What is the green or grey belt?

Traditionally, green belt land has been used as a buffer to prevent urban sprawl through keeping this land natural and undeveloped.

However, following the election of a Labour Government in July this year, the party has maintained they wish to re-categorise some of this green belt land to ‘grey belt’.

The grey belt refers to green belt land which is regarded as ‘poor quality’ and/or ‘ugly’.

This is said to include the ‘edge of existing settlements or roads, old petrol stations and car parks’ and “neglected areas such as poor quality wastelands and disused car parks that are in the green belt”; although it will be up to the individual councils to have the final say on what land can be branded as grey belt.

The Government’s intention appears to be create a hierarchy from a planning perspective consisting of Brownfield sites first, grey belt second and green belt third, with a target of 50% of affordable housing being included on such sites.

Grey belt land: An easy solution?

Whilst it is dubbed as Labour’s answer to the housing crisis, enabling thousands of homes to be built on grey belt land may not be as easy as it sounds.

Green belt land is often littered with restrictive covenants, which are in force to act as a contractual obligation to regulate what can and can’t be done with the land.

These covenants came about as a result of there being no national planning framework having existed prior to the Town and Country Planning Act 1947, therefore this green belt land could only have been protected through a restrictive covenant.

Such covenants may impose various restrictions on the use of land, such as requiring that the land only be used for agricultural purposes or as a single private dwelling or prohibiting the development of blocks of flats or completely prohibiting any sort of development.

Restrictive covenants on grey belt land: What can be done?

In the face of a multitude of layers of existing covenants restricting the use of land, developers may need to consider using s84(1) of the Law of Property Act 1925 to discharge or modify these covenants as such powers are often key to unlocking the value in development land burdened by restrictive covenants.

Whilst developers can consider ‘buying off’ any objectors to the development, the prospects of this are often slim and/or prohibitive especially where there are significant number of objects that can enforce the restrictive covenant.

Equally, restrictive covenants given an opportunity for objectors to the development to have a second bite of the cherry to thwart the development if the planning battle has been lost meaning there are often issues of principle that can be difficult to negotiate away [1].

Although, it must be noted that such modifications can only be made where a restriction — rather than a positive obligation- exists under the covenant and the freehold vs leasehold categorisation of the land may also be relevant to the modifications available.

In order to persuade the Upper Tribunal (Land Chamber) (“UT”) to exercise its discretion to modify a restrictive covenant, a developer would need to satisfy one of the statutory grounds under s84(10) the most coming of which are as follows:

• Ground A (obsolescence) is noted as the notoriously hardest ground to elicit success, developers may have a slim chance of arguing the restriction is obsolete. Drawing upon Hancock, a restriction may be deemed obsolete where it originated to limit development, but the surrounding area had undergone significant development so this original purpose could no longer be achieved. This could prove more useful where surrounding green/grey belt land has already been given the green light for development. If developers are granted planning permission for the land in question, this may be very persuasive in the tribunal’s consideration of a modification, however planning permission itself will not render the restriction obsolete.
• Ground AA (reasonable use) may be where developers can enjoy more success in their application to modify a covenant. In essence to clear this hurdle of ground (aa), it is necessary to show that the development represents a reasonable use of the burdened land, and critically, that any benefit secured by the covenant is not one of substantial value or advantage to the covenant beneficiary.
• Ground (c) (no injury) – a developer would need to show that the proposed modification of the covenant cause no injury to the benefitting land. This ground is often run in tandem with ground (aa).
• Whilst this is not a common ground relied at present, drawing upon Labour’s emphasis on using the development of grey belt land to address the current housing crisis, may open up the possibility for developers to rely on a public interest ground. However, this ground is very narrowly interpreted by the UT and the development would need to be seen as so important and so immediate for a modification to be granted.

Even when a statutory ground under s.84(1) has been established (i.e. one of the jurisdictional grounds) the UT still retains a discretion whether or not to grant the modification but there does need to be compelling reason not to exercise the discretion to modify, if a jurisdictional ground is established.

Grey belt land and restrictive covenants: Tips for developers

For any developer wanting to unlock the development potential in land burdened by restrictive covenants, the possibility to rely on s84(1) is a key consideration and the following matters need to be considered at an early stage:

1. Are the proposed covenants restrictive in nature and do they prevent the proposed development from being implemented? If so, consideration needs to be given as to whether title indemnity insurance is sought and/or whether it would be possible to negotiate a release/modification of the covenants with all potential beneficiaries.
2. If a resolution cannot be reached, consider the merits of a s84(1) application to modify the covenants in question and developers should seek both legal and surveying advice on the merits of the claim. Such advice will not only assist with presenting the best possible case to the UT but also with any potential negotiations that may take place either before or after the application is issued to the UT.
3. Whilst the UT retains a discretion as to whether to modify the covenant, there must be a good reason not to modify the covenant if a jurisdictional ground is established.
4. Where the application is brought on ground (aa), the developer ought to make sure that it has comprehensive evidence to address the other ‘discretionary’ matters that the Tribunal must take account of, in particular (under s.84(1B)): ‘the development [i.e. local] plan and any declared or ascertainable pattern for the grant or refusal of planning permissions in the relevant areas…’.
5. If an objection to the development is raised because of a covenant and a developer decides to continue to carry out works, a good reason will be needed to explain why works have continued (e.g. works to make the site safe) otherwise the UT may well criticise such behaviour especially where it is a cynical breach of the covenants in question.
6. Subject to the terms of any insurance policy, there is benefit in being transparent with objectors before any works are commenced. For example, if a developer is required to undertake implementation works to preserve a planning consent this should be explained to the beneficiaries of the covenant to avoid them seeking an injunction to prevent such works.

David Manda in our Real Estate and Housing Litigation team has significant experience of advising clients on the enforceability of restrictive covenants and the options available to unlock development land where covenants prohibit development.

[1] NB it should be noted that if developers are considering obtaining title indemnity insurance to cover the risk posed by covenants, any contact with potential beneficiaries my invalidate such policies and/or mean insurance is not available. Equally, if an insurance policy is in place, the terms often prevent such discussions taking place without the express consent of the insurer. Therefore, this must be considered very carefully before any potential beneficiaries are approached.