Although it is uncertain what the likely long-term impacts of the pandemic on the development industry will be, the short-term impacts are clearly significant.
The real estate development industry is looking to the Government for immediate relief in the following areas::
- automatic extension of the deadline for commencement of development under planning permissions;
- the introduction of a statutory review process for affordable housing and other planning obligations based on new viability considerations; and
- extension to Community Infrastructure Levy ("CIL") payment deadlines.
There are precedents for the first two elements of this from the then Government's response to the financial crisis (the CIL was, of course, not in place at that time).
Precious little has, so far, been forthcoming from the Government on any of these issues. In the meantime, developers can, at least, seek to extend deadlines for the discharge of conditions by making applications under S73 Town and Country Planning Act 1990 ("TCPA") or seek to re-negotiate S106 obligations on a case-by-case basis, under S106A TCPA. There may also be the possibility of seeking Exceptional Circumstances Relief from CIL payments under Regulation 55 of The Community Infrastructure Levy Regulations 2010.
It is also being reported that local planning authorities are seeking guidance from the Government about the extent to which they can relax the rules on the payment of CIL by instalments. Indeed, at least one local authority has issued guidance to the effect that where development has already begun, it will re-issue CIL demand notices to allow for a three-month extension to instalment due dates.
We will be following these issues closely and will report on developments as they arise.
The Planning Inspectorate's first decision on the impact of COVID-19 on housing applications issued on 9 April is likely to be of particular interest to residential developers.
This concerned an appeal against the decision of a local planning authority to refuse permission for up to 118 dwellings in the countryside.
The Inspector refused the appeal, finding that the proposed development would, amongst other things, cause very substantial harm to the character of the area. However, the Inspector's comments on the impact of COVID-19 are likely to provide some relief to housing developers.
As a general proposition, when a planning authority can demonstrate that it has a five-year supply of deliverable housing sites under its development plan policies, then the current application is to be decided in accordance with those policies. Where it cannot demonstrate the five-year supply, then the relevant housing policies are not applied and instead the determination of the application will benefit from the presumption in favour of sustainable development, thus potentially unlocking sites that were not allocated through the development plan process.
In this case, the developer argued that the economic impacts of COVID-19 would be felt for a period of three to six months with the consequent effect that the local authority would fail to meet its five-year supply.
The Inspector agreed that it was reasonable to assume a three to six month impact as the result of COVID-19, but in this case concluded that the local authority would still be able to demonstrate a five-year supply.
It is to be welcomed that the Inspectorate recognises the likely impact on housing supply, and as we move through the pandemic it will be interesting to see how the Inspectorate measures that impact. The Inspector also considered that, although there might be a significant short-term impact "it is equally possible that a bounce back will occur once the crisis ends". Of course, the impacts on housing delivery are not just economic: decision making is likely to be much slower while the lockdown continues, and this too will likely have an impact on housing delivery.