The long-awaited judgment from the Supreme Court in the case of Guest and another v Guest [2022] UKSC 27 was handed down recently. We summarise the key issues and highlight relevant points for farming families and rural practitioners.

In summary, Andrew Guest’s parents had provided their son with assurances for over 30 years that he would inherit a sufficient interest in the farm, which Andrew had relied upon to his detriment for little financial return. The parents then repudiated that assurance and effectively disinherited Andrew. Fuller details are set out in our previous articles (Proprietary Estoppel: Habberfield and Guest confirm the direction of the Courts | Michelmores) on the High Court decision and (Proprietary Estoppel: Two cases – two different outcomes | Michelmores) on the Court of Appeal decision.

Focus on remedy

It had been hoped that the Supreme Court would provide clear guidance on what the Appellants’ barrister referred to as the ‘lively controversy’ about how proprietary estoppel claims should be remedied:

1. by compensating claimants for the detriment they have suffered in reliance on the promise made; or
2. by enforcing the defendant’s promise so as to fulfil the claimant’s expectations.

Some ten months after the hearing, however, the five Justices of the Supreme Court who heard the case could not themselves agree and instead handed down a split judgment on a 3/2 basis.

The outcome

The leading judgment was delivered by Lord Briggs, with whom Lady Arden and Lady Rose agreed. Lord Briggs allowed the appeal in part, determining that the High Court Judge had been correct to award the claimant his expected inheritance, despite that effectively meaning that the farm had to be sold; but that he had been wrong not to apply a discount for the claimant’s early receipt of the award.

The aim of proprietary estoppel

In his judgment, Lord Briggs emphasized that the debate about whether the aim of the remedy is to fulfil the expectation or to compensate for the detriment suffered is ‘misconceived’. Rather, the aim of proprietary estoppel is and always has been to prevent or undo unconscionable (or unfair) conduct. The starting point for the court, once a claimant has successfully established that an estoppel has arisen, should therefore be to enforce the promise.

However, while the court should start with the assumption that the promise should be fulfilled, ‘considerations of practicality, justice between parties and fairness to third parties may call for a reduced or different award.’ Flexibility remains key, and remedies will continue to be fact specific.

Minimum equity

The idea that the appropriate remedy is the one that is cheapest for the promisor – i.e. does the least to satisfy the equity – was rejected. Following a detailed review of the relevant case law, Lord Briggs determined that this oft-quoted dictum from 1976 has developed out of context, and what remains key is that the injustice of the promisor going back on his word is rectified.

Detriment & proportionality

Lord Briggs confirmed that although detriment is a fundamental element in establishing an equity, quantification of the detriment is not relevant when it comes to the remedy. This is welcome news given the difficulties of quantifying detriment where the ‘harm’ suffered by claimants in farming cases like this is often vague, speculative and non-monetary.

The expectation will not always be proportionate to the detriment:

there is nothing in principle unjust in a full enforcement of the promise being worth more than the cost of the detriment, any more than there is in giving specific performance of a contract for the sale of land merely because it is worth more than the price paid for it.

However, Lord Briggs clarified that the remedy should not be ‘out of all proportion to the detriment’ and confirmed the continuing relevance of the proportionality test set out in the 2002 Court of Appeal case of Jennings v Rice. However, this test is only relevant where the detriment can readily be identified and should always be applied with caution.

Accelerated receipt of the promised property

The High Court’s award saw the claimant receive his promised inheritance while his defendant parents were still alive. Lord Briggs determined that in failing to apply a discount, the High Court award had given the claimant more than he was promised and had thus exceeded the ambit of the Court’s discretion.

The Supreme Court held that the correct remedy to avoid unconscionability was either:

• that the claimant receive the awarded sum now but with an appropriate discount applied to take into account the accelerated receipt (to be agreed or determined); or
• the claimant’s share of the farm be held on trust by his parents for their lifetimes.

It was for the parents to choose which of these alternative forms of relief to give, as either would avoid an unconscionable result.

Five Key Points

1. The aim of proprietary estoppel is to prevent or undo unconscionable (or unfair) conduct.
2. The now well-established principles of establishing a proprietary estoppel claim continue to be necessary for a successful claim: i.e. a sufficiently clear promise or assurance of a future interest in property which is relied on to the detriment of the promisee, so that it would be unconscionable for the promisor to later rescind their promise.
3. The starting point for the remedy is the satisfaction of the promise, as it is the going back on that promise which is unconscionable.
4. Each case is fact specific, and there are in practice a variety of relevant factors which may mean that something other than fulfilment of the promise in full is the appropriate remedy.
5. The remedy should not be out of all proportion to the detriment suffered, where that detriment can readily be identified.

