The Levelling-up and Regeneration Act 2023 (“LURA”)

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The Levelling-up and Regeneration Act 2023 (the LURA) received Royal Assent received on 26 October 2023 and is a substantial piece of legislation (over 500 pages long!), creating a raft of new laws concerning the property industry, many of which are yet to come into force.

In this round up we explore some of the main legislative changes brought in by the LURA which are set to impact the local government and property sector(s).

PART 9 – COMPULSORY PURCHASE

To enhance regional development initiatives, the government has introduced amendments to the existing compulsory purchase legislation under the LURA. Compulsory Purchase Orders (CPOs) for specific projects may now be granted without compensating owners for the ‘hope value’, as part of an incentive to promote more CPOs by making land costs more certain and, potentially, less prohibitive.

Whilst there are a number of changes made, the key changes to the law relating to CPO s under part 9 are summarised here. It should be noted that the provisions as set out below have not yet come into force and await a commencement order by the Secretary of State.

1. CONFIRMATION PROCESS
   The LURA introduces a significant change to the CPO confirmation process. The automatic right for objectors to request a public local inquiry has been removed. Instead, the confirming authority (i.e. the relevant Secretary of State) can decide, considering the CPO’s scale and complexity, whether to hold a public local inquiry or follow the ‘representations procedure,’ which is akin to the process used for planning appeals.
2. CONDITIONAL CONFIRMATION OF THE CPO
   The LURA permits confirming authorities to approve a CPO with conditions. This ‘conditional confirmation’ means the CPO cannot be implemented until the conditions have been discharged by the acquiring authority (i.e. the authority making the CPO).
3. TIME LIMITS FOR IMPLEMENTATION OF THE CPO
   Confirming authorities can now extend the three year time limit for the implementation of compulsory purchase powers under the CPO, if justified. The confirming authority can determine whether a longer period is warranted for more complex schemes.
4. HOPE VALUE
   The LURA removes ‘hope value’ under schedule 2A for compensation purposes. ‘Hope value’, tied to the potential future worth of land, has historically posed challenges to bringing forward urgent regeneration and infrastructure projects.

The LURA now provides that, in assessing the open market value of land compulsorily acquired, it must be assumed that, in the absence of any existing planning permission, no planning permission for alternative use would be granted for that land in the future. However, these provisions will only apply where the acquiring authority has applied for a direction from the Secretary of State and only where the CPO being made is intended to enable social or affordable housing, or educational or health facilities.

However, the assessment of land value excluding ‘hope value’ could well lead to potentially increasing legal challenges and unintended consequences thereby making the CPO process riskier for local authorities.

PART 10 – LETTING BY LOCAL AUTHORITIES OF VACANT HIGH-STREET PREMISES

The LURA has introduced a new statutory framework to enable local authorities to carry out auctions for letting vacant properties and subsequently compel commercial landlords to grant a new lease to the winning bidder. The outcome of an extensive Government consultation exercise, the so-called ‘high street auction process’, essentially allows local authorities to override the rights of private landlords for ‘qualifying’ properties.

In order for vacant premises to be captured by the legislation, it must satisfy the following conditions:

• DESIGNATION: It must be within a ‘designated’ high street or town centre. Heavy industrial, warehouse and residential properties are not captured by the LURA.
• USAGE: It must be for ‘high street use’ (set out in s192(1) of the LURA), for example as a shop or for public entertainment or recreation.
• VACANT: It must be ‘vacant’ – meaning unoccupied for the whole of the previous year or on at least 366 days during the previous two years.
• SUITABILITY: The local authority must consider the letting to be of benefit to the local economy, society or environment.

If the above four conditions are satisfied, the local authority may then commence the high street auction process to auction the letting of the subject premises, which is summarised as follows:

It should be noted that Part 10 of LURA is not yet in force and will require further regulations to expand the detail of the proposed high street auction process, including greater detail regarding procedural steps.

PART 11 – INFORMATION ABOUT INTERESTS AND DEALINGS IN LAND

The Act sets out a framework allowing the Secretary of State (SoS) to make regulations requiring certain information to be provided to the Chief Land Registrar or anyone else exercising public functions on behalf of the Crown where this is within the scope of one or more of the ‘permitted purposes’.

The Act identifies three ‘permitted purposes’ for which the SoS may require disclosure:

• The ‘beneficial ownership’ purpose: Information will fall within this purpose if the SoS considers it would be useful for:
  • Identifying persons who are beneficial owners of land in England and Wales; or
  • Understanding the relationship of those persons with the land they beneficially own.
• The ‘contractual control’ purpose: Information will fall within this purpose if the SoS considers it useful for understanding contractual rights, including identifying the persons holding such rights and the circumstances in which they were created. Relevant contractual rights for these purposes being those that:
  • Arise under a contract;
  • Relate to the development, use or disposal of land; and
  • Are held for the purposes of an undertaking.
• The ‘national security’ purpose: Information will fall within the scope of the national security purpose if it appears that:
  • There is a threat to national security in connection with the location of the land or anything being done on it;
  • The information would be useful for identifying persons who own relevant interests in the land, have relevant rights concerning the land or have the ability to control or influence a person with such interests or rights; and
  • Requiring the provision of the information would be justified in the interests of national security. There will be two main methods of ensuring compliance:
  • Regulations may provide that where the required information has not been provided, no change can be made to the register of title at the Land Registry. This will effectively be a bar to dealing with the land.
  • A person who fails to provide required information (or provides false or misleading information) will commit a criminal offence. The officers of an entity may also commit the offence e.g. company directors.

Section 219(8) makes it clear that regulations made thereunder may relate to things done or arising before it came into force on 26 October 2023 so the relevant provisions could have retrospective effect. Overall therefore the provisions of this Part of the Act will seriously reduce the extent to which details relating to land ownership and control and transactional information can be kept confidential.

It should be noted that whilst Part 11 came into force on the date the Act received Royal Assent (26 October 2023), secondary legislation is still awaited setting out the details of the obligation to provide information.

Real Estate: Jo Pickering and Aidan Dickinson
Contributors: James Mallery-Nelson, Victoria Okafor and Christopher Watkins