The Levelling Up and Regeneration Act 2023 finally received Royal Assent on 26 October 2023 after a lengthy passage through Parliament. The government introduced the draft legislation to the House of Commons on 11 May 2022 in the form of the Levelling Up and Regeneration Bill. Seven months' later the Bill passed to the House of Lords, who then spent a further 10 months considering the provisions. During this time the government put forward an unprecedented number of amendments – partly to satisfy backbench unrest reflecting the political instability of the time. The Lords themselves also proposed changes, such that by the time the Bill returned to the Commons it had increased in length by almost 200 pages over the original 338. Given the significance of the Lords' amendments, at the end of October many of us were double-checking Parliamentary procedure for what would happen should the Bill fail before the end of the Parliamentary session prior to the King's Speech on 7 November. We needn't have worried – despite months of debate, the Lords ultimately leapt aside and allowed the Bill to pass.
What impact will the Act have now that it is finally on the statute books? Whilst the initial driver for the Act was the government's agenda to "level-up" the country, a large part of the legislation actually focuses on reforms to the planning system in England. These changes do not go as far as proposed by the August 2020 Planning White Paper, but if implemented they represent fundamental change to the system as we know it. Other provisions focus on strengthening local authority powers to regenerate town centres and increasing transparency as to the identity of those with contractual controls over land which could potentially limit development opportunities.
As mentioned in our blog post of 24 November 2023, we've prepared a client briefing discussing the planning and development provisions in the Act in some detail – if you would like a copy, please contact us. However, the Act itself reveals very little about how the reforms will work in practice. The detail will be set out in future consultations and legislation. Future secondary legislation is also necessary to bring most of the planning-related provisions of the Act into force – some parts of the Act are coming into force at the end of December 2023, but on the whole further regulations are needed to bring even these provisions into effect.
Other than the planning reform proposals, two key areas of interest for those that own, let and develop land are found in Parts 10 and 11 of the Act (in respect of which we do not yet have implementation dates), which deal with lettings by local authorities of vacant high-street premises and information about interests and dealings in land, respectively.
Part 10 allows a local authority the right to carry out a rental auction where a property has been empty for a year and it considers that the occupation of the premises for a suitable high-street use would be beneficial to the local economy, society or environment. There are limits on the terms that can be agreed by the local authority with regards to the letting, but landlords of properties that meet these criteria may find that their control over the use of their premises is diminished unless they take positive steps to find an occupier of their choosing for the property.
Part 11 allows for further regulations to be made to require the provision of information to the Land Registry concerning the beneficial ownership of, and any contractual controls (such as overage arrangements or pre-emption rights) over, land that may be appropriate for development. At present, there is very little detail available as to what contractual arrangements or types of land may be caught by this requirement, but it is a further attempt by the government to achieve transparency as to the true beneficial ownership of land, which has already been achieved to a certain degree through the register of overseas entities and the existing land registration regime.
It's hard to tell when we are going to see changes on the ground. Given the forthcoming general election and the need for the government to demonstrate that they are implementing solutions to the problems this legislation is intended to tackle, we can expect the Secretary of State to continue to drive forward these reforms. However, even by the government's own timetables, as published in consultations over the past year, some of the most radical changes to the system will not be rolled-out nationwide for quite some time – implementing the Infrastructure Levy is intended to take 10 years using a "test and learn" approach, the new development plan system will be rolled-out slowly, and concepts such as Community Land Auctions may never progress beyond pilots.
And of course, the general election may see a change in government. It's not yet clear what a future Labour administration might do by way of halting, retaining or reversing these reforms. Going by what they have said publicly, we can expect them to reject the new Infrastructure Levy, but other reforms may be more difficult to undo.
The risk is that, if the changes outlined here do proceed, whether fully or partially, developers may have to deal with the implementation of multiple changes across the planning system, in different places, at different times and in different ways. Different plan-making regimes will operate across the country as the new development system is rolled out. Some, but not all, authorities could be implementing the new Infrastructure Levy while others may be piloting Community Land Auctions. And at the same time, developers may have to get to grips with a new environmental assessment regime while they are still understanding the new requirements for mandatory biodiversity net gain due to come into force in the new year.
The development industry should therefore prepare for greater complexity and uncertainty in the years ahead.
Links to the previous posts in our Yule Blog 2023 are as follows:
- Yule Blog 2023 – 12th Day – Drum roll please...
- Yule Blog 2023 – 11th Day – What's in the pipeline for tenants in 2024?
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