The Other View

The dissenting judgment given by Lord Leggett and supported by Lord Stephens demonstrates a fundamentally different approach to proprietary estoppel. The established rules of contract law and the legal requirements for valid transfers of land are clearly preferred to the uncertainty of this ‘potent legal doctrine’. The aim of avoiding an unconscionable result is acknowledged but criticised for failing to provide practical guidance on remedy.

The key difference between the judgments on remedy is Lord Leggett’s view that what should be avoided is the claimant suffering detriment if the promise is not kept. It follows that this can be done either by enforcing the promise or by putting the claimant in the position he would have been in had he not relied on the promise – i.e. by compensating his loss. The correct remedy is whichever of these two options ‘imposes the least burden on the defendant’. Lord Leggett’s conclusion was that he would allow the appeal and give an award based on the detriment suffered by the son in reliance of his parents’ promise.

Summing Up

The fundamentally different approaches and attitudes to proprietary estoppel between the leading and dissenting judgments is evidence of the continued uncertainty over how these cases will be resolved by the courts.

However, it is Lord Briggs’ leading judgment which the lower courts are to follow. There is therefore some clarity in what a potential claimant might expect to receive if he/she can make out a claim successfully. What it means in practice, however, given the broad scope for variations, dependent on the facts of each individual case, is yet to be seen.

Interestingly, there is discussion in both the leading and dissenting judgments about how uncertainty in this area of the law is a potential barrier to constructive settlement discussions between disputing parties. Our experience is the opposite: when the outcome at trial is so unpredictable, our view is that parties should seek to reach their own settlement agreement as early as possible.

In the recent case of Mill Strand Developments Ltd -v – James & Susan Tapp and others [2022] before the Upper Tribunal (Lands Chamber), the Tribunal considered the factors for and against granting an application to modify a restriction under section 84 Law of Property Act 1925 (“1925 Act”).

The case

The case involved a 1.24 acre patch of land adjoining the village of Lower Moor, Pershore in Worcestershire (“Site”). In 1972, the Site was conveyed with a restrictive covenant in favour of the adjoining landowner, the Defendants’ predecessor in title. The restrictive covenant prevented: (1) the construction of buildings on the Site which were not of an agricultural nature and (2) the commission of activity which would be a nuisance to the adjoining landowners or lead to the depreciation in the value of their land.

The applicant, a developer who had secured an option over the Site, was granted outline planning consent in December 2016 for the construction of five detached dwellings on the Site and land to the south of the Site. The applicant’s proposals were objected to by five adjoining landowners.

The agricultural use of the Site had reduced significantly over the years due to increasing residential development in the surrounding area and access issues to the Site. Although there were five objectors, the judgment considered the owners of No.4 Old Manor Close to be the only owner substantially affected by the application.

Legal test

The developer brought its application primarily under the grounds set out in section 84(1)(aa) and (c) of the 1925 Act. These were alternative grounds.

Under s.84(1)(aa), the Tribunal may order the modification of a restriction if it is satisfied that:

1. The continued existence of the restriction would impede a reasonable use of the Site for public or private purposes or would do so unless it was modified;
2. The restriction did not secure any practical benefits ‘of substantial value or advantage’ to the adjoining landowner or, alternatively, was contrary to the public interest. To determine this, the Tribunal shall consider “the development plan and any declared or ascertainable pattern for the grant or refusal of planning permission in the relevant areas as well as the period at which and context in which the restriction was created or imposed and any other material circumstances” (s.84(1B) of 1925 Act); and
3. Money was adequate compensation for the modification of the restriction.

Under s.84(1)(c), the Tribunal would need to ensure that a modification would not injure the restriction’s beneficiary.

Tribunal’s decision

The Tribunal held that the applicant had satisfied s.84(1)(aa).

First, the proposed use of the Site was a reasonable one and the planning proposals had been subjected to scrutiny through the planning process. All parties had agreed that the restriction would impede the development.

