Use legal powers to prevent developments grinding to a halt

As the credit crunch continues to bite and office blocks and housing developments stand half-finished, both developers and local planning authorities are anxious to clarify exactly where they stand legally.

According to Michael Kelly, one of our planning experts, falling land values, sluggish house sales and low consumer confidence are likely to affect developers and local planning authorities further still in the coming months.

"Many developers are sitting on land options which may be coming to crucial milestones in terms of financial commitment," explains Michael. "On the one hand, developers don't want to spend money they are not earning from sales, and on the other they may want to take the opportunity to acquire land at basement value."

In some cases developers are looking to extend the option period linked to a particular piece of land, possibly by stalling Section 106 negotiations or taking extra time to deal with some of the more detailed conditions.

Michael adds: "Many land owners will be looking at the fine print to see if they have an exit strategy, not wishing to be tied into lengthy option periods or forced into sales in a depressed market."

Where financial conditions have halted work, developers will attempt to make buildings weatherproof. They may also halt other site works required by planning permission, such as landscaping and laying the top surface finish on footpaths.

Meanwhile, where development has commenced and the planning permission is live, the local planning authority will need to determine whether to take enforcement action if planning conditions are not being met.

Local planning authorities can decide to use a Breach of Condition Notice, which is not subject to a right to appeal, and where non-compliance can lead straight to a criminal prosecution.

But another effective, but much less used, weapon in the armoury is the Completion Notice where, if the authority is of the opinion that the development will not be completed within a reasonable period, it may serve a notice stating that planning permission will cease to be effective after a certain date.

Michael comments: "Completion notices are rare and their use has tended to be in high profile locations, for example development of a town centre site where a partially completed office development has simply run out of funds, leaving only a shell of a building.

"However, there is a right to appeal in such circumstances and the best defence for the site owner is that they are in financial difficulty and, therefore, unable at the current time to complete the building."

A recent decision in a case involving Cardiff City Council has set a precedent that, where development has already been carried out under an extant planning permission, that part of the development will still be lawful and cannot be subject to removal by way of a follow up enforcement notice, however unsightly.

This result has come at an opportune time for developers who may want to mothball schemes and wait for the property market to improve.