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Out-Law News | 24 Aug 2018 | 4:30 pm | 4 min. read
The Scottish Land Commission (SLC) recently published a proposal for a compulsory sales order (CSO) power (30-page / 780KB PDF), as recommended by the 2014 Land Reform Review Group. Its proposal will now be passed to the Scottish government for consideration.
There is currently around 11,600 hectares of vacant or derelict land in Scotland, according to official figures. The idea behind the SLC's proposal is to give planning authorities a straightforward method of bringing small sites and buildings that have been unoccupied or derelict for a long period of time back into productive use, by requiring their sale by public auction to the highest bidder.
However, given the budgetary and resource constraints planners are currently under, the SLC's proposal that local planning authorities would be required to identify suitable land and build a very strong case in favour of a CSO before initiating action seems unrealistic, according to planning law expert Gary McGovern of Pinsent Masons, the law firm behind Out-Law.com.
"The CSO proposal is predicated on the notion that the various existing powers which can be used to deal with long-term vacant and derelict land are complicated and time-consuming – but it's evident from the consultation that a CSO is also far from straightforward," he said.
"Given the legal issues engaged and the evidence base that would need to be gathered, I do wonder whether many local authorities would have the appetite, resource and expertise to bring forward a CSO. There is little point in introducing a new tool if it is likely to remain in the toolbox," he said.
The new power could be used to tackle relatively small sites which do not have major development potential, which are not used for any productive purpose and which are causing "demonstrable harm" to the surrounding community, for example because they are eyesores or are attracting anti-social behaviour, according to the SLC report. Examples given by the SLC include empty homes, abandoned shopping centres, derelict hotels and commercial buildings, and small 'gap' sites.
The SLC envisages that the power should be used as a "last resort", where other attempts to bring a site back into productive use have failed. Sites that may be appropriate for CSO action would usually be identified by individual council officers and councillors, although community bodies would also be able to ask a planning authority to investigate a site for a CSO.
The report recognises that a CSO would involve "the state directly interfering with an individual's property rights". For this reason, planning authorities would be required to build "a very strong case" in favour of a CSO before taking action, drawing on sources such as reports of nuisance or previous enforcement action. They would also be required to give the property owner the opportunity to provide evidence of any attempts to bring the site back into productive use, any reason why this is not possible or any other extenuating circumstances "at an early stage in proceedings". Owners would also be given a right to object to the Scottish government.
Planning authorities would be able to attach conditions to the sale of sites subject to CSOs, for example a requirement that the new owner complete redevelopment and bring the site into productive use within a fixed period of time. The SLC proposes that planning authorities should be "empowered to recoup the costs associated with organising the auction and undertaking the initial desk-based survey" from the proceeds of the sale. However, they would be expected to cover the costs should the proceeds of the sale fall short.
The SLC envisages that the new right would operate alongside existing policy instruments which can be used by communities and local authorities to encourage regeneration, such as compulsory purchase orders and the new community right to buy 'abandoned, neglected and detrimental' land. These policies usually require that there be a clear plan in place as to how the land or building in question would be used, which the SLC said was unlikely to be the case for many of the small sites for which a CSO would be appropriate.
"The SLC believes that the problem with the existing rights to buy is that the community body wishing to acquire the land has to have a plan for what they will do with the property before they can buy it," said property law expert Rachel OIiphant of Pinsent Masons. "They see the advantage of the CSO is that someone can buy the land without fully developed plans for using the property, but it is difficult to see how this progresses things: how is having a new owner with no plan for what to do with the land better than having the existing owner with no plan for what to do with the land?"
Property law expert Alan Cook of Pinsent Masons said that the SLC's proposals were not clear on whether an owner forced into selling land by way of a CSO should be compensated should the purchaser profit from an increase in the value of the land as a result of the sale. For example, if the purchaser owned adjoining land, they could benefit from a significant uplift in value due to the development potential of the larger site, he said.
"Can planning authorities really be expected to successfully evaluate this before they proceed with a CSO for the land?" he said. "That evaluation requires an appreciation of development potentials, adjoining ownerships or interests, etc. – skills which planning departments do not necessarily have."
"If CSO measures ignored the question of whether a forced sale under a CSO should also allow for payment of future overage to the seller if the purchaser profits from an increase in the value of the land as a result of the sale, this would feel like the seller was being financially punished for their previous decision not to sell (for whatever reason), with potential human rights law repercussions. On the other hand, it could be argued that that is not the point of the policy, which is simply to unlock the ability for the land to be used in some way," he said.
Fintech meet up