Secondly, although the restriction did secure practical benefits for the owners of No.4 as it protected the setting of No.4 on the edge of the village and prevented the property from being surrounded by residential development, these benefits were not assessed to be ‘substantial’. The Site had changed over the years to ‘scrubby grassland’ and was likely to remain ‘essentially redundant’ for the purposes of agriculture.

Thirdly, money was likely to be adequate compensation and the Tribunal held that £25,000 should cover any disadvantage to the owners of No.4.

Fourthly, the Tribunal noted the practical context. The restrictive covenant was entered into 50 years ago when an agricultural use was still ongoing and when the planning policy framework would have been different. The Tribunal acknowledged the importance of considerations of housing supply and sustainable development on the policies of local authorities.

However, the alternative ground brought by the developer under section 84(1)(c) was not made out. S.84(1)(c) was not satisfied as the modification would cause injury to the owners of No.4. In this case, this had no effect on the final ruling of the Court as the developer had already been successful in establishing that the modification should be made under section 84(1)(aa).

Points for the future

This case provides useful guidance to parties with an interest in open areas of agricultural land adjoining residential settlements who are considering either making or opposing an application for modification of a restrictive covenant on residential development.

S.84(1)(aa) requires the Tribunal to consider the factual context. In particular, issues of local policy, the current use of the land and the pattern of the grant/refusal of planning permissions in the locality will need to be considered.

The recent High Court case of Davies-Gilbert v Goacher [2022] EWHC 969 (Ch) sets out the general principles to be followed when determining whether the refusal of consent by a landowner whose land benefits from a restrictive covenant is unreasonable.

The Facts

The claimant owned a significant area of land in East Sussex (the “Estate”), part (but not all) of which benefitted from a restrictive covenant (“Covenant”). The defendants’ land was burdened by the Covenant.

The Covenant provided as follows:

”… NOT to erect upon any part of the property hereby conveyed any other messuage erection building or wall whatsoever without such previous written licence as aforesaid such licence not to be unreasonably withheld” (emphasis added).

The defendants wanted to construct two detached dwellings on their land. However, the claimant refused to consent to this for two reasons, namely that if the development were to proceed:

1. it would have a detrimental impact on the amenity value of the Estate; and
2. it could threaten the future use and commercial value of the neighbouring land.

A number of considerations contributed to the claimant’s reasons including the:-

• impact of the proposal on his neighbouring land;
• impact on future anticipated use and value of that land;
• impact on the amenity value of the Estate in the locality as a whole; and
• effect on boundary treatment and maintenance.

Despite the claimant’s refusal to consent to the proposal, the defendants proceeded to commence works in the belief that the claimant’s refusal was unreasonable.

The Issue

The main issue in the case for the Court to decide was whether the claimant’s refusal to consent was indeed unreasonable. In arguing that it was not, the defendants essentially claimed (amongst other matters) that the claimant’s decision-making process was flawed for taking into account irrelevant considerations.

Reasonableness – General Principles

In reaching a decision, the Court helpfully distilled a number of general legal principles which can be applied in any given case where the reasonableness of consent under a restrictive covenant is in question.

In summary:-

1. There is no authority to support the proposition that a refusal will be automatically unreasonable if is based on a concern which could be neutralised by imposing a condition.
2. Where a refusal is based on aesthetic grounds, it is insufficient for the proposal to simply not be to one’s taste.
3. The primary finding of fact the Court must make in a case like this is the actual reason or reasons (at the time of the refusal) which resulted in the covenantee refusing consent.
4. There was no magic in use of the word “reasons” in case law. However, reasons and considerations were not the same thing. The latter category is potentially a broader category than the former.
5. The process of reaching a decision and the reason itself must be reasonable applying the two-limb test comprised in the “Wednesbury principle”.
6. It will be unreasonable for a covenantee to refuse consent for the purpose of achieving a collateral or uncovenanted advantage.
7. As part of a reasonable decision-making process, a decision maker must exclude extraneous/irrelevant considerations whilst taking into account relevant considerations. However, not all decisions will be automatically rendered unreasonable as a result of an irrelevant consideration being taken into account. That will depend on whether the consideration contributed to/influenced the reason – as considerations can be given a “zero-weighting”.
8. Where there is a refusal for a mixture of good and bad reasons, the refusal would still be reasonable if there was at least one “free-standing” good reason and the decision would have been the same absent the bad reasons.

