The path to 1.5 million new homes – Activating the Government's landholdings

Since the Labour government was elected on 4 July there has been much in the media about how it will go about achieving its manifesto pledge of delivering 1.5 million new homes over the course of this parliament. A lot of the attention to date has been focused on reform of the planning system which in the view of the Chancellor "leaves too many important projects getting tied up in years and years of red tape before shovels ever get into the ground".

Whilst many are in agreement that planning reform will be key to delivering the additional homes promised, releasing the vast swathes of developable land in public ownership will also be an important factor. In addition to the usual title encumbrances and legislation that could apply, there are various additional real estate considerations at play when it comes to disposing of land in public ownership for development, including the following:

Crichel Down Rules (Rules)

Where the government is looking to dispose of land that was previously subject to compulsory acquisition for government purposes (but is no longer required for such purposes) the Crichel Down Rules may apply. If the Rules do apply, the government will be required to declare it surplus and offer the surplus land back to the former owner (or its successor in title) at the current market value prior to disposing of it. Whether the Rules apply may require detailed legal analysis and, if they do apply, the selling government entity will need to follow the procedures set out in the Rules prior to the disposal (including investigating previous ownership and writing to former owners etc).

Public Contracts Regulations (PCR) / Procurement Act 2023

The Public Contracts Regulations 2015 may apply to the disposal of land by the government because the disposal could constitute a "public works contract" – this is generally where the land transaction includes certain development or construction obligations in addition to the land transfer. When disposing of the land the government entity may wish to impose certain controls about how the scheme is developed, particularly if it is retaining land which adjoins the site. However, any such controls will need to be looked at in the context of the PCR and any applicable processes. The Procurement Act 2023 will be coming into force shortly but there are transitional provisions so the PCR may continue to apply.  

National security and asset protection

Land in public ownership is, by its very nature, likely to be located near to critical government infrastructure which may include government buildings or other key infrastructure.  One factor to consider is whether the disposal of the site will engage national security issues and thereby be caught by the UK National Security and Investment (NSI) Act. Although it is unlikely to apply to most land disposals, certain transactions could be subject to mandatory notification requirements, with a prohibition on completion of the disposal prior to clearance.

More broadly, if the site adjoins or is near other government-owned land or infrastructure, the site is likely to be subject to asset protection provisions which are designed to protect nearby infrastructure (for example there may be restrictive covenants not to build within a prescribed exclusion zone or not to do anything which would interfere with the operation of the infrastructure). Again, these could impact what can be developed on the site.

Summary

At best, these additional considerations have the potential to delay the disposal of land for development and at worst they could make some new housing schemes unviable.

So whilst planning reform will be a key driver in delivering the 1.5 million new homes that have been promised, the government should look at other impediments to the disposal and development of land in public ownership and consider how it can promote the disposal of this land for development whilst at the same time balancing this against the interests of government, infrastructure operators, landowners and other stakeholders under the existing statutory frameworks.

If you have any thoughts on this or would like to hear about our experience of dealing with these issues in practice, please get in touch.