths (or if a Coroner is appointed to investigate the death, from the Coroner). This certificate must be obtained before the burial takes place, and a notice must be returned to the local authority’s Registrar after the burial.

The Environment Agency and/or local authority’s Environmental Health Department should be consulted as it may be necessary to obtain their authorisation for the burial, in particular as a burial site must not be within certain specified distances from water.

The owner of the freehold land on which the burial has taken place must prepare and keep a “Burial Register” pursuant to the Registration of Burials Act 1864. This Burial Register must be kept in a safe place so that it can be passed onto future owners of the land. A Burial Register is a document that records details of the deceased and of the burial, including an accompanying plan showing the grave’s location.

Lastly, the presence of a very small number of burials on an area of private land would generally be unlikely to require planning permission from the local authority, on the basis that it would not be viewed as a “material change of use” of the land. However we would always urge caution. Furthermore, the potential exemption from having to obtain planning consent only applies to the burial itself – if a gravestone, memorial or other erection is also proposed, advice on planning should always be sought.

The appearance of The Modern Slavery Act in Development Agreements

Subscribers will be familiar with the concept of a development agreement requiring an agreed form of building contract to be put in place by the developer in undertaking a build. 

We are noticing more and more that landowners and tenants require that building contracts contain specific obligations to comply with their broader policies for statutory compliance.  Laws relating to bribery and modern slavery can be high on this checklist.

Consequently, developers will want their contractors to demonstrate adequate procedures to avoid falling foul of legislation and, now that we have seen the changes in the law bed in, are likely to require that contractors comply with an anti-slavery policy. 

For a reminder on the Modern Slavery Act 2015 and the requirements on businesses to state what actions they take to detect and combat forced labour in their supply chains, see our original briefing here.

This article has been posted on behalf of Andrea Newman whose details may be found here.