The year in Westminster: an update for rural estates

Another year of sound and fury from Parliament, but what does it all signify for rural estates? Amidst all the hullabaloo about housing targets and reforming the rented sector, there are important takeaways. Here are some of them.

Abolition of section 21

The stop-start progress of the Renters Reform Bill continues. The Bill had its second reading in Parliament on 23 October 2023, but a report by a parliamentary committee identified concerns about the ability of the court system to cope. As a result, “The government will not commence the abolition of section 21 until stronger possession grounds and a new court process is in place”. The possibility of a dedicated housing court has been ruled out. A House of Commons select committee has launched a call for evidence on the work of the county court. Abolition of section 21 notices may have been paused for now, but change is coming in the medium term.

Leasehold and Freehold Bill

Another prong of the attack on “the outdated feudal system” of leasehold land tenure (according to Michael Gove). The Bill is squarely aimed at addressing developers’ abuse of leasehold tenure, where it is used for new-build houses, to create an ongoing income stream from ground rent. Headline measures include a ban on creating new leasehold houses (new leasehold flats remain possible); existing leaseholds will remain, but it will be easier and cheaper for leaseholders to buy out the freehold; standard lease extensions are set to rise from 90 to 990 years, and the Government will consult on capping existing ground rents.

Planning reform

There is near universal agreement on the need to reform the planning system, which is widely seen as clunky and obstructive. The Levelling Up and Regeneration Act (LURA), which received Royal Assent on 26 October, aims to tackle this in various ways. Developers will need to get on with developing and planning authorities will be able to require commencement notices when development begins. Permissions which remain incomplete can be terminated and developers with a history of not getting on with it may simply be refused permission at the outset.

Planning enforcement

The current enforcement period for breaches of planning control is four years (for unauthorised “operational development”, ie work done or change of use to single dwelling) and ten years for all other breaches. LURA proposes changing this to a standard 10-year period, giving authorities longer to enforce. Authorities will also be given the power to issue enforcement warning notices, giving landowners a chance to rectify breaches by seeking retrospective permission where viable.

EPCs and MEES

The requirement for residential let properties to meet an improved minimum energy efficiency standard of an EPC of C or above by 2025 was scrapped in September, much to the relief of estates with old cottages that leak heat. The ban on new fossil fuel heating for off-gas-grid homes has also been delayed by nine years to 2035. EPCs are to be reviewed. But there is now talk of including “decent homes standards” in the Renters Reform Bill: watch this space.

Nutrient neutrality

One bit of LURA that did not make it on to the statute book, thanks to the rebellious Lords. The rule therefore remains that where development is commenced in one of 74 affected local authorities, developers will need to neutralise the effect of the development on local watercourses. They can do this by taking measures on site, and / or buying credits to offset the impact. For rural estates this creates an opportunity for those with spare or low-yielding land, to supply offsite nutrient credits. The Government seems keen to support such schemes.

Holiday cottages

The noose is tightening. LURA proposes the start of a registration scheme, requiring that all residential accommodation being let to guests for payment in the course of a trade or business of the host are to be registered. As with so much of LURA, further detail is to follow in regulations. A consultation was also launched in April 2023 on the creation of a separate use class for holiday lets.

Unlet high street properties

Where high street commercial premises have been vacant for more than one year, councils will be able to arrange auctions to find suitable tenants. Leases of up to five years for “suitable high street use” will then be agreed, contracted out of business security tenure (which itself is under the microscope in a current Law Commission review). A loss of control for landlords, but it may prove a creative solution to a common problem.

Martyn’s Law

The Terrorism (Protection of Premises) Bill aims to enhance public protection from terrorism at public venues by placing duties on the owners or operators to take appropriate terrorism mitigation measures, including staff training (which catches unpaid volunteers). Qualifying public events with over 800 attendees are also within scope, making this an important Bill for estates hosting events. That said, after initial publication on 2 May 2023 this went quiet following criticism from a parliamentary committee that the Bill’s measures as drafted were disproportionate and unduly onerous on owners of premises. A consultation has just been opened.

BPS (and cross compliance) is dead: long live delinked payments

31 December 2023 saw the end of the basic payment scheme. Farmers’ obligation to cross comply also ceased on that date, but only to the extent that the rules are not also set out in statute. The window for transferring reference amount has been announced as 15 February to 10 May 2024, with delinked payments (based on the claimant’s reference amount) to be made in two chunks in August and December in this and every year
until 2027.

This article is part of the Rural Estates Newsletter 2024, click here to read.

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

© Farrer & Co LLP, February 2024