Local authorities' statutory powers to override third party land rights will apply to a wider range of public schemes, says expert

The new legislation, contained in sections 203 to 205 of the Housing and Planning Act of 2016, came into effect on 13 July. It provides local authorities and regeneration bodies with powers to override private third party rights in land they own or formerly owned to unlock the redevelopment potential of that land.

Previous legislation that applied in this area, including section 237 of the Town and Country Planning Act 1990, was repealed at the same time as the new laws came into effect.

The new legislation contains more detailed drafting relating to the statutory powers local authorities and other qualifying authorities have to override private third party rights than was contained in the old legislation. However, in a sense the new legislation codifies principles implicit in the proper application of the former legislation and arising from past case law. 

The new drafting, and in particular the test that applies when an authority wishes to acquire land compulsorily, could well, however, require authorities to give greater consideration to the public interest justification for any interference with third party rights arising from the new powers.

Third party rights and their potential obstacle to redevelopment of land

Third party rights such as rights to light, rights of way and restrictive covenants can pose a serious obstacle to development if third party owners are not prepared to release their rights by agreement on reasonable terms or if they cannot be identified.

Section 237 of the old Town and Country Planning Act applied to land acquired or appropriated by a local authority for "planning purposes". It authorised both construction works and changes of use carried out in accordance with planning permission, notwithstanding any interference with private third party rights, subject to payment of statutory compensation to affected third parties. 

The provisions applied not just to development by the local authority itself, but development undertaken by a person who had acquired the land from the local authority. Consequently, local authorities have often played an important role in site assembly for redevelopment schemes, through appropriating land they already own or by acquiring other land for planning purposes before transferring it to a developer.

What's new?

Section 203 of the 2016 Act applies to land owned, or formerly owned, by a range of "specified authorities", which is widely defined and includes ministers of the Crown, Welsh ministers, government departments and local authorities, which includes, for example, certain joint bodies and police and crime commissioners. It also accounts for statutory undertakers and any other body "established by or under an Act".

The UK government has power to amend the definition of "specified authority" by regulations.

Where the new provisions apply, it is irrelevant who carries out the works or implements the change of use.  It is not necessary to show that the developer has derived title under a specified authority, or has any land interest at all.

In the case of land acquired by a local authority on or after 13 July 2016, the provisions would apply to land acquired under a range of local government powers and not just to land that has been acquired or appropriated for planning purposes. The main question is whether the local authority could have used compulsory purchase order (CPO) powers to acquire land for the particular works or use. As local authorities have powers to acquire land compulsorily for the purpose of most of their statutory functions, this means that the overriding powers can apply to a more extensive range of local government projects.

Establishing whether the new provisions apply depends on the type of authority concerned and whether the land to be developed was acquired by the authority before or after section 203 of the 2016 Act came into force on 13 July 2016.

Land acquired or appropriated for planning purposes on or after 13 July 2016

In the case of land acquired by or vested in a specified authority on or after 13 July 2016, and land appropriated by a local authority for planning purposes on or after that date, regardless of when the authority acquired the land, the new power to override third party rights and interests would apply if:

• there is planning consent for the development (i.e. works or use) that causes the interference with the third party right;
• the authority concerned could acquire the land compulsorily for the purpose of the development that causes the interference; and
• the development which causes the interference is for purposes related to the purposes for which the land was vested in, acquired or appropriated by the authority.

For those bodies whose land has not previously benefited from any statutory provisions on overriding third party rights, the new provisions would normally only apply to land they acquire on or after 13 July 2016. 

The need for the specified authority to have relevant CPOs means that for the majority of regeneration and redevelopment projects, the powers of local authorities and regeneration bodies will continue to be of most relevance. This is because many of the other specified authorities are "single purpose" bodies with more limited powers of compulsory purchase relating solely to their undertakings.

It is irrelevant who actually carries out the development, or whether the land, or an interest in the land, has passed to another party following its ownership by a specified authority, or appropriation by a local authority. What is important is that the authority that owned or appropriated the land would have had power to acquire the land compulsorily for the particular purpose that causes the interference.

'Other qualifying land' – acquired before 13 July 2016

"Other qualifying land" is land which at any time before 13 July 2016 was acquired by or vested in certain regeneration bodies such as urban development corporations and the Homes and Communities Agency and other bodies whose land benefited from statutory provisions akin to section 237, as well as land which has been acquired or appropriated by a local authority for planning purposes before 13 July 2016. These are referred to as "qualifying authorities" and are a sub-set of 'specified authorities'.

The provisions on "other qualifying land" preserve the powers of qualifying authorities to override third party rights in respect of land they acquired before 13 July 2016, notwithstanding the repeal of the former legislation, provided that: 

• there is planning consent for the development (works or use) that causes the interference;
• the qualifying authority could acquire the land compulsorily for the purpose of the development that causes the interference; and
• the development which causes the interference is for purposes related to the purposes for which the land was vested in, acquired or appropriated by the qualifying authority.

Again, it is irrelevant who carries out the development or whether an interest in the land has passed to another party. 

Constant features

The following features of the old section 237 apply to the new overriding provisions in section 203 of the 2016 Act:

• The same list of private rights may be overridden, namely: "any easement, liberty, privilege, right or advantage annexed to land and adversely affecting other land (including any natural right to support)" and any "restriction as to the user of land arising by virtue of a contract".
• The same activities may be authorised by section 203 as those previously provided for in section 237, namely "the erection, construction or carrying out or maintenance of any building or work" and any use of land.
• Statutory compensation is payable to third party owners whose rights are overridden, calculated in the same way as compensation for certain harm caused by compulsory purchase, generally based on any reduction in the value of their land. The developer causing the interference is liable to pay the compensation, failing which the specified authority must pay. The specified authority can then recover from the developer.
• Rights of statutory undertakers and electronic communications code network operators cannot be overridden by the new provisions. In addition, rights held by the National Trust are now excluded.
• It is still necessary to show that the land is owned by or has "passed through" the ownership of one of the specified authorities at the relevant time. Accordingly, in a scheme involving a local authority and land owned by a developer, it would still be necessary for the local authority to acquire the land and to grant an interest back to the developer.
• The specified authority will need to be satisfied that any interference with third party rights is proportionate and justified in the public interest.
• Decisions by specified authorities in relation to reliance on the new provisions may be subject to judicial review. Managing this risk will remain an issue for public authorities and developers wishing to benefit from the provisions.

Anne Bowden is an expert in property law at Pinsent Masons, the law firm behind Out-Law.com.