Councils fail in Court of Appeal challenge to HMO regulation changes

Three local authorities have failed in a Court of Appeal challenge to new laws giving greater permitted development rights to houses in multiple occupation (HMOs).

Milton Keynes Council, Oxford City Council and Newcastle City Council brought legal action after the Housing Minister, Grant Shapps, laid regulations in September 2010:

• granting a new permitted development right enabling a change of use from a single dwelling house to use as a small (six person or less) HMO; and
• limiting the liability of local planning authorities to pay compensation in the event that they decided to make an Article 4 direction to remove the new permitted development right.

Sir Michael Harrison ruled in the High Court in April this year that a short, informal consultation exercise on the changes – where the government only consulted representative bodies including the Local Government Association and the Planning Officers’ Society – in 2010 was not so unfair as to be unreasonable and therefore unlawful.

The Deputy High Court judge pointed to the fact that the option implemented by the minister had been one of three consulted on by the previous government in 2009. He therefore refused to quash the relevant statutory instruments.

The three authorities appealed, reasserting their claim that the government had erred in law, in July 2010, in failing sufficiently to consult, before making the orders, local planning authorities.

In evidence to the Court of Appeal, Milton Keynes’ Assistant Director of Planning said HMOs could have negative effects to the community in terms of social cohesion, parking, character, noise and litter.

There were about 160 HMOs in the borough with planning permission and more than 400 existing unauthorised HMOs. The government’s changes are said to make it more difficult to prevent buildings being turned into HMOs.

But in Milton Keynes Council & Ors, R v Secretary State for Local Government [2011] EWCA Civ 1575, the Court of Appeal last week upheld the High Court judgment and ruled in the government’s favour.

Giving the judgment of the court, Lord Justice Pill said the fairness of the 2010 consultation had to be considered in the context of a “very full” consultation having been conducted in 2009.

In the 2009 consultation, over a longer period, Milton Keynes and all local planning authorities had been given an opportunity to make representations upon a series of options. These included the option eventually chosen by Grant Shapps.

“I do not accept that, upon a change of Government policy, the entire process needed to be repeated,” Lord Justice Pill said, adding that ministers had been entitled to conduct a more limited consultation in 2010 “both as to the identity of consultees and the content and duration of the consultation”.

The Court of Appeal judge said the claimant councils’ best point was that local planning authorities were best placed to answer the questions posed in the consultation letter of June 2010.

“There is force in the submission that, if the government wanted answers to those questions, it should have turned to local authorities to provide them,” the judge said. “However, I am not persuaded that the consultation is rendered unfair by the failure to consult them directly.”

Lord Justice Pill said the central issue to be decided by the Secretary of State was whether to permit a change of use from a dwelling house to a HMO without the need for planning permission, and this was a macro-political decision.

The judge said it appeared as though the 2010 consultation was conducted mainly as a public relations exercise. However, it was still capable of being fair.

“The possibility was left open, in the framing of the questions, that significant issues would arise which required further consultation,” Lord Justice Pill explained. “The council has been unable to identify any such matters and I am not persuaded that they existed.”

Points which the councils made before the High Court judge that they claimed should have been addressed more fully were “matters inherent in the situation as it existed in 2009”.

The Secretary of State was well aware of the strongly held views of local authorities, and other bodies, as a result of the 2009 consultation, Lord Justice Pill added.

The Court of Appeal judge concluded: “That recent and comprehensive consultation in 2009 is in my judgment the key to the decision in the present situation. The Secretary of State was minded to make the orders challenged notwithstanding the strong, articulated objections to them by local planning authorities, of which he was aware.

“The decision to make them was a political decision which the Secretary of State was entitled to make. In the circumstances, he was then entitled, first, to make the consultation a limited one and, secondly, to decide that there was no evidence of significant new issues arising, which required fuller consultation.”

In a statement, Milton Keynes revealed that – in case the legal action was not successful – it had used Article 4 Directions powers to remove the right to change to a HMO.

“Currently planning permission is required for a change of use from a dwelling to HMO in the ‘city’ area and from 23 December 2011, planning permission will be required anywhere in the borough,” it said.

Milton Keynes said it was also currently consulting on a HMO Supplementary Planning Document to assist in the determination of planning applications for a change of use from a dwellinghouse to a house in multiple occupation.

Philip Hoult