Question: What do Chelsea FC & the High Court’s decision in Rainbird have in common & what is the link with CPOs?
Answer: The use of section 203 of the Housing & Planning Act 2016.

Once a compulsory purchase order is confirmed, the promoter and its development partner know that they can acquire all interests within the red line. However, when it comes to developing and using the land, they are still at risk of action by owners of land outside the red line which benefits from restrictive covenants or rights over the land (particularly rights of light). Interference with those rights can, at worst, lead to injunctive proceedings against the developer. This is a potential impediment to not only delivery of the scheme but potentially confirmation of the CPO. The strategy to deal with these rights needs to be addressed and agreed alongside the CPO process.

Section 203, Housing and Planning Act 2016

Section 203 provides a mechanism to enable a local planning authority to override any claim for an injunction in respect of the rights and covenants adversely interfered with as a result of the development of the Scheme. Adjoining neighbours with rights or covenants interfered with as a result of the vesting can instead claim compensation under section 204.

The section operates by allowing works to be carried out or land to be used even if that involves interfering with a “relevant right or interest” or breaching a restriction as to the user of land arising by virtue of a contract – as opposed to, say, a planning restriction on use. The rights or interests of statutory undertakers, electronic communication code network operators & the National Trust are excluded from this power.

For the override to operate in respect of works (i.e. the works causing the infringement or breach) it is necessary only for the four criteria in section 203(2) to be met. A similar override in respect of use applies by virtue of section 203(5). There is no need as a matter of law to specifically apply section 203. Either the criteria are met, which is a matter of fact and the override operates or they are not and it doesn’t. There is no statutory requirement for public consultation but plainly a Council seeking to use these powers should ensure the decision is properly taken & recorded. Other broader issues will also be in play such as the public sector equality duty and human rights (although generally these will have been considered as part of the CPO process).

The criteria (summarised) are that:

(a) there is planning consent for the works;
(b) the work is carried out on land that has at any time after the day on which the section came into force namely 13 July 2016 (i) become vested in or acquired by a specified authority, OR (ii) been appropriated by a local authority for planning purposes as defined in section 246(1) TCPA 1990;
(c) the authority could acquire the land compulsorily for the purposes of the works; and
(d) the work is for purposes related to the purposes for which the land was vested, acquired or appropriated.

Ownership

Councils can acquire land from developers and landowners and so override rights before returning or passing on the land to the developer (or granting a long lease). In this sense CPO is not necessary for the exercise of s203. The London Borough of Hammersmith & Fulham famously exercised such rights to help Chelsea Football Club on the redevelopment of their ground.

Alternatively, Councils, acting alone or with a development partner, may promote regeneration using their CPO powers. In this scenario care should be exercised. Councils do not acquire interests in land they already own through the CPO process. Although it is routine to include land in the Council’s freehold ownership as part of the pink land delineated on the Order Map it is equally routine to exclude those freehold interests in the Schedule to the CPO. This is in accordance with paragraph 204 of the current DLUCH guidance on compulsory purchase which advises that if an acquiring authority’s own land is included to clear other interests, the authority’s own interests should be excluded from the Schedule to the CPO and so fall outside the use of CPO powers. In this situation Councils need to rely on their appropriation powers to invoke s203. The best approach is to do so either before or when resolving to make the CPO. The former gives comfort that the issue can be managed before expending resources on the CPO process. The latter allows the Council to consider the public benefits of the scheme in justifying any interference with human rights both in the context of the CPO itself and the appropriation. Either way ensures this ensures the matter does not become an impediment to confirmation of the CPO.

Appropriation

A Council which owns the land can use its power under section 122 of the Local Government Act 1972 to appropriate land for planning purposes. If it is already held for planning purposes it must use section 232(6) of the Town & Country Planning Act 1990. The consent of the Secretary of State is required if the land forms part of a common. The London Borough of Tower Hamlets appropriated land to ensure a scheme to provide affordable housing through the redevelopment of the William Brinson Centre could be brought forward following the second grant of permission after the successful challenge in R (oao RainBird) v London Borough of Tower Hamlets [2018] EWHC 657 (Admin) based on the Council’s assessment of sunlight and daylight.

Under the Housing Act 1985 a Council can appropriate housing land for non-housing purposes but where the land consists of a house or part of a house the consent of the Secretary of State is required under section 19. For this reason, section 122 is almost invariably preferred where the Council owns the land.

Land held for the purposes of Part II of the Housing Act 1985 can be disposed of by a Council but (with some limited exceptions) the consent of the Secretary of State is needed under section 32(2). In 2013 the Secretary of State issued a set of general consents with reference to this section. The most wide ranging consent under this set is for a disposal at market value, subject to some exceptions, one of which is where the disposal is to a body in which the local authority has an interest. If any disposals are to take place which result in secure, introductory or demoted tenants becoming the tenant of private sector landlords then the much more onerous consultation requirements in Schedule 3A of the 1985 Act apply. In London the Mayor has published his Good Practice Guide to Estate Regeneration February 2018 which contains specific guidance on consultation which it is obligatory to follow if mayoral funding is to be used.

Land held by a local authority for planning purposes is less constrained as regards disposals and is subject to section 233 TCPA 1990. The consent of the Secretary of State is not needed except for certain kinds of land (e.g. open space) and/or if the consideration is for less than the best that can reasonably be obtained. Under section 233(1) a disposal is lawful to anyone and can be subject to such conditions as appear to the local authority to be expedient in order:

(a) to secure the best use of that or other land and any buildings or works which have been, or are to be, erected, constructed or carried out on it (whether by themselves or by any other person), or
(b) to secure the erection, construction or carrying out on it of any buildings or works appearing to them to be needed for the proper planning of the area of the authority.

The Developer’s perspective

From the point of view of the LPA’s development partner, the use of section 203 will be of great significance, particularly if the proposed development includes tall buildings which would infringe on the rights of light of neighbouring properties

While negotiations with affected owners and insurance can cover of some of the risk, the threat of an injunction or of damages assessed on the basis of a ransom of the developer’s profit can materially affect viability and finance.

It’s important for the developer to think about this early in the process and to work with the LPA to secure some comfort (through an indemnity or development agreement) that any appropriation required will take place at an appropriate time (subject of course to not fettering the LPA’s discretion) and is properly funded by developer.