In the aftermath of the referendum vote, Irwin Mitchell partner, Martha Grekos, outlines an odd climate for planning. Governed part by uncertainty and part by the necessity of continuing to adhere to EU laws, planners will be left to cautiously survey a changing lie of the land.
What are the short-term planning implications of the result?
I would expect delays on any planning reforms proposed, because ministers will now be engaged with what the exit plan from the EU should be and the negotiations that will follow once the article 50 clock is started. Commercially, the viability of many schemes will have now changed given the shock the market has had and the uncertainty that remains. As such, many developers will be proceeding with extreme caution and it is likely that investors will start pulling back even more.
The EU does not tend to legislate in the area of planning law, leaving this to the individual Member States and, as such, European law has a comparatively limited effect in relation to development regimes across the UK. However, where the EU has a greater effect on planning is in the area of environmental protection. As such, there will not be much change here in the short-term. This area will not be impacted on until we leave Europe—but we will still be bound by a lot of European legislation as we have transposed those into our law. All that said, there are always some who use uncertainty to their advantage so we may see some quick transactions due to the changed pricing opportunities.
What are the longer-term implications of the referendum result?
This will mainly depend on what shape the negotiations take and what the final exit agreement with the EU would be. In addition, it will also depend on how the economy stabilises because developers and investors would want to see growth and opportunities in order to bring forward schemes. For now, what is known is that the uncertainty over the process for exit could well impact on decisions in the property market as the perception of risk attached to the UK is heightened. Some investors will hesitate and some occupiers will re-plan their footprints and building pipelines may slow down. That said, there are always some who use uncertainty to their advantage and it will not be the first time the property industry has taken advantage of market change. It will be interesting times ahead.
European environmental Directives have been transposed into national legislation and the devolved administrations in Scotland, Wales and Northern Ireland have different diverging laws/policies all within that European framework. Once the UK is no longer a member of the EU, Regulations and Treaty provisions would no longer apply. However, we will still be bound to our own laws which have transposed those Directives. It is possible that policies in different parts of the UK will diverge even further than they do currently because if any part of the UK wanted to make any legislative changes, these would need to be made by each of the individual constituent parts of the UK. This in turn could make compliance more difficult for businesses operating in more than one part of the UK.
In addition, the UK could be faced with an odd position that it would have to mirror the EU protections without having any power or a say in their development. This is because we would no longer be able to shape EU policy once we were no longer at the negotiating table. If UK businesses wanted to trade with the EU, any goods exported to the EU would still have to comply with EU environmental standards. And most importantly, if the UK joined the EEA or EFTA, the UK would still have to sign up to most of the EU’s environmental laws because those laws also affect the functioning of the single market. Areas of environmental regulation excluded from the EEA Agreement include the conservation of wild birds and natural habitats. It’s questionable whether Parliament or the devolved administrations would actually want to deregulate in these areas.
Finally, the UK will also remain bound by the various international conventions to which it is a part. These cover matters such as climate change (the Framework Convention and Kyoto Protocol), access to justice in environmental matters (Aarhus Convention), habitat protection (eg Ramsar) and the protection of endangered species (eg CITES). UK exporters still have to comply with EU product safety and labelling standards in order to place their products on the European single market. The true impact of planning and environmental law and policy will only become clear once negotiations are underway and the future legal relationship with the EU will govern the extent to which the UK must continue to comply with EU environmental laws.
There will be question marks raised over some major infrastructure projects due to the potential losses of funding from EU for such projects and this may also force the government and local planning authorities to rethink their priorities. This is because it will put pressure on the public sector to find alternative sources of funding and/or to cut back. Schemes such as HS2, Crossrail 2 and the Northern Powerhouse programme are vital to the country’s ability to compete on a global stage, which is more crucial than ever due to this referendum result.
Housing need drivers include demographic trends such as migration rates, population age structures and household headship rates. However, economic factors are also relevant—both directly and indirectly in terms of their influence over demographic outcomes such as household formation. Levels of immigration will continue, we will have a large ageing population and it will be interesting to see if the younger generation stay or move abroad for opportunities. Either way there will be an impact on population growth, and on local authorities’ ability to plan for future needs in their area. Furthermore, we will probably end up seeing more use of viability assessments and the increased pressure to reduce affordable housing in order for schemes to progress through the planning system in such an economic climate. The imbalance between housing supply and housing demand would continue.
Interviewed by Julian Sayarer.
The views expressed by our Legal Analysis interviewees are not necessarily those of the proprietor.