UK: The Localism Act 2011

The Localism Act 2011

The Localism Act 2011 is a major piece of reforming legislation that makes significant changes to local government, social housing and the planning system; it also amends the rules relating to assured shorthold tenancy deposits.

Overview

The Act is the flagship measure of the Government's decentralisation policy, which aims to move decision making from central Government to local communities. The policy is summed up in the Government's guide to the Act: "We think that power should be exercised at the lowest practical level – close to the people who are affected by decisions, rather than distant from them." The central planks of the Act are the abolition of Regional Strategies, a new system of neighbourhood planning which will allow certain development to be approved by a local referendum, new rights for community groups to bid to take over assets of community value when they are sold and the introduction of a general power of competence for local authorities. The original proposal for five per cent of local electors to have the right to trigger a local referendum on any issue has been dropped. Much of the detail of the measures in the Act remains to be dealt with in regulations. The Government aims for many of the major measures to come into effect in April 2012.

This update focuses mainly on the planning aspects of the Act; it does not deal with the provisions relating to social housing, local authority governance, business rates or EU fines.

Abolition of Regional Strategies

The Act provides for the abolition of Regional Strategies – regionally set policies and priorities on matters such as housing supply, the environment, infrastructure and waste, which provide a framework for local planning policies. The Secretary of State had sought to use existing powers to revoke the strategies but his right to do so was challenged in the courts. The Act now puts the matter beyond doubt.

However, local authorities are not given a completely free hand to ignore the effect of their policies on surrounding areas. A new duty to co-operate in preparing development documents is imposed on local planning authorities and county councils. The duty requires them "to engage constructively, actively and on an ongoing basis" with each other in relation to strategic matters, which are, broadly, matters which affect more than one area or authority.

Neighbourhood Planning

At the heart of the Government's localism policy is a radical new system in which there is the option for planning decisions to be dictated by local referendums and, in a major change to the original proposals, businesses will have a say as well as residents.

The new system will apply in relation to local areas to be designated as "neighbourhood areas" which, if they are wholly or predominantly business in nature, may be designated as "business areas". Rights in respect of these areas are given to parish councils and, in areas without parish councils, new bodies to be designated as "neighbourhood forums" whose membership will be open to people who live or work in the area and to local councillors. The designations will be made by local planning authorities.

The parish council or neighbourhood forum will have the right to put forward a "neighbourhood development plan", setting out policies for the development and use of land in the neighbourhood area, and "neighbourhood development orders", which grant planning permission either in relation to a particular site or to the whole or part of the neighbourhood area. A particular type of neighbourhood development order is a "community right to build order", which will permit specific development by a community organisation within certain limits. Regulations will impose requirements for consultation with and participation by the public before a proposal may be submitted.

An independent examiner will decide whether a proposed plan or order should be put to a referendum, taking into account a list of factors including national policies and guidance. If the referendum vote is in favour, then the plan or order must be made, unless it would be incompatible with an EU obligation or a right under the European Convention on Human Rights. In a business area, there will be separate referendums of residents and business rate-payers. If there is a majority in favour in one but not both referendums, then the local planning authority may make the plan or order, but is not obliged to do so.

The cost of the scheme is to be met by imposing a charge on the development authorised, which will be payable when the development commences. It is unlikely, though, that these charges will cover the total costs incurred.

These new rights certainly deliver local democracy, but they also carry the seeds of a "nimby charter" which could result in development being frustrated rather than promoted. They could also promote division within communities.

Pre-application Consultation

The provisions also include a new obligation to consult the local community before submitting a planning application for certain developments. The Government has indicated that the obligation is likely to apply to developments providing more than 200 residential units or 10,000 square metres of non-residential floorspace. Where the obligation applies, the proposed application must be publicised in a way likely to bring it to the attention of a majority of local residents and occupiers, certain people will need to be consulted specifically and there is an obligation to "have regard to" any responses received. The Act does not make clear how far the obligation to have regard to responses extends – for example, whether it is sufficient for the developer to note all the responses but to make no changes to the proposal which would result in any increased cost.

Nationally Significant Infrastructure Projects

The system of development consent for major infrastructure projects is significantly modified by the Act. The main changes are:

  • The Infrastructure Planning Commission is abolished;
  • National policy statements are to be approved by Parliament;
  • Applications for consent will be decided by a panel of up to five people appointed by the Secretary of State.

Community Infrastructure Levy

CIL is a locally imposed charge on development, designed to provide additional funding for infrastructure in a way that is more transparent and provides greater certainty than the previous system of individually negotiated planning obligations. Authorities choosing to implement the Levy set a rate per square metre of new floorspace following public consultation and approval by an independent examiner.

The Act makes three main changes to the rules on CIL.

  • Local authorities are given the freedom to decide how to amend their proposed charging schedules to address issues raised by the examiner; they are no longer required to adopt the examiner's recommendations.
  • It is made clear that use of the Levy is not restricted to the provision of new infrastructure but may also include the improvement, replacement, operation or maintenance of infrastructure.
  • Regulations may require the Levy to be used to support the development of the particular area to which the Levy relates by funding not just infrastructure but anything else that is concerned with addressing demands that development places on an area.

