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Wednesday, 24 October 2012

Will New Bill Draw a Line in the Sand for Boundary Disputes?

Boundary disputes are not good for your health, or your pocket.

Trying to sort out an argument over a boundary can result in years of despair, dangerously high blood pressure and soaring costs.

There’s a bill currently going through parliament however that might improve the way these disputes are handled in future.

The Property Boundary (Resolution of Disputes) Bill has its second reading on 30 November 2012.

The bill is currently being prepared for publication, but there was recently commentary on it from Pinsent Masons in the Estates Gazette (£) (29 September 2012). [Update 5/11/12 - the text of the bill can now be viewed here and I have amended this post slightly to reflect the terms of the bill].

The bill seeks to apply a dispute resolution mechanism similar to the one currently in place for party walls (under the Party Wall etc Act 1996) to boundary disputes.

The idea is the parties would jointly appoint a single surveyor to determine the dispute by making an award.

Alternatively, each party would appoint its own surveyor.

If they couldn’t reach agreement, the surveyors would appoint a third independent surveyor to resolve the issue.

Either party would have the right to appeal to the County Court within 14 days of the award.

Whilst that process might still seem a little cumbersome to some people, it’s surely better than litigation.

The costs of litigation can be steep and many cases end up being appealed, resulting in costs ballooning out of all proportion to the subject-matter of the dispute – between November 2011 and March 2012 for example six residential boundary cases were decided by the Court of Appeal.

Mostly, these are issues that should be resolved on the ground...literally.

The scale of plans used by the Land Registry means title plans are not always definitive, and will seldom assist with small boundary discrepancies.

The thickness of a line on a title plan used in urban areas (scale 1:1250) represents roughly 0.3 metres on the ground; for rural areas (scale 1:2500) it’s roughly 0.6 metres.

There are complex rules and assumptions regarding accuracy, which are explained in this Land Registry guide.

The majority of title plans show only “general boundaries”, reflecting what the Land Registry considers to be a reasonable interpretation of pre-registration title deeds when compared to the detail on Ordnance Survey mapping.

In practice, when parties try to enter into discussions or mediation, they often become entrenched in their positions and unwilling to compromise.

The new bill might offer a workable solution - although the losing party is never going to be happy, however the dispute is dealt with.

Photo by quinn.anya via flickr

Tuesday, 23 October 2012

Insurers to Lend More as Banks Retreat

Global insurance companies are expected to up their provision of commercial real estate (CRE) loans in the UK by £28.1bn over the next 5 years, according to a study out today from DLA Piper called Searching for Investment: Insurers as Lenders.

Since the financial crisis, the availability and character of lending to the UK’s CRE market has changed dramatically.

Bank financing has been much more difficult to obtain and, when it's available, the terms are heavily stacked in favour of the lender.

Although banks remain the majority providers of debt finance, what the report describes as their “effective withdrawal from new lending” has left a gap in funding across all sectors, but especially within CRE.

Insurance companies (life & pensions and annuity providers) could therefore provide a welcome boost to the beleaguered sector.

Thursday, 18 October 2012

Chancel Repair Liability Discussed in Parliament

Whilst most people interested in parliamentary goings-on may have been transfixed yesterday by the latter-day sport of Chief Whip baiting, those inclined to a more medieval persuasion were treated to a debate on chancel repair liability.

Chancel repair liability was featured on this blog recently in my post One Foot in the Grave.

Peter Luff MP has a special interest in this area and raised it yesterday in the Commons. He says he has seen evidence of a “rush of registrations” on behalf of the Church.

He estimates about 500 parishes and potentially 15,000 individuals could be affected by the risk of chancel repair liability.

There’s not much sympathy from the minister, Helen Grant, however.

She said: “Chancel repair liability is a long-standing interest in land under the law of England and Wales, and the Government have no plans to review the law relating to it.”

You can read the debate if you want to follow the reasoning, such as there is, behind that decision and here is a very good summary by Paul Hayek, a solicitor who's taken a close interest in this subject.

The Parochial Church Councils are in a difficult position as the law currently stands, both from a public relations and a legal perspective.

Their members don’t have a free hand in grappling with this issue.