Reasonableness – the Claimant’s refusal

Applying those principles to the claimant’s refusal, the Court held:

• The first reason for refusal of consent was not reasonable.

Amongst other matters, it took into account the impact of the proposal on the Estate (which included non-benefitted land) – an irrelevant consideration. Covenantees are not entitled to take account of matters that did not affect the benefitted land. Applying the above legal principles, as irrelevant considerations contributed to the first reason, that reason was unreasonable (or a “bad” decision).

• The second reason was, however, reasonable.

That reason considered the effect of the scheme on the future use and commercial value of neighbouring land (which did benefit from the Covenant). That was a “free standing” reason not influenced by any irrelevant considerations. The Court concluded the claimant had followed a reasonable decision-making process and reached a reasonable conclusion (i.e. a “good” decision).

Overall, therefore, the claimant’s refusal of consent was reasonable. The claimant was awarded a declaration to that effect and injunctive relief (or such undertaking in lieu).

Comment

This case serves not only as a useful summary of the existing legal principles applicable to qualified covenants and dealing with reasonable decision-making – it also helpfully clarifies the approach to be taken with the concept of “irrelevant considerations” in the field of restrictive covenants.

For anyone advising in connection with applications for consent under covenants, this case will emphasise the importance of scrutinising not only the principle headline reasons for a refusal, but also the underlying considerations which may have influenced those. If challenged, those considerations will be of utmost importance for determining whether a decision is reasonable. It is therefore better to grapple with those at the outset.

A refusal will still be reasonable provided there is one “good” free-standing reason. From a practical perspective, the case therefore also highlights the benefit of giving several reasons for refusal.

The Judge in this case particularly welcomed the opportunity to undertake a site visit which the Judge comments had inevitably influenced the Court’s findings. Those advising in this area might also seek to introduce the same where appropriate to give greater context to the subject matter.

The principles in the case are likely to be relevant whether dealing with freehold or leasehold property.

A recent High Court decision (R(Harris) v Environment Agency & Natural England [2022]) has confirmed that European conservation laws remain enforceable despite Brexit.

The case

The claimants sought to challenge by judicial review both the legality and rationality of a decision taken by the Environment Agency in relation to its management of water abstraction licences in the Norfolk Broads.

The EA has a duty to promote the conservation of flora and fauna that are dependent on an aquatic environment. It is also responsible for granting, revoking and varying licences for the abstraction of water; in the Broads, such licences are chiefly for agriculture. The Broads is one of the driest parts of the country, and the claimants – themselves farmers on the Broads – were concerned that water abstraction was causing irremediable damage to the environment, including to ecosystems that were legally protected under European Law.

Specifically, this case was brought against the EA’s decision to limit a programme undertaken to review the impact of water abstraction on the Broads to just three of the 28 individual SSSIs which together make up The Broads Special Area of Conservation (”SAC”).  The claimants’ case also applied to the 25 SSSIs which make up the Broadlands Special Protection Area for birds and the Broadland Ramsar site, both of which are also protected under article 6 of the EU Habitats Directive (92/43/EEC) (“Habitats Directive”), but the Judge determined that it was sufficient to focus on the SAC to resolve the claim.

The disputed programme – known as the Restoring Sustainable Abstraction Programme – began in 1999, and was intended to identify, investigate and resolve environmental damage caused by unsustainable water abstraction. By 2012, approximately 500 sites had been identified across the country as being at risk, at which point the EA decided to close the programme to new sites to enable it to take action.

Key points

The key points in dispute included:

1. The meaning of the obligation under regulation 9(3) of The Conservation of Habitats and Species Regulations 2017(“Habitats Regulations”), to “have regard” to the requirements of the Habitats Directive; and
2. Whether article 6(2) of the Habitats Directive was otherwise enforceable by the UK courts.

In summary, where an activity is known to pose a risk to the environment, article 6(2) imposes a requirement for proactive measures to be taken to prevent harm occurring.

Duty to “have regard”

The Judge (Johnson J) did not agree with the claimants’ argument that the obligation to ‘have regard’ to the Habitats Directive mandated compliance with article 6(2) of the Habitats Directive. The duty to have regard was differentiated from a duty to act in a specified way, for example. Johnson J agreed with the EA that by considering article 6(2) in its programme, it had satisfied the obligation to have regard to it.

