Planning Considerations for Property and Corporate Transactions
When purchasing a property, or purchasing a company with one or more property assets, one important factor which is often overlooked is the planning history of the property and whether there is planning permission in place for both the use of the property and any buildings at the property and there have been no breaches of planning control.
If planning permission has not been granted (either by express grant or deemed through the permitted development rights regime) or there has been a breach of planning control, for example as a condition of a planning permission has been breached, then there is a risk that enforcement action could be taken by the local planning authority which could include action to stop the use of the property or action to remove any works constructed without planning permission and this could have a substantial impact on the property and any business conducted thereon both operationally and financially and could significantly impact the valuation of the property.
Planning permission is required for the carrying out of any "development" on land, which is defined in the relevant legislation as the "carrying out of building, engineering, mining or other operations in, on, over or under the land or the making of any material change in the use of any buildings or other land". This means that planning permission is usually required for any building works (such as the construction of a new building or any extension or addition thereto) or any change of use of a property which is material.
The starting point with planning due diligence is to ascertain what planning consents have been expressly granted by the local planning authority for any building works or changes of use at the property. However, not all development requires an express planning permission as there are permitted development rights which grant deemed planning permission for specified classes of works and changes of use, such as a change of use from office to residential. Each permitted development right has conditions and limitations attached, and the works must fall within these limitations and comply with the conditions, for planning consent to be deemed granted.
Unless deemed planning permission is granted, planning permission must be obtained for any development as defined above. If planning permission is not obtained for any works or any change of use then the local planning authority has 10 years to take enforcement action for any change of use, or 4 years to take enforcement action for any works carried out, from the date the change of use commenced or the date the building works were completed (as appropriate). If enforcement action is taken then the local planning authority could require that the new use is stopped or the property is reinstated or could require a retrospective planning application be submitted. Any of these actions could prevent the use of the property for the desired purpose and could be costly and so it is critical to carry out a review of the planning history at the outset as part of the property due diligence.
Further, more often than not a planning permission will have conditions attached and these could include pre-commencement or pre-occupation conditions and ongoing conditions. Pre-commencement and pre-occupation conditions are requirements which must be discharged before the works are commenced or the property is occupied (as appropriate). An example of a pre-commencement condition is a requirement to obtain an archaeological report. It is important to ensure that any such conditions are formerly discharged with the local planning authority before the works commence, or the property is occupied, and once a condition has been discharged the local planning authority will provide a discharge of condition notice evidencing compliance.
Ongoing conditions, for example a condition limiting the hours of use of a building, are conditions which must be complied with continuously and it is important to monitor compliance with any ongoing conditions on a continuous basis.
If any condition in a planning permission is breached, then the local planning authority may take enforcement action for ten years from the date that the breach first commenced, to secure compliance with the breached condition. In relation to a breach of a pre-commencement or pre-occupation condition, the local planning authority may be able to argue that the planning permission has not been implemented and accordingly the property has been built without the benefit of planning permission. The local planning authority could then take enforcement action and stop the use of the property, remove the works in breach of planning or require a revised planning application is submitted and so it is also critical that not only is the presence of a planning permission considered, but also all of the conditions stated therein.
If a planning permission does include ongoing planning conditions then these should be carefully considered to ensure they will not impact the proposed operations to be carried out on the property post completion and further so there will be no breach of condition going forwards.
Next, any planning obligations contained within a section 106 agreement should be reviewed to ensure all obligations have been discharged and in particular any monies which were payable have been paid in full. The responsibility to comply with any planning obligations usually rests with the landowner (and any successors in title) and so it is vital that there are no outstanding obligations which need to be discharged, or sums paid, following completion.
In addition to planning permission, building regulations approval is required for any building works carried out at a property to ensure the health and safety of people. Building works include extensions and alterations to a building but also include electrical works, the installation of a boiler and double-glazing. If building regulations approval is not obtained when required then the local planning authority has the power to take enforcement action for one year from the date that the works were completed. After one year, the only power the local planning authority has is to apply to the Court for an injunction and this power is used rarely, unless there is a danger to public health and safety. The building regulation approval history should therefore also be reviewed in addition to the planning history to ensure all of the correct approvals have been granted as and when required.
When purchasing a property, or a company with property assets, we would always advise that appropriate advice is obtained regarding the planning history at the outset to ensure that the property has the benefit all of the necessary planning consents and building regulation approvals, there have been no breaches of planning and there is no risk of enforcement action going forwards.
This article is for general guidance only. It provides useful information in a concise form. Action should not be taken without obtaining specific legal advice.