A PCC is a charity so its members are subject to the usual duty of charity trustees to exercise their powers in its best interests.  They can't therefore simply choose not to register or enforce chancel repair liability. 

The Charity Commission has warned that if they don't register in time, individual members of PCCs could be liable for the repairs or even found to be in breach of their legal and fiduciary duties as trustees.

The deadline for registering chancel repair liability creates a tension between the interests of the Church and landowners.

The Church says it has financial responsibility for 45% of the nation's Grade 1 listed buildings and many other architecturally important churches. 

70% of repair bills are met by local fundraising, with only a minority coming from English Heritage, lottery funds and other non-church sources.  This places a considerable financial burden on PCCs, which largely rely on voluntary giving to support their work. 

Against that background, the Church says it can't be expected to forego sources of funding to which it's entitled unless it receives adequate compensation. 

The policy of English Heritage has traditionally been that it won't provide grant aid to a PCC in respect of repairs to the chancel of a church where there's a lay rector who is responsible for its repair. 

However, responsibility for grants for places of worship is to be taken over by the Heritage Lottery Fund (HLF) with effect from 1st April 2013.

The HLF has said it won't continue with the blanket policy that considers chancel repairs where there's a lay rector to be outside the scope of grant aid.

Instead, the HLF intends to take account of the financial needs of the applicant with regard to future development plans for the long-term sustainable use of the building and also to be realistic about their ability to fund raise.

The HLF says it won't encourage PCCs to pursue chancel repair liability on occasions where it's “evidently unreasonable for them to do so”."

Although some might sympathise with the position the PCCs find themselves in however, it's surely a nonsense, or even an outrage, that your property can forever be blighted by a liability that has its origins in the Reformation.

The government could have cut through all this by abolishing the liability altogether and compensating the Church.

But they’ll say there’s no money left.

There’s a piece by me on Chancel Repair Liability – “One foot in the grave” – in the Property Law Journal (£) Issue Number 299 dated 5 November 2012.

Tuesday, 16 October 2012

Less Heavy with the Levy

The government is expected this week to announce amendments to the Community Infrastructure Levy (CIL) regulations to prevent developers being charged double planning gain*.

The revised regulations are expected to contain measures to prevent developers from being liable both to pay a CIL charge and make a section 106 contribution.

The regulations will seek to prevent CIL being charged just because developers are seeking to alter or amend a planning permission that wasn’t subject to CIL because CIL hadn't come into force when the original planning permission was granted.

At present, under section 73 of the Town and Country Planning Act 1990, you can apply to vary a condition subject to which a planning permission has been granted and if the application is successful, a new consent is granted. 

If the new consent is granted after CIL comes into force, it could attract a CIL charge. 

There is currently therefore a risk of a development being subject to both a section 106 contribution agreed at the time of the original consent and a CIL liability relating to the section 73 consent. 

The regulations are expected to come into force next month.

Other planning news - minister Nick Boles last night said proposed temporary changes allowing larger extensions to homes without planning permission could become permanent, in a forceful defence of the proposed policy.

*Update - The draft regulations have now been published and here is some commentary from CMS Cameron Mckenna and some more from Pinsent Masons

The effect of the draft regulations will be that if the section 73 consent does not result in an increased floor space compared to the original consent, then no CIL will be payable.

Developers will therefore have to take this into consideration if they want to increase floorspace.

The regulations are not retrospective and will only apply to section 73 consents issued after the regulations come into force.

It looks like one thing that hasn't been reformed is the complexity of the CIL regulations, which will dismay developers who are still likely to need specialist planning advice in many situations to steer them through this labyrinth.

UPDATE 18/10/12 The British Property Federation has warned London’s boroughs to take care when charging CIL or risk choking off development in the capital.

Liz Peace, chief executive of the BPF, told the GLA on 17 October: "There's no doubt if you set a high CIL you will scupper development...There's a fear CIL is being imposed on top of s106 agreements, rather than s106 being scaled back and CIL used to fund infrastructure in its place. This 'double dipping' needs to resolved."

UPDATE 5/12/12

The regulations came into force on 29 November 2012. 

Photo by treehouse1977 via flickr