Enforceability of EU Directives in UK Courts

The Habitats Regulations are retained EU law under the European Union (Withdrawal) Act 2018. In contrast, the Habitats Directive is not direct EU legislation, and so the obligations imposed under it only continue to be applicable in UK law if they were either recognised in domestic law or ‘of a kind’ recognised by the CJEU or any court or tribunal in the UK before 31 December 2020.

Article 6(2) has not been recognised by the courts as having direct effect in domestic law, but the claimants’ case was that the obligation it imposed was of a kind, which had been so recognised. Johnson J agreed: article 6(3) had been found to have direct effect in national courts by the European Court of Justice in 2005, and there is a close relationship between that article and article 6(2). Article 6(2) therefore continues to be recognised and is enforceable in domestic law post Brexit.

How the EA was in breach of Article 6(2)

The EA’s programme was not intended to be a comprehensive analysis of the impact of abstraction across every SSSI within the Broads. However, the EA accepted that the environmental risks from abstraction were not limited to the three sites it focused on. Johnson J found that whilst further studies of the other sites had not been ruled out, that was not adequate to discharge the duty imposed by article 6(2) to take proactive remedial steps in light of the accepted knowledge that water abstraction posed a risk of damage to the environment across the whole of the SAC.

Johnson J did not accept the EA’s case that its lack of resources provided a justification for its failure to take any proactive activity in relation to the other SSSIs, stating:

“Resources may be relevant to the decision as to how to discharge the article 6(2)/regulation 9(3) obligations, but they are not relevant to the question of whether to discharge those obligations [104]”.

Irrationality

Johnson J found that the EA had acted irrationally by not expanding the programme: the EA had committed to comply with article 6(2), yet in limiting the programme as it did, compliance was impossible.  A rational course of action to ensure compliance with article 6(2) would have been either to expand the programme or to undertake further work.

Conclusion

This case reaffirms the importance of the precautionary principle underlying environmental law; it is the starting point for the interpretation of legislation. More broadly though, whether provisions in EU directives are ‘of a kind’ that have been recognised in UK courts will depend on the specific provisions in question, when taken in context.

It is a common misconception that you must complete a law degree to be successful in a career in law. In fact, roughly half of all trainee solicitors recruited by most firms come from non-law backgrounds.

However, from experience, I know that it can feel daunting to enter the legal profession as a non-law graduate. If you are in the same boat, hopefully these tips will help prepare you for starting your career in law.

1. Discovering that a legal career is for you.

I was midway through an English degree when I decided to embark on a career in law. Some may have decided that they want to be a solicitor even before applying to university and others may be struggling to make their minds up as they come to the end of their undergraduate degrees. If you haven’t quite made your mind up, try not to panic.

Attend your university’s careers fair, seek guidance from your university’s career adviser, talk to your family, friends and network about their careers. The great thing about the law is how varied the type of work can be:

• meeting clients, finding out their needs and establishing how to help;
• researching relevant areas of law and advising clients of their options;
• drafting letters, contracts and other legal documents; and
• acting on behalf of clients in negotiations

Brainstorm the type of work that might be suited to you, your skill set and your interests.

2. Take the initiative

Once you have decided that you would be suited to a career in law, what’s next? Without the framework of a law degree, it is all the more important for you to take the initiative.

Many universities have ‘law for non-law’ societies that organise events specifically for students in your position. Look out for Facebook groups or memos popping up at your university and get involved with any events that will give you greater insight into the legal industry. It may also be worth asking your law student friends if you can tag along to any events to which they are invited to!

Networking events, Q&A panels and law fairs present an excellent opportunity to get to know the industry. You will learn more about the firms you would like to work for as well as different areas of the law. Be active at these sessions and always ask questions. Follow up with any key contacts that you make; you are already building your network!

3. Do your research

The more research you can do the better. Take a look at firm websites to get a flavour of who they are and the type of work that they do. Chambers and Legal 500 can also give you a snapshot of the firms you are interested in.

Keep up-to-date with the law and different sectors by reading reputable newspapers and articles published by law firms and the Law Society.  Recruiters look for graduates with great commercial awareness, so keeping your knowledge up to date will stand you in good stead when it comes to applications and interviews. I found listening to Radio 4 a useful and easy way to build up general knowledge. There are also many legal themed podcasts, such as ‘Law in Action’, many of which are only 30 minutes long. These can be a quick and efficient way to improve your commercial awareness.

