Over the next few weeks we’re going to let you in on our Top 6 developments in planning law from 2022. These might not be the best known (or infamous) cases, but hopefully if you aren’t already aware of them they might provide you with food for thought.
The Supreme Court decision in the Hillside case – The problem of overlapping planning permissions
Top of the pile for us is the Supreme Court decision in Hillside v Snowdonia Natural Park Authority. This looks at the perennial question: can you take advantage of two (or more) overlapping planning permissions over the same land, or do you lose the benefit of one of them by implementing the other one?
We most frequently come across this problem where we’re acting for clients buying or developing a site which is part of a much bigger site or over which there’s one (usually outline) planning permission. Often our client wants to obtain a detailed (full) permission just for its part of the site. The question is: is this allowed and does it mean the main permission is somehow voided? This is the problem of so-called “drop-in” permissions.
Another way to look at it is this: if a client wants to buy a site which benefits from planning permission for a wider site but someone else, somewhere else, on the wider site has built out under a “drop-in” permission, can our client still benefit from the permission for the wider site or has it been voided by the “drop-in” permission?
And if you’re looking at buying such a site, does that mean you have to check not just the planning situation on your target site but all the sites falling within the wider permission – which is clearly going to be a costly and time-consuming, exercise, and ultimately likely to be fruitless as the chances are you won’t be able to definitively resolve the position.
Hillside – What happened?
The standard practice has been that “drop-ins” are lawful.
The thinking has been that permissions over large sites are (properly interpreted) a series of mini-permissions for individual plots or phases, so are “severable” and as such a “drop-in” on one such plot or phase doesn’t affect the lawfulness of the original permission for other plots or phases.
This was the core argument of the developer in Hillside. In that case, a 1967 (full) permission authorised the development of 401 houses in accordance with a Master Plan.
Since the original permission had been granted, 40 or so houses had been developed but under so-called “drop-in” permissions. These weren’t consistent with the approved Master Plan under the 1967 permission. The 1967 permission had been implemented because various roads had been constructed under it and, as such, (and ignoring for now the “drop-ins”) could be completed whenever the developer liked.
Overlapping Permissions – Physical impossibility
The legal rule governing whether you can legally benefit from overlapping permissions was originally set out in a case called Pilkington. Essentially that provides that if development under one or two (or more) permissions has begun (i.e. the permission(s) implemented), you can only implement a second overlapping permission if it would be physically possible to do so with regard to what has been done and what is permitted to be done under the original permission. If it is physically impossible to carry out two permissions together, it’s unlawful to implement the second one. So, in Hillside, it wasn’t possible to build out the 1967 permission (and its approved Master Plan) as that would have been physically impossible, bearing in mind the houses that had been built under the individual permissions for the 40 houses.
After Pilkington, lawyers devised a neat response to get around the rule on physical impossibility.
The concept of “drop-ins” was developed; you don’t have a physical impossibility problem if the planning permission for the wider site is properly looked at as a series of mini-permissions for individual plots or phases. In this way, the mini-permissions were “severable”, i.e., could be looked at individually, and thus the problem of physical impossibility across the wider site didn’t arise.
Nice work, you might think – and it even had some (weak) judicial support in a case called Winn.
The developers in Hillside pushed this line, too hard (as it turns out); they said for permissions over large areas for major developments this is the norm and only with exception should you not look at these permissions as “severable”.
Hillside – What the Supreme Court said
The Supreme Court disagreed. On the plus side, it agreed in principle that “drop-in” permissions could be lawful but this had to be very clear. It shouldn’t be the starting point. So for new developments, planning applications and the consequent permissions should make this explicit.
For existing developments or consents, it often won’t be explicit because people have been operating under the misapprehension that it doesn’t have to be. So this brings us back to the question at the top of this blog: when are “drop-in” permissions lawful and, if you’re buying or developing a plot authorised under a wider consent and want to rely on that wider consent, do you have to diligence the rest of the wider site to check the original permission hasn’t been voided by someone else’s drop-in?
When are “drop-in” permissions lawful?
If the original permission is not explicitly “severable” (i.e., acknowledged to be a series of mini-permissions) thus allowing a lawful “drop-in” to be obtained, then all is not lost.
First, it is a question of interpretation of each permission as to whether a particular permission is severable and it might be possible (looking at the supporting documents, Officer’s Report, etc.) to come to the fairly safe conclusion that it is.
Second, it might be possible to amend the description of the development by way of an application under S96A Town and Country Planning Act 1990 (TCPA) to introduce the concept of “severability”.
Third, it might be possible to isolate a “drop-in” site by varying the conditions of a wider permission (by way of an application under S73 TCPA) and/or using a S106 Agreement to relinquish development rights under the overall permission in respect of the “drop-in” site (thus removing any question of “physical impossibility”).
We’re also looking at insurance options to cover the question about having to diligence the wider site if you wish to rely on the original permission and are worried that someone else’s “drop-in” might have voided the overarching permission on which you might want to rely.
So there are a number of actions that can be taken to mitigate the risks associated with the problem of overlapping planning permissions. Being conscious of the potential risks and tackling them early is the key (as ever) to smooth transacting.
See our other blog posts in this series:
Our top 6 Planning Law takeaways in 2022 – Part 2: Proposals to stop “landbanking”
Our top 6 Planning Law takeaways in 2022 – Part 3: What to do when the planners delay
Our top 6 Planning Law takeaways in 2022 – Part 4: What happens if the local authority gets its CIL paperwork wrong?
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For any other legal questions related to UK real estate, please get in touch with your usual Mayer Brown contact or one of the blog editors.