Real Estate Focus – August 2024

Remediation under the BSA: what is the law and who pays?

Part 4 of the Building Safety Act 2022 (BSA) includes a new safety risk management scheme in relation to higher-risk buildings (HRBs). With some exemptions, a HRB is defined as a structure that has at least seven floors or is at least 18 metres in height and has at least two residential units. 

Part 4 also imposes wide-ranging duties on every Accountable Person (AP) and the Principal Accountable Person (PAP) in respect of HRBs, particularly in relation to fire safety. (For further information about the identity of the AP and the PAP, please see the July 2024 edition of our Real Estate Focus). Such duties include carrying out building safety assessments and managing building safety risks, which may necessitate remedial works such as cladding replacement. Breach of these obligations, which are regulated and enforced by the Building Safety Regulator, carry criminal sanctions.

The party with the primary responsibility under the BSA to identify and remedy building safety risks in respect of a HRB is the PAP. In practice, however, it might well be that the PAP can pursue other parties to carry out the works and/or contribute to the costs of doing so.

Where the PAP lacks the funds to carry out the works it can apply to the government’s Building Safety Fund to contribute towards the costs (although the government may well seek repayment from others in due course).

The PAP (or other “interested party” such as the government or a lessee) might also apply to the Property Chamber of the First Tier Tribunal (“FTT”) for a Remediation Contribution Order under section 124 of the BSA. That section provides that the FTT may make such an Order to require a “specified corporate body or partnership” to contribute to remediation costs which have already been incurred or will be incurred. In practice, such an Order is most likely to be made against the original developer of the building and/or any entity associated with the developer. As at 31 January 2024, 55 of the larger developers had already signed a “Developer Remediation Contract” with the government to be responsible for remedying such works. A list of those developers can be obtained online.

The PAP might also explore the scope for recovering costs against the contractor and/or other members of the professional team responsible for the construction (or redevelopment) of the HRB pursuant to the relevant construction agreements and warranties, and/or claims in negligence or under the Defective Premises Act 1972 (as amended by the BSA to, for instance, extend the limitation period for defective cladding claims to 30 years).

Finally, there may be limited scope for the PAP to pass on some of the costs to lessees of the building by way of service charges pursuant to the terms of their leases.

Many residential flats in a block may be let out on assured shorthold tenancies that do not generally provide for the payment of service charges, or to “qualifying leaseholders” who occupy their flats as principal homes under leases exceeding 21 years and are therefore exempt from charges for cladding remediation pursuant to paragraph 8 of Schedule 8 of the BSA (and have lesser protections in respect of the costs of other building safety works). However, lessees who hold multiple flats (such as buy-to-let investors) do not enjoy any protection from such service charges (unless the landlord was “responsible for the relevant defect”), although there may be scope for argument about whether the terms of the service charge provisions in their lease provide for the recovery of the costs of such improvement works.   

For further information please contact Dispute Resolution partner David Stevens.

Consultation on reforms to the National Planning Policy Framework

On 30 July 2024, the government published a consultation on proposed reforms to the National Planning Policy Framework (the NPPF) and other changes to the planning system (the Consultation). 

In broad terms, the key proposals include:

• Clarifying the circumstances in which the presumption in favour of sustainable development applies, to ensure that it acts as an effective “failsafe” to support housing supply and  introducing  safeguards to make clear that its application cannot justify poor quality development. 
• Introducing a new mandatory standard method for assessing housing needs and calculating the minimum number of homes that a local planning authority (LPA) must provide.
• Approving brownfield development as a default and requiring LPAs to undertake a “Green Belt” review where housing, commercial or other needs cannot be met, with a view to releasing “Grey Belt” land, being Green Belt land regarded as poor quality. 
• Introducing new “golden rules” to ensure that major development on land released from the Green Belt benefits both communities and nature.
• Introducing measures to deliver the right mix of affordable housing and to promote developments that have a mix of tenures and types, including the removal of certain prescriptive requirements relating to affordable homes. 
• Improving the existing system  of developer contributions – the government states that it does not intend to implement the new Infrastructure Levy included in the Levelling-Up and Regeneration Act 2023.  
• Introducing changes to the planning system to drive greater commercial development in key  industries such as laboratories, gigafactories, digital infrastructure, freight and logistics.  
• Introducing measures to improve the provision and modernisation of key public services and exploring how national planning policy could promote health through local plans and planning decisions.
• Revisions to the NPPF to increase support for renewable energy schemes, tackle climate change and safeguard environmental resources.
• Removing or revising the local plan intervention policy criteria to align it with government priorities.
• Increasing planning fees for housebuilder applications. Views are also sought on introducing fees for wider planning services and other planning applications, such as listed building consents.

