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Sink or swim – legal hurdles to regeneration

8 February 2016 • Julie Loggenberg

The myriad legal issues inherent in large-scale regeneration could stall many of David Cameron’s ‘sink estate’ improvement plans before they’ve even got going, writes Julie Loggenberg, Property Partner at Croftons.

When the Prime Minister announced that the Government intends to spend £140m to regenerate 100 sink estates I found myself mentally totting up the cost of dealing with the legal issues which could quickly eat into the pot before a tower block could be demolished. Any RP or developer who has ever developed an infill site on an estate will know exactly what the potential difficulties can be. Large scale regeneration is expensive, and in the end there is no guarantee that what you end up with will fare any better than what was there in the first place, or enhance the life chances of residents living there; but that’s not to say we ought not to try.

Previous attempts at regeneration of estates or areas of deprivation using renew or pathfinders haven’t always been a resounding success. Design will always divide opinion, and what is good design is obviously not for lawyers to consider; but whether a scheme design will swim or sink into the estate from whence it came may depend more on what is legally possible than what flows from the architect’s pen.

The wrong assumption?

The funding will be made available to help community groups, councils and housing associations with planning and early construction costs (with the rest to come from the private sector), and although no estates have yet been identified the assumption seems to be that these estates and all the land needed to regenerate them is owned wholly by the local authority or an LSVT Landlord. This is rarely going to be the case, and even if it were a thorough title review would be needed for each estate in any event. Titles may need to be tidied up, amalgamated or closed; covenants and restrictions dealt with; and rights of access, way, light, run of services and such like all need to be considered, and any leases or licences surrendered or varied. Shrinking or outsourced local authority legal teams may struggle to undertake such an exercise.

Once the land holding has been established, this will no doubt identify any number of further issues, not least what to do with owner occupiers, leaseholders ( both commercial and residential), funding and stock transfer agreements affecting the land, the terms of which are likely to be affected by any attempts to sell, acquire, reconfigure or demolish existing stock.

Much to consider

Equal consideration will need to be given to the requirements for stopping up orders, infrastructure agreements (including substation leases), PV panel removal, garages and serving of demolition notices on tenants to prevent Right to Buy applications. Re-sighting and removal of telecoms masts and associated roof top installations will also be problematic. As with PV panels, these are a source of much needed income for landowners, so knocking down tower blocks could result in landlords being required to pay compensation to companies under existing arrangements.

CPOs and home loss and disturbance costs are likely to take the bulk of any money, as will the requirement for tenant/resident consultation. Planning challenges and public enquiries could also prove costly, with decisions open to Judicial Review.

Planning blockages are to be looked into by Mr Hessletine in his role heading up this initiative, and there is certainly going to be an element of ‘where angels fear to tread’ associated with this. Measures proposed in the new Housing and Planning Bill currently going through parliament are designed to facilitate housing supply, such as placing a legal duty on councils to guarantee the provision of 200,000 Starter Homes on all reasonably sized new development sites; getting Local Plans in place by 2017 so they can help provide the homes their communities need, and planning reforms to support small builders.

A lot of persuading

Remediation on post-war estates built on land which may now be considered as contaminated or subject to flooding could also add considerably to any development appraisal. Linking back to planning, the Government is looking at permitting brownfield development without the rigors of invasive and expensive site investigations. This would no doubt cut the cost of development, but if the desire is to have more affordable homes for sale generated by this policy, where will this leave buyer’s in terms of obtaining mortgage finance, or landlords looking to charge stock? Funders will naturally take a cautious view and potentially offer less for securing these properties, or indeed refuse to accept them at all. If this type of regeneration is to attract the pension funds they will take a lot of persuading on this score and no doubt require significant and expensive tax-payer-backed guarantees.

These are just some of the many challenges in delivering regeneration from a legal point of view and this by no means covers all of it, but the argument is clear: like the Titanic we are going to need more life boats in the form of cash to turn the tide for thousands of tenants and residents on these estates.

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