Development planning red tape and the case of Redrow Homes

One of the key issues debated during the recent general election campaign was the desperate shortage of new houses and the urgent need to free up the planning process to enable the targets set by central government to be achieved.

Developers are often frustrated by the red tape of the planning system and by the power of ‘nimbyists’ to block proposed housing schemes which can add considerably to the cost of obtaining planning consent. They will therefore be dismayed to hear about a recent case involving Redrow Homes which could have a significant impact on the development costs.

The case involved the construction of a new estate road at a development of 525 new houses near Liverpool. Where roads are built as part of a new development, it is usually the case that these will become public highways once the estate has been completed. Under section 38 of the Highways Act 1980, the local highways authority can agree to adopt roads that have been constructed to a required standard. The developer is therefore usually liable for the roads up to the point of adoption and the highways authority thereafter.

This was not the case with the Redrow development. The local highways authority refused to enter into a section 38 Agreement unless Redrow agreed to contribute a capital sum of £39,000 for future maintenance of street lights. The authority argued that it was lawful to request that sum based on the strict wording of section 38.

The Court of Appeal agreed and held that “maintainable at the public expense” does not specify how an authority should discharge its responsibilities. The authority can either maintain the road itself or require this of the developer. It is also permitted to use public funds or funds obtained from a developer or a combination of the two.

The ruling in this case raises the spectre of local authorities holding developers to ransom. The Court of Appeal, however, dismissed the idea that section 38 Agreements “will become a dead letter”. The judgment of the court sought to reassure developers that a sensibly negotiated section 38 Agreement was still a useful way to achieve the twin objectives of the developer and the highways authority.

Time will tell whether the court’s reassurance is valid. In the meantime, it is likely that local highways authorities, at a time of stringent cost cutting, will wish to take advantage of any possible savings in their budgets for road maintenance.

A version of this article appeared in Business East on 9 June 2015.

If you need advice, the friendly and experienced solicitors at Barker Gotelee are on hand to help. Call the team on 01473 611211 or email [email protected]