In this edition we look at proposals to make contractual arrangements controlling land more transparent; public access to the Building Safety Register; the latest on the Building Safety Levy; and a warning to developers who take a “build first and apply later” approach to restrictive covenants.
Contracts controlling land: information to be in the public domain
The government intends to make contractual arrangements providing “control” of land more transparent.
The Levelling-up and Regeneration Act 2023 grants the power to make regulations for the disclosure of certain information about the ownership and control of land. The government has not dragged its heels and a consultation on Contractual Controls on Land was published on 24 January 2024.
Responses to the consultation will form the basis of regulations which will “seek to create a dataset comprising the “what”, “where”, “who” and “when” of contractual control agreements that will promote transparency by providing a reliable and accessible source of information for communities, developers and other stakeholders”.
Drilling into the detail, “contractual controls agreements” refer to agreements intended to secure land or property for residential, commercial or mixed-use development and which subsist for 12 months or more. The examples given in the consultation are option agreements, pre-emption agreements, conditional contracts and promotion agreements. Agreements made for the purposes of “national security” or defence, or to facilitate finance and loan agreements, are exempt. Views are sought on other agreements that should be included or exempt.
The consultation proposes that:
- The disclosable contractual control information should include: details of the contracting parties; agreement date; start and end dates; any right to extend; the extent and title number(s) of the land affected; the official identification number of the professionals involved “to allow for easy identification….if needed for compliance purposes”. Commercially sensitive information, information that is “not useful or relevant” and financial information will not be sought.
- The required information will be supplied to the Land Registry by a conveyancer on behalf of the grantee, within 60 days of the agreement. A notice to protect the agreement cannot be entered on the land register without first providing the required information.
- There will be a retrospective element as data will be collected on existing agreements entered into from 6 April 2021.
- The data collected will be publicly and freely available.
- Criminal sanctions will be applied for non-compliance or knowingly or recklessly providing information that is false or misleading.
Importantly, the consultation also seeks views on the possible unintended consequences of the proposals, such as the impact on land values, pressure on landowners and the impact on developers, who might opt into different types of arrangements to avoid disclosing information, or buy land outright.
Concerns will no doubt be raised over a further piece of retrospective legislation and the Land Registry’s ability to administer the additional requirements given the already significant delays to registration.
The consultation ends on 20 March 2024 and the proposed implementation date is currently April 2026.
Building Safety Register now searchable
The Building Safety Act 2022 (BSA) imposes extensive new legal responsibilities in relation to “higher-risk” buildings.
With some exemptions, a higher-risk building is defined for these purposes as a structure that has at least seven floors or is at least 18 metres in height and has at least two residential units. A building will qualify as a higher-risk building if it complies with this definition even if it is not exclusively residential.
Existing higher-risk buildings that are occupied, or could be occupied, were required to be registered in a new register maintained by the new Building Safety Regulator (BSR) by 30 September 2023. New higher-risk buildings completed after 1 October 2023 must (amongst other things) be registered in the BSR register and be issued with a completion certificate by the BSR before the building is occupied.
Legal responsibility for registration (and for notifying the BSR if any information it holds about the building changes) rests with the “principal accountable person”. For further information about accountable persons, please see our briefing here.
Following registration, principal accountable persons have a duty to apply for a building assessment certificate for their buildings when directed to do so by the BSR. This includes submitting numerous documents, such as a safety case report and residents’ engagement strategy. The BSR intends to start issuing directions in April 2024.
The BSR register became publicly accessible on 8 February 2024. It can be accessed here and is searchable by postcode: https://www.register-high-rise-building.service.gov.uk/public-register/search
Building Safety Levy: one step closer
A short government consultation on the implementation of a new Building Safety Levy closed on 20 February 2024. The proposed Levy will raise revenue to replace defective cladding and remediate other historical building safety defects. It will apply to all new residential buildings in England requiring building control approval, regardless of their height.
The proposals outlined in the consultation include that:
- Local authorities will be designated as the collecting agent for the Levy and will retain a proportion of the receipts;
- The Levy will be charged on a square metre basis and a differential geographic rate will be applied based on local authority boundaries;
- A lower Levy rate will apply to buildings on previously developed land;
- Levy rates will be reviewed every three years;
- Exclusions from the Levy will include affordable housing, non-social homes built by a not-for-profit registered provider, NHS hospitals, care homes and developments of fewer than 10 units; and
- The consequence for non-payment will be that a building control completion certificate cannot be issued by the local authority or the Building Safety Regulator.
We will report further as soon as we know the outcome of the consultation and the anticipated implementation date for the Levy.
Developers beware: ignore restrictive covenants at your peril!
A recent case is a sobering reminder of the dangers of what the judge called a “build first and apply later” approach to a restrictive covenant.
In Fosse Urban Projects Limited v Robert Whyte and others [2023] UKUT 286 (Lands Chamber), the applicant developer applied for the discharge of a restrictive covenant on land it had acquired and which had planning permission to build a new house. The covenant restricted the use of the land to that of a garden but despite this, the applicant had already built the house and it was occupied by one of its directors.
The owners of adjoining land which had the benefit of the covenant objected to the discharge.
Section 84(1) of the Law of Property Act 1925 gives the Tribunal power to discharge or modify any restriction on the use of freehold land on being satisfied that one or more statutory grounds are met by the applicant.
Having evaluated the evidence, the judge concluded that two of the statutory grounds had been satisfied and that they therefore had the jurisdiction to modify or discharge the covenant. The next question was whether to exercise their discretion to do so.
The applicant’s conduct was relevant in this respect. In the absence of a witness statement from anyone at the applicant company, the judge concluded that it was likely, being an experienced developer in receipt of legal advice, that the applicant was aware of the restriction and that it was enforceable but nevertheless decided to take a gamble.
The success of the application to discharge depended on the willingness of the Tribunal to overlook what it concluded was a deliberate breach of the covenant. It was for the applicant to explain why they acted as they did and to provide evidence that their conduct was not cynical, but no such evidence was produced. The judge therefore declined to discharge or modify the covenant to sanction the development, leaving the objectors entitled to apply to the court for an order that the house be demolished, or alternatively for damages.
We await next steps with interest……