4. Legal work experience

Once you have conducted your initial research, the best next step is to acquire real work experience in the industry.

It is never too early to start applying for vacation schemes as many firms hire trainees up to two years in advance. See Key Dates | Michelmores for Michelmores’ key deadlines. Alongside applying for vacation schemes, I would recommend attending the firm’s presentation evenings, shadowing solicitors or gaining informal work experience at local firms. The more experience you can get, the better positioned you will be when it comes to applying for formal vacation schemes.

Please see Events (michelmores.com) for Michelmores’ up-coming events. The Insight Session on the 3 November will offer invaluable advice on The Firm’s Graduate Solicitor Apprenticeship. Most events take place virtually so you can join from wherever you are in the world.

It can be difficult to juggle studying and applying for work experience so make a short list of your favourite firms and keep an eye on deadlines.

When applying, draw on your non-law experience as well to show valuable transferable skills. (See fellow trainee Annabel’s article for more tips: Trainee Blog: Work experience from all walks of life | Michelmores)

5. Keep an open mind

When applying for legal work experience, it is also important to keep an open mind. Even though you may want to be a solicitor, I would encourage you to seek out opportunities in chambers or in Court, such as a mini-pupillage. Not only will this give you more insight into how solicitors and barristers work together to bring a case to completion, but you will also learn valuable soft skills such as client care and professional conduct in Court.

6. Post-graduate study and beyond

Embarking on legal post-graduate study can be daunting. The GDL, or PGDL, can feel like treading water at times. Unfortunately, there are no shortcuts and you must put in the hours each week to prepare for the exams. However, remember that you will be in the same boat as your peers. Although it may take a few weeks to warm up to the style of teaching and learning involved in these conversion courses, your fellow students and tutors should be there to give you support throughout the year.

If you would like to find out more about post-graduate study please see Kate’s useful blog post Trainee Blog: Top Tips for Postgraduate Legal Study | Michelmores.

7. Enjoy it

Finally, it is a privilege to study a subject for three plus years simply for the love of it. My parting tips would be to focus on having a well-rounded university experience, build a solid support network, take every opportunity, and overall, enjoy the time you have at university.

If you have any questions following this post, please do not hesitate to get in touch with me.

The Renting Homes (Wales) Act 2016 (RHWA) is finally due to be implemented on 1 December 2022.

It will substantially reform the basis on which residential property in Wales is occupied, by creating two new forms of occupation contract:

1. A standard contract, modelled on the present assured shorthold tenancy (AST).
2. A secure contract, modelled on secure tenancies and assured tenancies.

If a tenancy or licence meets certain criteria it will be an “occupation contract” and subject to the provisions of the RHWA.

The parties will be known as Landlords and Contract Holders.

This article focuses on standard contracts. Secure contracts will be used by local authorities and social housing landlords, although private landlords will be able to offer a secure contract if they wish to do so.

Standard Contracts: the basics

The standard contract will be available as either a periodic or a fixed term contract.

It will replace the AST entirely – after 1 December 2022 it will not be possible to grant a new AST in Wales and the Housing Act regimes will no longer apply to Welsh residential properties.

Section 7 confirms that a tenancy or licence is an occupation contract if all of the following apply:

• It is made between a landlord and an individual (or two or more persons, at least one of whom is an individual).
• It gives the individual(s) the right to occupy a dwelling as a home.
• Rent or other consideration (such as providing a service) is payable under it.

Points to Note:

• There is no minimum or maximum rent threshold, unlike traditional ASTs.
• The section 7 test does not refer to exclusive possession, hence licences will fall within the scope of the RHWA.
• “Dwelling” as defined in section 246:

• includes any land occupied with the dwelling, unless the land is “agricultural land” which extends to more than 1.999 acres.
• excludes any structure or vehicle which can be moved (e.g. caravans, boats, mobile homes).

Many licences and common law tenancies which previously fell outside the Housing Act regime will fall within the ambit of the RHWA, conferring statutory protection on residential occupiers who have historically had precarious and limited rights.

