Levelling-up and Regeneration Act 2023: what does it mean for planning?

The Levelling-up and Regeneration Act 2023 (the LURA) became law on 26 October 2023. The LURA includes provisions capable of changing the planning regime in the UK, amongst a realm of other provisions with implications for the wider property and environmental practices.

In this article, we set out some of the key changes to the planning regime introduced by the LURA. These changes may be less dramatic in practice, as large sections of the LURA depend on secondary legislation for delivery. Many of the LURA changes to planning procedure are unlikely to take effect until associated regulatory and national policy changes are in place. It may be helpful to think of the LURA as a framework for further legislation to “pad out”. Perhaps unsurprisingly, we are not offered much guidance as to when secondary legislation will be coming forwards.

With a general election on the horizon (scheduled to be held no later than 28 January 2025), there is speculation as to whether much of the LURA, contingent on secondary legislation for delivery, will ever come into force in the event there is a change of government.

Below, we detail some of what we consider to be the most impactful planning changes in the LURA, although we note this is by no means an exhaustive summary.

Short term effects: LURA provisions in force on 26 December 2023

On Boxing Day this year, the following planning provisions come into force in England (other timescales apply to devolved governments). We expect that the end of 2023 and early 2024 will see local plan-making slow, as councils digest the impact of the LURA. We should also be prepared for an increase in legal challenges as any new provisions are tested and applied.

Section 111: Commencement notices

• New requirement for developers to submit commencement notices to LPA specifying the date that development is expected to start.
• Mandatory requirement for developers.
• Another notice may be submitted if development does not begin on the anticipated date.
• Failure to serve a notice is an offence liable on summary conviction to a fine up to £1000.
• Commencement notice does not need to be confirmed by the Secretary of State (as is current practice).

Commentary
This is a notable change which will be very helpful in the context of acquiring a property / due diligence processes as the commencement date of development will be documented.

When?
Power to make regulations comes into force on 26 December 2023. Further regulations are expected setting out Other information that the commencement notice is to include.

Section 112   - Completion notices

• Introduces the power to issue completion notices if a development is being built out “unreasonably slowly” and sets out the procedure for doing so.
• There is a right of appeal.
• LPA can issue a completion notice even before the three-year commencement period has lapsed if they believe that the development will not be completed within a reasonable period.
• Must allow at least 12 months after service of the notice for works to be completed.

Commentary
Completion notices are not a new mechanism, however, the role of completion notices is renewed and re-emphasised in the LURA. Completion notices are now envisioned to be a mechanism to force a developer to complete the development. Failure to complete within the timeframe will mean that planning permission for any incomplete parts of the development will fall away (potentially leading to half-finished developments). It remains to be seen whether LPAs will use completion notices more frequently as a result of these changes. We note that serving a completion notice does not guarantee that development will actually be completed…

When?
There is some discussion in the legal community as to when these provisions come into force. Some commentators are of the view that these provisions are already in force. Our reading of the commencement provisions in the LURA is that the power to make regulations comes into force on 26 December 2023 but the provisions do not come into force until such regulations have been made by the Secretary of State.

Section 113 - Power to decline to determine planning applications

• Introduces the power for LPAs to decline to determine applications in cases of earlier non-implementation or unreasonably slow build-out.
• If misleading or reckless statements to notices are given, the person may be guilty of an offence is liable on summary conviction to a fine.

Commentary
The introduction of these powers is controversial. The aim is to punish / penalise slow moving developers. There are concerns over the democratic process if LPAs are able to take into account developer conduct on other sites and applicant “character”.

When?
Power to make regulations comes into force on 26 December 2023.

Section 114  - Progress reports

• Introduces the power to impose mandatory conditions relating to annual development progress reports on specified residential planning permissions in England.
• Progress reports submitted by developers.

Commentary
There is a real potential for adding to the administrative burden of local authorities who will have to receive these reports. In reality, we anticipate that annual development progress reports will be limited to circumstances of alleged breaches or slow progress.

When?
Power to impose conditions comes into force on 26 December 2023. We await further detail on this topic which will be set out in secondary legislation.

Section 136 - Ancient woodland

• A requirement that the Secretary of State vary the Town and Country Planning (Consultation) (England) Direction 2021 (“the 2021 Direction”) so that it applies in relation to applications for planning permission for development affecting ancient woodland within three months of the Act being passed.
• Introduces a consultation requirement for developments affecting ancient woodlands.

