Hillside – practical implications for developers

As the dust settles on the Supreme Court ruling in Hillside Parks Ltd v Snowdonia National Park Authority, the implications are becoming clearer. Developers and their advisers will need to swiftly assess how it may affect current development sites and future applications. 

The case concerned a longstanding development in Snowdonia for 401 houses originally consented in 1967. The original permission was not fully built out and, subsequently, a series of further permissions were granted for further development on the site, which were built out. The issue was whether the current owner, Hillside, could continue to carry out further development under the original 1967 permission.

The main focus prior to the judgment had been on how the court would deal with the issue of ‘drop-in’ applications (standalone planning applications, submitted to change part of a wider approved development), which have become a widespread practice in large, multi-unit schemes. In dismissing the appeal, the court found that it would be unlawful to continue to rely on a planning permission if development is carried out on land to which it relates, which makes it physically impossible to carry out any further development under the original permission, described in the judgment as a masterplan.

This position essentially reaffirms the Pilkington principle, but the court went further to clarify that this would only be the case if the changes to the original permission were ‘material’, or if the permissions were more than just ‘merely inconsistent’. While the court also found that, spatially, the 1967 planning permission was not severable into separate permissions applicable to discrete parts of the site, if a planning permission could be construed to be expressly ‘severable’ – for example, a large phased permission – then it may be possible to continue under that permission after works have been carried out on part of the site in question under another permission.

The materiality, inconsistency and severability will need to be considered on the facts on a case-by-case basis, but it is apparent that there will be limited circumstances where these factors will apply to preserve the ability to carry out further works under the original permission. As such, while not a moratorium on ‘drop-in’ applications, the ruling is likely to result in the practice becoming much less applicable and much more complicated. Developers will, for the most part, need to focus on alternative routes.

However, the ruling is also not entirely clear on how local authorities should consider applications to vary a permission where a developer wishes to amend an approved scheme in one particular part of the site. While acknowledging the ‘practical hurdles’ that developers may face, the court found that there was no reason why a developer could not submit an additional application for permission that incorporates the wider site which benefits from an existing permission that has not been fully built out.

The court’s suggested approach would leave the developer with a second permission under which it could proceed. The plans submitted with the application would need to show that the changes would still result in a coherent design for the whole site and the accompanying reports – including an EIA if required – would need to cover the whole site. Immediate issues which arise would be increased application fees and also potential implications for CIL payments. In addition, local authorities are likely to require any parties with an interest in the wider site to be bound to any new section 106 agreement required, which could be problematic and cause further delays.

While this slightly ‘clunky’ approach may suffice for developers who own the whole development site, the ruling raises issues for developing large scale strategic sites.

Considerable thought is now needed for the long-term requirements of masterplans, site assembly, development agreements, sales of part and/or funding of masterplan sites, given the ruling that most future variations will need to encompass the entire development site. Applicants may seek to build in a degree of ‘severability’ as far as possible, which may involve creative and elaborate descriptions of development being applied for to build in future flexibility. Hybrid consents for phased schemes will also become more widespread. When selling part of a site with the benefit of planning permission to another developer, it will be vital to ensure that there are provisions in the contract or development agreement to prevent or limit the scope of any applications that the buyer can then make on their land, to ensure that the buyer does not submit an inconsistent scheme which could render the original permission unimplementable.

For large schemes in multiple ownerships which are already in progress, careful dialogue may be needed among site owners to ensure cooperation and that continued development of the original uncompleted scheme is not jeopardised on land without the approval of the relevant owner. Thankfully, the court did at least kill off the suggestion that any incompatibility with previous planning permissions may render any development already carried out under those permissions unlawful. As such, any development yet to be completed could be at risk. It would be hoped that most local authorities would take a pragmatic view on enforcement action against further works, especially if they are not substantial, but funders and future purchasers may not be willing to take the risk. To rule out such risk, the original developer may need to reapply for permission for the uncompleted development. However, this opens up risk of increased contributions or policy requirements if policies have changed since the original determination.  

The ruling falls short of providing clarity sought by the industry on how best to make changes to large multi-unit developments and instead throws up a number of practical difficulties. Any amendments to existing schemes or applications for future schemes will have to be considered and crafted with great care to avoid or mitigate many of the pitfalls highlighted above.

Miles Crawford is a senior associate at Fladgate LLP, London