Exclusions to RHWA

Certain tenancies and licences are not occupation contracts, unless notice is given to create one[1]. These include:

• Holiday lets
• Accommodation shared with the landlord

Further, certain tenancies and licences are never occupation contracts[2]. These include:

• Rent Act arrangements:
  • A protected occupancy or statutory tenancy within the meaning of the Rent Act 1977 (RA 1977).
  • A protected occupancy or statutory tenancy within the meaning of the Rent (Agriculture) Act 1976.
• Commercial leases under Landlord and Tenant Act 1954.
• Agricultural Holdings Act 1986 tenancies.
• Farm Business Tenancies under the Agricultural Tenancies Act 1995.
• A tenancy or licence if all the persons with whom it is made are below the age of 18.
• A secure tenancy that is a housing association tenancy within the meaning of section 86 of the RA 1977.
• A long tenancy (for a fixed term exceeding 21 years).

Core Content

Standard contracts will contain the following terms:

• Key matters:
  • e.g. the names of the parties, rent payable, address of the property, fixed term or periodic.
  • These must be inserted in every contract.
• Fundamental Terms:
  • Cover the most important aspects of the contract, including the possession procedures and repairing obligations.
  • Some may be omitted or varied by agreement but only in favour of the contract holder.
• Supplementary Terms:
  • Deal with the more practical, day to day matters applying to the occupation contract, e.g., use of dwelling for business purposes, ability to carry out alterations.
  • They can be omitted or varied by agreement, provided that is compatible with the fundamental terms.
• Additional Terms:
  • Any other matters specifically agreed by the parties, e.g., the keeping of pets.
  • Any additional terms must be fair, as required by the Consumer Rights Act 2015 and must not conflict with a key matter, fundamental term or supplementary term.

Key provisions applying to all contracts

• a written statement of the terms + prescribed explanatory information must be given to the contract holder free of charge within 14 days of the occupation date.
• failure to provide the written statement can lead to financial penalties for landlords / compensation for the contract-holder and will restrict a landlord’s ability to serve a valid notice to terminate the contract.
• A Model Contract has been published by Senedd Cymru / Welsh Government: see Renting Homes: model written statements

• A joint-contract holder can leave the contract without ending the contract entirely
• The rights of the other joint contract-holder(s) will not be affected, and they will be bound by the same terms, as before.
• New joint-contract holders can be added without having to end the current contract and start another one.

• Landlords will be entitled to increase the rent under periodic standard contracts annually, following service of two months’ notice.
• Prescribed form notices must be used.
• Rent review under fixed term contracts will be governed by the terms agreed between the parties.

• There are some differences to the section 11 Landlord & Tenant Act 1985 provisions that previously applied.
• Landlords must:
  • keep the structure and exterior of the dwelling in repair;
  • keep the installations for the supply of water, gas, electricity, sanitation, space heating and hot water in repair and good working order;
  • ensure that the property is fit for human habitation at the start of the contract and throughout its duration
    • in accordance with the Renting Homes (Fitness for Human Habitation) (Wales) Regulations 2022 SI 2022 No. 6 (W. 4) (the FFHH Rules)
    • The FFHH Rules include a requirement for working mains-wired smoke alarms, carbon monoxide detectors and valid electrical safety inspection prior to occupation commencing.
    • see Fitness of homes for human habitation: guidance for landlords​
• The repairing provisions apply to all occupation contracts except fixed term standard contracts for a term of more than seven years.  This is consistent with the applicability of the standard provisions under section 11 of the Landlord & Tenant Act 1985 previously.

• Succession rights are conferred on certain family members and carers who occupy the dwelling as their principal home at the time of a sole contract-holder’s death.
• There are two potential rights of succession.
• Whilst the succession rights under the RHWA are fundamental terms which cannot be excluded, the landlord’s right to terminate a periodic standard contract using a s.173 no-fault notice remains. On that basis, the succession rights may not have a significant impact.

Termination

• Any notices to terminate a Standard Contract will be invalid if the landlord has failed to comply with certain statutory obligations contained in Schedule 9A, RHWA.  These obligations relate to issues such as Rent Smart Wales registration and licensing; provision of a written statement; deposit protection, compliance with FFHH Regulations; supply of EPC etc.
• Prescribed form notices must be used
• If the contract holder does not leave voluntarily, landlords must obtain a possession order to enforce any termination notice they have served.