Commentary
Whilst other amendments seeking to protect ancient woodlands did not make it into the LURA, (ie 50m buffer zone) this amendment made it in. The Consultation Direction will be amended to require local planning authorities to consult the housing secretary if they are minded to grant planning permission for developments that affect ancient woodland. Amendments to the National Planning Policy Framework (NPPF) wording are also expected to strengthen the protection of ancient woodland.

When?
The requirement for the Secretary of State to make the variation comes into force on 26 December 2023 and the variation must be made by 26 January 2024.

Part 6 (including Schedule 13 relating to Part 6)  - Environmental Outcome Reports

• To replace Environmental Impact Assessments, Sustainability Appraisals and Strategic Environmental Assessments.
• Two categories of plans and developments that will require an Environmental Outcome Report: 1. consents which will require an assessment in all circumstances; and 2. consents which will require an assessment if the criteria set out in the regulations are met.
• Require assessment against “high-level” outcomes that reflect the Government’s environment ambitions.
• Applicants to report on the performance of projects or plans against all relevant outcomes on a proportionate basis.
• Strengthen the role of mitigation in the context of environmental assessments.
• Focus on data and digitalisation.

Commentary
This would be a fundamental change for development, replacing over 30 years of practice and case law. With greater detail to be developed in further regulations, the new regime may not be very different to the current EIA regime in the end. The Environmental Outcome Reports are meant to streamline the system and place a greater focus on delivering environmental ambitions. The LURA secures powers to implement a new system of environmental assessment. We are awaiting the outcome of an earlier consultation that ended on 9 June 2023 to inform the detailed approach to developing Environmental Outcomes Reports.

When?
Comes into force on 26 December 2023. Outcomes would need to be set by secondary legislation with a supporting suite of “indicators” for each outcome stated in Government guidance. The consultation paper indicated that the Government will set a transition period of between six months to two years.

Medium – longer term effects: LURA provisions that come into force when regulations are made by the Secretary of State

The general election will be a key determinator as to how the rest of the LURA is implemented. Labour have already said that it would draw a line through items such as the Infrastructure Levy and produce their own Planning Bill within 100 days of leadership. It would seem that planning is due reform no matter which government(s) are in office.

Sections 92- 99 / Schedule 7 - Changes to development plans and local plans / plan making

• Development plan now expressly includes supplementary plans, minerals / waste plans and policy maps.
• Determination is to be in accordance with the development plan AND national development management policies unless material considerations strongly indicate otherwise.
• National policies trump development plans.
• All types of development plans and national development management policies must have regard to the need to mitigate and adapt to climate change.
• All development plans to have regard to local nature recovery strategies.
• Neighbourhood plans cannot prevent proposed housing development in the development plan.
• Design codes to be included in the development plan.
• Duty to cooperate repealed and introduction of new “alignment” test.
• Local planning authority to publish and comply with a 30-month local plan timetable and comply with new local plan procedure.
• Local planning authority to seek observations / advice on proposed local plan from the Secretary of State’s appointed person.
• Observations / advice and national development management policies must be regarded and published.

Commentary
Developers should ensure that they engage with design codes, supplemental plans and policy maps as they will be part of the development plan. The requirements to have regard to local nature recovery strategies and biodiversity could see local planning authorities ask for additional requirements and / or mitigations. Local plans could shift controversial or detail into supplementary plans in order to achieve compliance with local plan timetables. Supplemental plans subject to less scrutiny.

When?
Comes into force on such day as the Secretary of State may appoint by way of regulations. A lot of new regulations and supporting guidance will be needed to introduce much of these changes.

Section 110 - New section 73B power

• Introduction of a new section 73B to the Town and Country Planning Act 1990 (TCPA 1990) to make “non-substantial changes” to planning permissions.
• This can include making changes to the description of development and the conditions, so long as these are not “substantially different from that of the existing permission”.
• Granting a section 73B application results in a new permission.

Commentary
This new provision aims to provide a slicker process to amend the description of development. However, there is no detail on what “non-substantial” means. A section 73B application is determined only on the basis of the differences between the previous permission and the new proposal. We do not know whether this new power will replace section 96a and section 73 applications, or indeed whether section 73B will be avoided by applicants because it is an unfamiliar option. Interestingly, we note that a section 73B cannot be used to amend a section 73 permission, meaning that any section 73B application will need to reference the original permission whilst not being a “non-substantial” change.

