Local Government Lawyer Insight December 2018 LocalGovernmentLawyer 34 period of 20 years, the registration authority must also be satisfied that the recreational pastimes have been exercised, without force, openly and without permission. Recently, insofar as local authorities are concerned, the focus has been on the permission question and whether land held and provided for public recreational purposes stops in its tracks any claim that the land has been used without permission (see Barkas¹). The topical area of interest now, for public bodies, is whether the statutory basis on which land is held is incompatible with the creation of TVG rights. This principle was established in Newhaven² in which it was held that land could not be registered as a TVG because its statutory use as a port was incompatible with its designation as a TVG. In conjoined appeals in Lancashire County Council and NHS Property Services³ the Court of Appeal clarified the application of this principle, in the former case holding that the carrying out of a local authority’s functions as an education authority were general, i.e. they were insufficiently specific, so as to give rise to the necessary degree of statutory incompatibility. However, the issue is not closed because the Supreme Court has now granted leave to appeal against the Court of Appeal’s decision. State of the market The real estate development market, already in flux due to the ongoing collapse of the retail market and Brexit undercurrents, is set for uncertain times going forward as a result of government plans to implement substantial structural changes to the residential leasehold market including: ● Imposing a ban on leasehold tenures for houses save where absolutely necessary (for example shared ownership); ● Banning ground rents on all new leasehold flats; and ● Introducing new ways for developers to create long-term arrangements for the maintenance of shared facilities and open spaces on new developments (so possibly an end to rent charges!) Whilst the government has been consulting on these plans since 2017, and the market has started to incorporate the expected ban on ground rents into new residential development schemes, it is still not clear how the government intends to implement alternative satisfactory arrangements that will allow for the transmission of positive covenants that are generally required for large developments (and which was not necessarily an issue on leasehold transmissions). This is especially the case where there are substantive communal elements such as combined heat and power arrangements. Traditionally the inability of positive covenants to pass with land has required developers of large schemes to rely on leasehold structures or, less often, rent charge deeds. We should also mention, of course, the alternative commonhold arrangements that have been available for some time but given the market has steadfastly refused to embrace this structure it seems clear that this will not be an acceptable alternative to the existing ‘tried and tested‘ structures now under threat. Additionally, obligations to provide deeds of covenant on transfer protected by restrictions have proven unwieldy in the context of large schemes. In addition, on 2 July 2018 the Ministry of Housing, Communities and Local Government confirmed that: ● new government funding schemes will no longer be able to use funds for unjustified new leasehold houses; and ● it will be introducing new proposals to create a minimum Assured Shorthold Tenancy (AST) lease term of 3 years with a six-month break clause to give renters greater term assurance and landlords longer term financial security. Developers now face the prospect of reduced scheme viability because of the inability to capitalise ground rents and a potential softening of the Private Rented Sector market (recently seen as a key part of schemes in urban areas) due to the proposed AST changes. All of this will make for interesting negotiations between local authorities and private developers for new regeneration schemes. 2019 is shaping up to be a momentous year for the real estate development markets. Watch this space…. Nathan Holden is a partner and Head of Local Government and Clive Pearce is a real estate partner at Freeths. http://www.freeths.co.uk/people/nathan- holden/ http://www.freeths.co.uk/people/clive- ¹ R (Barkas) v North Yorkshire County Council [2011] EWHC 3653 (Admin) ² R (Newhaven Port and Properties Limited) v East Sussex County Council [2015] UKSC 7 3 R (Lancashire County Council) v Secretary of State for Environment, Food and Rural Affairs [2018] EWCA Civ 721. The real estate development market, already in flux due to the ongoing collapse of the retail market and Brexit undercurrents, is set for uncertain times going forward as a result of government plans to implement substantial structural changes to the residential leasehold market. Nathan Holden Clive Pearce