The impact of Hillside and how to manage your planning permissions
9th August 2023
Author: Wesley Timothy, Senior Underwriter, DUAL Asset
Following Hillside Parks Ltd v Snowdonia National Park Authority [2022] (Hillside), the Court of Appeal offered a landmark explanation of the intricate issue a developer faces when considering multiple planning permissions affecting a potential site.
This case held that where it is ‘physically impossible’ to build out an earlier planning permission according to its terms, this earlier planning permission cannot be relied upon for future development.
The Supreme Court’s ruling had a significant impact on the usage of “drop-in” applications, a term used to describe stand-alone planning applications aiming to change a small part of a broader development approved earlier. Following the ruling, their usage is expected to be significantly restricted in future applications.
What does this mean and what are the implications you face as a result?
I’ll endeavour to respond to those questions, but in the meantime fear not! We are receiving many requests for insurance solutions to assist in managing the risk and have been able to assist on several occasions to date.
It’s essential to note that completed developments under earlier planning applications are not considered unlawful. However, planners and developers may also consider beneficially leaving part of the scheme requiring a “drop-in” to the last phase to ensure other assets aren’t affected.
Synopsis of Hillside
So, what happened in Hillside:
In 1967, Hillside Parks Ltd was granted planning permission for a comprehensive housing development in the scenic Snowdonia National Park. The entirety of the scheme was, however, never fully realised. Subsequently, Hillside procured distinct permissions to develop individual parcels within the confines of the original site, fulfilling these development plans independently.
Years later, Hillside sought to execute the remaining parts of the 1967 scheme. The Snowdonia National Park Authority opposed, contending that the original permission had been rendered void as the subsequent parcel developments had irrevocably compromised the feasibility of the 1967 scheme’s completion.
Ultimately, the Supreme Court aligned with the Authority’s perspective. The judgement established that the 1967 planning permission was expressly for a unified scheme of housing development. The Court held that the developments executed under the later permissions were inconsistent with the original plan, making it physically impossible to implement the historical 1967 permission.
As I alluded to above, we have been asked to provide insurance solutions to assist in managing the risk the case presents.
We all know that despite the legal principles a case establishes, the facts of that case tend to be quite unique.
Our leading underwriter William Needham, who had the opportunity to consider an offer of cover in a case involving existing and ongoing drop-in permissions, and therefore technically falls foul of Hillside, comments:
“A key consideration in underwriting is the distinction between the specifics of the particular scheme and the specifics of the Hillside case. Evidence of an ongoing positive disposition towards the scheme from the local authority; that further variations to the master permission have taken place and that the proposals are not drastically inconsistent with the original intention form a strong case for insuring.”
In a more detailed summary those differences are:
- The original planning permission that Hillside tried to utilise was first granted in 1967, and there were several significant inconsistencies between that permission and the development as built. Whereas the case we were looking at involved an overall permission granted in 2011.
- A change in approach. The more recent drop-in permissions demonstrate that the Local Planning Authority altered its approach to granting fresh permissions, rather than altering the original. In the case William assessed, original plan continued to be varied, with the initial established permission being fresh in all the parties mind.
- The subsequent Hillside drop-in permissions created a disruptive alteration to the prime planning permission. In William’s case, although the drop-in permissions are technically physically inconsistent with the masterplan, it only relates to a tiny percentage of units across the larger scheme and not a major alteration of the same.
- Continued reliance and intent. In this case, whilst alterations to the original concept are being negotiated, construction in line with the original grant has been progressing. With no indication from either side that development needs to cease before agreement has been reached.
- William’s case is not in Snowdonia National Park, or any other Area of Outstanding Natural Beauty, or site of special public interest.
The Hillside judgment brings about clear risks for developers and investors building out permissions where ‘drop-in’ applications may be used in the future. Lawyers may experience varying factors of risk depending on the completeness of the structure, the level of development yet to be completed, and whether private laws have been used to control and/or monitor surrounding development.
The judgement necessitates a reassessment of the strategic approach to ‘drop-in’ or ‘slot-in’ planning applications. This practice has traditionally enabled developers to secure planning permission for a broad scheme, subsequently seeking to modify or enhance parts of it through additional permissions. Given the ruling, this practice may now be untenable.
The judgement underlines the importance of a more strategic and meticulous approach to planning. Developers must be cognisant of the potential impact of new planning permissions on existing ones. New permissions should not be sought without a thorough understanding of whether they could undermine earlier permissions.
For complex or phased projects, developers will need to engage more profoundly with planning authorities to ensure that proposed developments align with the integrity of the original planning permissions granted.
The future without insurance
Given the complexity of these issues, the absence of insurance could have significant implications for future developments. It is increasingly apparent that funders are concerned, and lawyers are reluctant to use private laws to monitor and control surrounding developers due to the additional burdens this creates.
While the government has not yet proposed measures to address this novel risk, the landmark Hillside case continues to reverberate across the real estate and legal indemnity insurance industries. Its full impact is yet to be fully understood, but what is clear is the necessity for proactive risk management and effective insurance solutions to navigate this changed landscape.
Legal Indemnity Insurance policies offer coverage for reduction in market value, costs to submit a new application, legal and professional costs to defend an Enforcement, costs to alter, demolish/reinstate assets required by an Enforcement Notice, sums paid to free the property from an Enforcement Notice, and any other costs incurred from an Enforcement Notice.
Based on limited experience and the product’s immaturity, current rates range from 0.1%-0.5% of the limit of indemnity. Despite this, the policy offers flexibility for clients to communicate if required and is provided in perpetuity, in most cases.
For more information look out for our upcoming video in the DUAL Asset Academy on ForLegal’s platform, where we will discuss these issues and the availability of cover in more detail.
Contact William Needham for commercial enquiries at: william.needham@dualgroup.com, +44 (7566) 785185
References:
https://www.pinsentmasons.com/out-law/news/planning-permission-variations-reform-hillside-ruling
https://www.addleshawgoddard.com/en/insights/insights-briefings/2022/real-estate/hillside-parks/
https://www.clydeco.com/en/insights/2022/11/hillside-what-does-this-mean-for-the-industry
https://www.forsters.co.uk/news/blog/planning-update-does-hillside-spell-end-of-drop-application
https://www.brownejacobson.com/insights/hillside-the-end-of-drop-in-applications
