Property Update: Coming up in 2013

On the 5th of December, George Osborne delivered his Autumn Statement to the Commons, with little Christmas cheer. The Chancellor confirmed that growth forecasts were to be revised downwards and the national debt was taking longer to reduce than anticipated. With such a paucity of cockle-warming news, the government’s legislative programme for 2013 has assumed even more importance, and will have significant property law implications. This article takes a look at a few developments in the pipeline for 2013.

Growth and Infrastructure Bill

Last month, the Growth and Infrastructure Bill had its second reading in the House of Commons, and is expected to become statute by April 2013.

Perhaps the Bill’s most controversial reform is the plan to allow applicants for planning permission in ‘underperforming’ local authorities to apply directly to the Secretary of State. How an authority will be deemed to be underperforming is largely unknown at this stage, but it could be encouraging for applicants to have the option to bypass inefficient councils.

The Bill also addresses the law surrounding town or village greens. At the moment, local groups can stop development on land by registering it as a town or village green as long as they can show they have used the land as of right for 20 years for lawful sports and pastimes. Change has been prompted by reports of residents taking advantage of the law in order to register disused railway lines, beaches and golf courses – not your typical village greens!

Under the Bill, landowners can issue a formal statement that definitively declares the land is not to be taken as a village green, which (after two years) will prevent all future attempts to register it as such. In addition, registration attempts will not succeed if there is a planning application pending over the land. It is expected that these measures will cause a significant drop in the number of successful registrations, but there is also likely to be a deluge of registration attempts before the Bill passes.

 Chancel Repair Liability

The law on chancel repair liability is also set for significant change in 2013. As it stands, landowners can be made to pay for repairs to the chancel of their local parish church, thanks to an archaic liability that dates back to the dissolution of the monasteries under Henry VIII. In the notorious 2003 case of Parochial Church Council of the Parish of Aston Cantlow, etc v Wallbank, landowners were ordered to pay £350,000 to pay the local church’s repair bills. This landmark case gave rise to a niche insurance industry that has reaped the benefits of insuring buyers against the risk of liability when purchasing a new home.

The big change is that chancel repair liability will no longer be classed as an overriding interest under the Land Registration Act 2002 from midnight on 12 October 2013. This means that the liability to pay for chancel repairs will only arise if a notice is registered at the Land Registry against a property’s title. This will bring a degree of certainty to some buyers, who may no longer need to carry out a chancel search to ascertain the risk of liability.

However, it is not all good news. If chancel repair liability is registered on the title before 13 October 2013, it will permanently affect the land. In addition, land acquired before that date will continue to potentially be affected by chancel repair liability until it is sold.

Overall, this is a step in the right direction, but not the end of chancel repair as a much-maligned quirk of English property law. It will also be interesting to see whether there is a rush to register liabilities before the October deadline.

A New Property Tax?

Ever since the coalition government came to power in 2010, there has been debate about the viability and desirability of new property taxes. Particular attention has been devoted to the Liberal Democrats’ idea of a tax on residential properties valued above a certain amount (£2 million has recently been suggested). This so-called Mansion Tax would have wide-ranging implications for owners of high-value houses – particularly those who are relatively “cash-poor”; their assets being tied up in property.

However, at the date of writing, the latest signs are that the Mansion Tax is far from imminent. Indeed, there is so much resistance to the idea in the Conservative Party that we appear unlikely to see it without a change of government.

Less radical (and hence more likely) is an increase in Stamp Duty Land Tax for high-value properties. Whilst nothing concrete has yet been proposed, the government’s continued struggle to restore its finances makes a stamp duty hike in the next Budget (perhaps on properties sold for £1 million or more) look ever more tempting.

Summary

The government wants to show that it is serious about stimulating the economy and spearheading the necessary growth to drag the country out of recession. It remains to be seen whether the liberalisation of planning laws will kickstart economic activity, but the climate certainly appears to be shifting in favour of allowing development. As a result, it is more important than ever that both developers and residents are aware of the forthcoming changes to the law, and how they will be affected.

This guide is for general information and interest only and should not be relied upon as providing specific legal advice. If you require any further information about the issues raised in this article please contact the author or call 020 7404 0606 and ask for your usual Goodman Derrick contact.