A controversial amendment to Section 70 of the Town and Country Planning Act 1990 requires local planning authorities to have regard to possible government grants and Community Infrastructure Levy, so far as material, when determining planning applications. The provision prompted accusations that it would lead to planning permissions being granted for financial gain rather than on planning merit. In response, Section 143(5) spells out that the amendment does not alter whether regard is to be had to any particular consideration or the weight to be given to any consideration. The effect, therefore, is simply to clarify that it is proper to take finance considerations into account where they are material. Realistically, however, the fact that finance considerations are singled out for special mention may result in them being given greater prominence in the decision process.

Assets of Community Value

The Act introduces provisions to help community interest groups that want to take over local amenities which are threatened with closure. Local authorities will be required to compile a list of "assets of community value". Land and buildings can qualify for inclusion on the list if their current or recent use furthers the social well-being or social interests of the local community and it is realistic to think that such use can continue, whether or not in the same way. A nomination for inclusion on the list may be made by a parish council, a community council in Wales, or a voluntary or community body with a local connection and regulations may also permit other nominations. Land will remain on the list for a maximum of five years.

If property is on the list, the local authority must be notified of a proposed disposal with vacant possession of a freehold or leasehold of at least 25 years. There is then a six week period during which the disposal may not go ahead, to give community interest groups an opportunity to make a written request to be treated as a potential bidder for the property. If such a request in made during the six week period, then the disposal cannot proceed until six months after the original notification to give the group time to make its bid. There is no obligation to accept a bid from the community group. Once the six month period has ended, the property may be disposed of within eighteen months of the original notification, but after that period the process has to begin again. Certain disposals are exempt, such as gifts, disposals to family members or by personal representatives and, in particular, a disposal of part of a business sold as a going concern. Regulations may specify further exemptions. Regulations may provide for compensation to be payable but no details are yet available.

Inclusion of property on the list will clearly cause significant delay to a proposed disposal and therefore could have serious financial consequences for property owners.

Predetermination

The Act makes clear that a member of an authority will not be taken to have a closed mind on an issue (and therefore be open to an allegation of bias) just because he has previously done something that indicated his view on a matter relevant to that issue. The provision is intended to ensure that councillors are not prevented from campaigning or expressing their views on local issues for fear of facing a legal challenge.

Enforcement Powers

The Act includes several measures to strengthen enforcement powers.

Planning authorities are given power to refuse to determine a retrospective planning application for development which is subject to an enforcement notice. The object is to prevent the application being used to delay the enforcement process.

A loophole is plugged by allowing enforcement action to be taken in respect of a deliberately concealed breach of planning control after the statutory time limit has expired. The authority must apply to a magistrates' court for a planning enforcement order within six months after it has sufficient evidence to justify the application. Concerns have been raised that action could be taken against an innocent person who was unaware that a breach had been concealed by a previous owner of the property. This is probably unlikely as the order may only be made where the court considers it just in all the circumstances. It will, however, become more important to ensure that adequate enquiries are made into the planning history when a property is acquired.

The Act also gives local planning authorities powers to remove structures used to display unlawful advertisements and to recover the expense from the person responsible. They may also remove graffiti and recover the cost from the owner of the property unless it is residential. Fines for certain planning offences are also increased.

General Power of Competence

The Act introduces a general power of competence for local authorities, giving them power to do anything that individuals generally may do. That includes doing things for a commercial purpose, anywhere in the UK or elsewhere and whether or not for the benefit of the authority, the area or the residents of the area. The general power is subject to any specific statutory limitation, whether imposed before or after the Act was passed, although the Secretary of State is given power, subject to certain conditions, to amend or repeal a statutory provision which restricts the general power. If an authority acts for a commercial purpose, it must do so through a company.

The general power of competence is very widely worded and the Government has indicated that it is intended to be "fireproof", in other words not capable of being cut down by judicial interpretation.

Compensation for Compulsory Purchase

The Act reforms the planning assumptions to be made when assessing compensation for compulsory purchase. The valuation is to:

  • take account of any planning permission in force at the valuation date, whether for the land acquired or other land (and it is assumed for this purpose that planning permission is in force for the scheme for which the property was acquired);
  • assume that there is in force any planning permission which could reasonably have been expected to be granted on or after the valuation date if the scheme for which the property was acquired had been cancelled;
  • take account of the prospect of planning permission being granted for other development if the scheme for which the property was acquired had been cancelled.

This deals with a particular aspect of the previous law on this point which was perceived as being unfair and was highlighted in the 2009 House of Lords decision of Transport for London (London Underground Limited) v Spirerose Limited (in Administration).

Tenancy Deposits

The Act also amends the rules for the protection of deposits paid by assured shorthold tenants in response to recent court decisions which had significantly reduced the effectiveness of the regime.

  • The period for the landlord to comply with the initial requirements of the scheme and supply prescribed information to the tenant is increased from 14 to 30 days.
  • The penalty for failing to comply with the initial requirements of the scheme or to give the tenant the prescribed information within 30 days will be between one and three times the deposit (rather than fixed at three times the deposit as before).
  • The landlord will no longer escape liability for the statutory penalty if the scheme requirements are complied with late but before the hearing.
  • The tenant will be able to make its court application even if the tenancy has ended.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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