Public land and property development

Project iStock 000000224397XSmall 146x219Selling public land, or making it available for development, is high up on the Government’s growth agenda. But property development is a risky business. How can public sector organisations seek to manage this risk? Phil Lawrence looks at the key issues and the use of s. 237 TCPA 1990.

Adopting a risk management approach

A full legal and property review is an essential part of the project risk assessment process. Careful thought is needed to identifying the possible obstacles or threats to your organisation achieving the best outcome for any given site.

It is important to identify and assess the risks before placing a site on the market, otherwise the procurement or disposal process may be jeopardised by a fundamental point being raised by a buyer's lawyer once the process is underway. It is also usually more cost-effective to resolve an issue at an early stage, without the pressure of deadlines or adverse publicity.

Detailed legal review - with an eye on the bigger picture

Property due diligence is therefore an essential early step. It should address three elements:

  • all ownerships and interests within the intended ‘red line’ of the sale or development area (including land owned by other participating landowners);
  • any additional land or long-term land rights required for the development, e.g. for realignment of highways, pedestrian and vehicular access, visibility splays or construction of services; and
  • any temporary rights required to implement the development, e.g. for a site compound, development access, scaffolding or crane oversailing.

Ideally the review should include the full suite of conveyancing searches the buyer's lawyer is likely to undertake. 

What are some of the issues to spot?

The following are some of the issues to be alert to:

  • Local constraints: Is there a risk of registration of land as a town or village green – the underlying legislation has become the weapon of choice for those seeking to delay development proposals.
  • Statutory constraints: Do you need to identify the statutory basis on which land was acquired or is held, and whether there are any additional statutory procedures to consider? For example allotment land or public open space or land may potentially be subject to Crichel Down rules (which relate to offering land back to former owners).
  • Boundaries: Are the physical boundaries clear and secure, and does your organisation occupy the entire site?
  • Easements: is the land burdened by third party easements; if so which land benefits from them, and who should be approached to secure a release or variation?
  • Highways: does the site abut an adopted highway at all essential points, or does it rely on private easements for access or services? Is there sufficient land to create any new access; and are the existing services of adequate capacity to serve the new development?
  • Restrictive covenants: are any restrictive covenants on the title and if so are enforceable? They will require careful legal scrutiny.
  • Vacant possession: is there anyone on the land and will they leave?
  • Third party leases: are there any third party leases and if so, are they protected business leases under the Landlord and Tenant Act 1954?
  • Planning constraints: are there any constraints on existing planning permissions and statutory agreements?
  • Rights of light: does the development potentially infringe a third party's right to light; can it be designed in such a way as to respect the right of light without loss of development value?
  • Party Walls: does the development include works to party walls, and works within 3 metres of neighbouring structures, or 6 metres depending on the depth of foundations?
  • Environmental and nature conservation issues: is the project likely to encounter contamination, flooding, ground stability or archaeological issues?
  • Telecoms or other undertakings apparatus: is there any telecoms equipment on site which may have the protection.

Use of section 237 of the Town & Country Planning Act 1990

There is an interesting area relating to development for some organisations under this provision. Where a local authority has acquired or appropriated land for planning purposes, section 237 enables easements and other rights to be overridden to allow building or other works to be erected or carried out or maintained on that land. The easement might, for example, permit access over the site that is to be developed from neighbouring land. Or the land to be developed might be subject to a restrictive covenant that prevents the land from being used for a certain purpose.

The key elements of section 237 are that:

  • the land must have been acquired or appropriated by the local authority for planning purposes. ("Planning purposes" has the same meaning as under section 226, i.e. the development will contribute towards the promotion or improvement of the economic, social or environmental well-being of their area, or is required in the interest of proper planning of their area – section 246 Town and Country Planning Act 1990)
  • the works or use must be undertaken by the local authority or by a person deriving title under them, in accordance with a planning permission.

Given the difficulties faced by developers in achieving releases or variations of covenants and easements in the light of recent case law (especially rights to light), section 237 offers the opportunity for local authorities to facilitate development by overriding covenants and easements. A third party whose rights are interfered with will still have a statutory entitlement to compensation on a compulsory purchase basis, but section 237 removes the threat of injunction or ransom.

Taking the use of section 237 a step further, some developers are seeking to promote the use the section, in conjunction with a local authority, to achieve section 237 protection for the proposed development of their privately owned land. This potentially involves the transfer of the developer's freehold land to the local authority with a lease-back to the developer (so the developer then derives title under the local authority). Clearly any such scheme gives rise to a number of public law considerations, including the proper use of local authority's powers for planning purposes; and careful thought should be given at any earlier stage to such issues.

Phil Lawrence is an Associate at Veale Wasbrough Vizards. He can be contacted on 0117 614 5441 or This email address is being protected from spambots. You need JavaScript enabled to view it..