When?
Power to make a development order comes into force on 26 December 2023. This change will not be effective until a development order is granted setting out the process for applying under section 73B. There is no indication as to when a development order will be brought forward.

Section 115 - Planning enforcement

Modifies the time limit for enforcing breaches of planning control in England to 10 years for enforcement of building operations and unauthorised change of use of a building to a dwelling.

Commentary
This will be a major change and will impact the due diligence exercises required for / in transactions. On a practical note, if you are hoping to apply for a certificate of lawfulness relying on a four-year period, we recommend submitting the application as soon as possible before the enforcement period is amended to 10 years.

When?
Comes into force on such day as the Secretary of State may appoint by way of regulations. This change is not currently in force as we await regulations from the Secretary of State to bring these into force. We do not know if the regulations will include any transitional arrangements.

Section 135 - Pre-development biodiversity value and habitat enhancement

• Calculating pre-development biodiversity when the biodiversity value is lower as a result of activities on site.
• Reduces incentives to clear habitats on potential biodiversity gain sites or “offsites”. 

Commentary
This clause is designed to close a potential loophole where a site is cleared under a previous planning permission. This amendment takes a precautionary approach where there is doubt about what habitats were on a site before it was cleared.

When?
Comes into force on such day as the Secretary of State may appoint by way of regulations.

Part 4 / Schedule 12 - Infrastructure Levy (IL)

• Introduces a charge on development: IL to fund the provision of infrastructure in the charging authorities’ area.
• Intention is for affordable housing contributions to be delivered through IL.
• To replace CIL, in time, on a “test and learn” basis (except Mayoral CIL which will continue to exist in Greater London).
• Liability for IL occurs prior to commencement of development and becomes liable when development commences.
• Mandatory charge based on the gross development value rather than floorspace.
• Certain exemptions for charities.
• IL is intended to reduce the circumstances section 106 agreements are used.
• Charging authority must issue a charging schedule that must be consulted on and independently examined.

Commentary
There are concerns that IL will not deliver affordable housing at the levels needed, therefore risking a significant reduction in the delivery of affordable housing whilst also potentially exposing councils to an excessive levels of financial risk. Section 106 agreements are envisaged to only be used to support delivery of the largest / complex sites. We are waiting for the outcome of an earlier technical consultation on the IL that closed on 9 June 2023 to set out the detail and process of IL. Labour have vowed to replace IL and even the Conservatives have said that IL’s introduction would be via 10-year pilot.  

When?
Comes into force on the day the Secretary of State appoints by way of regulations. Whilst the LURA sets out the framework for IL, the detailed design will be delivered through regulations. We have no indication as to when these regulations will be introduced.

Part 8 - Development Corporations

• Introduction of a new locally led urban development corporation, making five types of Development Corporation instead of four types.
• This new type will be for wider regeneration purposes and can be across multi-authority areas.
• Local authority to consult and propose, but decision is taken by Secretary of State.
• All Development Corporations now eligible to become local planning authorities for plan making, overseeing neighbourhood planning and development management.
• Now have CPO powers.
• Borrowing aggregate limit and cap on board members removed.

Commentary
Locally led Development Corporations would allow multiple types of regeneration projects and cross-authority collaboration. Borrowing changes may allow for increased funding options. Landowners / Developers should monitor the creation and redlines of any Development Corporations. We are waiting to see whether any Development Corporations will exercise their CPO powers to disapply hope value in the LURA as acquiring authorities. Consider JV and acceleration of development options if developing within Development Corporations. Labour have indicated that they support the Development Corporation provisions.

When?
Comes into force on the day the Secretary of State appoints by way of regulations.

Part 9 - CPO and compensation changes

• Removes “hope value” for the purposes of compensation for enactments under new Schedule 2A (health, education or planning purposes).
• Acquiring authority can seek a direction in the CPO that compensation is to take no account of prospect future planning permissions – except for subdivisions of dwellings.
• Wording to allow for conditional confirmation of CPOs (operative date delayed until all conditions have been discharged).
• Power to extend time for implementing a CPO.
• Power to agree a variation or postponement of a vesting date. 

Commentary
We assume that “planning purposes” includes affordable housing purposes. This change has been included to encourage more CPOs to be made. However, removing hope value may have unintended and unforeseen consequences. See articles by Raj Gupta and Nikita Sellers of Town Legal for further commentary.

When?
Comes into force on the day the Secretary of State appoints by way of regulations.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

© Farrer & Co LLP, December 2023