Given the breadth and scope of the proposals in the Consultation and the timing of its publication, the time to respond is  relatively short  and it closes on 24 September 2024.

For further information please contact Planning partner Sarah Fitzpatrick or associate Alysha Patel.

When is a sign sufficient to prevent a right of way arising?

Two recent cases shed an interesting light on this question. In Nicholson and another v Hale and another [2024] UKUT 00153 (LC) The Upper Tribunal held that a prominent sign which read “This staircase and forecourt is private property. No public right of way” was sufficient to prevent a private right of way arising by prescription following over 20 years’ use.

Contrast that with Sagier v Kaur [2024] UKUT 217 (LC) just over a month later, in which it was held that a sign on a private road bearing the words “No Public Right of Way” did not prevent a private right of way arising by prescription.

The judge in Sagier held that the general question was: what would the sign convey to a reasonable user of the claimed right? The judge concluded that the sign in that case appeared specifically to be aimed at the public, and that a householder living on the private road in question would be unlikely to have clearly understood that the sign also applied to them. An ambiguous warning would not do. 

Nicholson was not an obstacle to that conclusion as “both the wording of the sign in that case and the location and context in which it was displayed was very different”.

So it is all in the signage! 

Landmark Supreme Court decision on downstream emissions

In R. (on the application of Finch on behalf of the Weald Action Group) v Surrey County Council and others [2024] UKSC 20, the Supreme Court confirmed that, when assessing a planning permission for an onshore oil drilling project (the Project), Surrey County Council (the Council) should have treated the emissions that would occur on combustion of the oil as “effects of the project” on the climate. Those emissions were within the scope of the environmental impact assessment (EIA) required under the Town and Country Planning (Environmental Impact Assessment) Regulations 2017 (SI 2017/571) (the Regulations). 

In September 2019, the Council granted planning permission for the expansion of an existing onshore oil well site enabling the extraction of oil over a period of 20 years. Under the Regulations, the Council was required to consider an environmental statement prepared by the developer and to carry out an EIA which assessed the “direct and indirect significant effects of a project” on the environment. However, the scope of the environmental statement and the EIA undertaken by the Council did not include an assessment of the impact of the downstream emissions, being indirect emissions resulting from the Project, such as the emissions that would occur on combustion of the oil. 

Ms Finch, a local campaigner, applied for judicial review of the Council’s decision on the grounds that its failure to consider the downstream emissions meant the decision was unlawful. The High Court dismissed Ms Finch’s challenge. It held that the assessment of the combustion emissions was not within the legal scope of the Regulations and, alternatively, that whether to assess the downstream emissions was a matter of evaluative judgment for the Council, and the Council had a reasonable and lawful basis for excluding the combustion emissions from the EIA. The Court of Appeal upheld the judge’s decision on the basis of the alternative reasoning. Ms Finch appealed to the Supreme Court.

The Supreme Court allowed the appeal and made the following interesting points:

• The downstream emissions were “effects of the project” within the meaning of the Regulations and therefore should have been assessed as part of the EIA. Failure to assess the effect on climate of the combustion of the oil produced from the Project meant that the Council’s decision to grant planning permission was unlawful.
• The question of what are the “effects of a project” is one of causation. In this case, the emissions that will occur on combustion of the oil produced are indirect effects of the Project because it is known with certainty that, if the Project goes ahead, the oil extracted from the ground will inevitably be burnt thereby releasing greenhouse gases into the earth’s atmosphere in a quantity which can readily be estimated.
• The Regulations do not impose a geographical limit on the scope of the environmental effects of a Project which must be assessed in an EIA; there is no correlation between where greenhouse gases are released and where climate change is felt.
• The approach of the High Court that, as a matter of law, such combustion emissions were incapable of falling within the scope of the EIA, was rejected. The emissions were entirely within the control of the operators; if no oil is extracted, no emissions will occur. The refining of crude oil does not break the causal connection between the extraction of the oil and its subsequent combustion. 
• The Court of Appeal was also wrong to conclude that the question of whether the combustion emissions were indirect effects of the Project depended on an evaluative judgment by the Council as to whether, given the intermediate events that would take place before combustion, there was a sufficient causal connection between the extraction of the oil and its eventual combustion. This was “a recipe for unpredictable, inconsistent and arbitrary decision-making” by different planning authorities. 

For further information please contact Environment partner Lucy Bruce Jones.