Planning Reform and Leasehold Shakeup: A Lawyer's Guide to Upcoming Changes

The King’s Speech is always a fascinating moment for lawyers. The anticipation of what legislation the new Government intend to introduce evaporates and what we are left with is questions as to how these Bills are going to be shaped and ultimately what that will mean for our clients moving forwards.

The new Government have made it clear that they see the planning reform as a key to unlocking economic growth in the UK economy. These are the main highlights of what is being proposed in the new Planning and Infrastructure Bill.

• Further reforming compulsory purchase rules. This is to ensure that not only will landowners be compensated equitably but it “will unlock more sites for development, enabling more effective land assembly, and in doing so speeding up housebuilding and delivering more affordable housing, supporting the public interest.” This will be welcomed by developers across the country but, as always, the devil will be in the detail.

• Improving local planning decision making and increasing local planning authorities capacity. The idea here is to modernise planning committees and improve the performance and the decision making to developers and investors.

In the background information to the King’s Speech, it states that only 9 per cent of Local Planning Authorities (LPAs) are determining more than 70 per cent of non-major applications within 8 weeks. Moreover, only 1 per cent of LPAs determine more than 60 per cent of major applications within the statutory 13-week period. These are quite stark figures, and it is easy to see why the Government see this a blockage that could yield significant results quickly. As mentioned above developers will welcome any measures that will speed up the process.

What is perhaps less good news for developers are the changes being brought under the new Draft Leasehold and Commonhold Reform Bill.

The Government have stated they will be: “reinvigorating commonhold by modernising the legal framework. We will also restrict the sale of new leasehold flats. The Government will consult on the best way to achieve this, so that generations to come will benefit from absolute homeownership.”

This will be a significant change and will require a great deal of consultation from all parties. It will however lead to developers looking at the long-term financial benefit of a site, particularly one the developer would be keen to keen a hand in, as that will change depending on whether it can be set up as leasehold or commonhold. Then you also need to consider caps to existing groups rents, changes to private estate charges and the ending of forfeiture as a method of enforcement. None of which will be welcome to freeholders, landlords or management companies across the country.

It will be important to keep an eye on these developments and the consultations on both the Planning and Infrastructure Bill and the Draft Leasehold and Commonhold Reform Bill. Our Commercial Property team is here to help guide you through these changes as and when they are introduced.