• Contract holders must give at least four weeks’ notice to terminate (sections 168 and 169)

• Landlords are entitled to serve a section 173 ‘no-fault notice’ to terminate the contract (akin to a section 21 notice to terminate ASTs) on the following basis:
  • they must give the contract-holder at least six months’ notice.
  • Section 173 no-fault notices cannot be issued before the end of the period of six months from the occupation date.
  • In practice, this means that there will be a twelve-month minimum term for periodic standard contracts under the RHWA.
  • If the contract holder does not vacate, the landlord must issue possession proceedings to enforce the s173 notice within two months of its expiry date. It will become unenforceable thereafter and the landlord cannot serve a replacement s173 notice for another six months.
  • Landlords cannot issue a new s.173 notice within six months of withdrawing an earlier s.173 notice.

• Fixed term contracts will come to an end on the term date.
• If a new fixed term contract is not agreed at the end of the term, and the contract-holder remains in occupation:
• a periodic standard contract will automatically arise at the end of the fixed term under s.184;
• the termination provisions outlined above will then apply, save that the landlord will be entitled to serve a six-month s.173 ‘no fault’ notice immediately (under s.175) to bring the new periodic arrangement to an end.
• Landlords will generally be unable to serve a notice to terminate a fixed term contract during, or at the end of the fixed term. In most cases, in the absence of a valid break clause (see below), landlords will have to wait until a new periodic contract has arisen after the end of the fixed term before they can take steps to terminate the arrangement.

• Landlord’s break clauses cannot be used if the fixed term is for less than two years.
• If the fixed term is two years or more, landlords cannot serve a break notice until at least month 18 of the fixed term contract and will have to provide at least six months’ notice.
• Break clauses in favour of the contract holder can be included in all fixed term contracts, with a minimum four week notice period.

Landlords can issue possession proceedings to terminate on short notice (in most cases on one month prior written notice) in the case of:

• Breach of contract – by contract-holder
  • A discretionary ground, meaning the court will only order possession if it considers it reasonable to do so.

• Estate Management Grounds –
  • RHWA contains nine ‘estate management’ possession grounds.
  • They are discretionary grounds.
  • Suitable alternative accommodation must be available for the contract holder.
  • Landlord will be liable to pay the contract holder’s moving expenses.

• Rent Arrears –
  • Landlords can serve a 14-day written notice to terminate
  • Contract-holder must be “seriously in arrears” with their rent:
    • Broadly RHWA requires a minimum of two months’ unpaid rent if rental period is monthly, fortnightly or weekly; and
    • Three months unpaid rent if rent paid quarterly or annually.
  • If there are serious rent arrears still outstanding at the date of the court possession hearing this is a mandatory possession ground.

Service Occupiers & Assured Agricultural Occupiers

The impact of RHWA on service occupancies and assured agricultural occupancies is considered in our separate article:  Welsh residential tenancy reform: Agricultural workers & service occupiers.

Conclusion

The RHWA has been a long time coming.  After significant delays in the implementation date, including a last minute, 5-month deferral earlier this year to give landlords more time to prepare, it heralds a significant change to housing law in Wales.

From 1 December 2022, occupiers of residential dwellings in Wales will have significantly more protection than their English counterparts (for the time being at least), with the introduction of rules which effectively create a 12-month minimum term for ‘contract holders’. As noted above, this will include licensees who previously had precarious rights and protections. Full details of the English Renters’ Reform Bill are awaited at the time of writing.

The RHWA further highlights the strength and reach of devolved law-making powers in Wales.

Whilst the new legislation and terminology will no doubt take a while to bed in, the Senedd’s aim is to simplify matters for all parties and consolidate a previously diverse set of rules and regimes in one place. Hopefully this will prove to be the case in practice.

Further Information

The Senedd has a dedicated landing page containing links to various guidance notes, standard form documents, prescribed form notices and the relevant legislation: see Rent Homes: housing law is changing

For more information, please contact Josie Edwards.

Property development contains inherent risk. Property contracts are used between the parties to allocate this risk. These property developer contracts can be option agreements, conditional contracts or promotion agreements.

Where there is wider market uncertainty the parties, or their agents, should consider the legal tools to deal with risk allocation in the case of significant economic change. Such tools can include a freeze clause which can step into price provisions of a contract. This may postpone (i.e. freeze) a site purchase in market circumstances which means the contract would, otherwise, be terminated and the deal fail.

The risk for a developer is that they are likely to have invested a lot of resource in the planning and site investigation processes. It might be commercially fair and preserve the effort to have a freezer provision, so as to put back contract position for a period of time, in the hope the market bounces.

There can be a benefit for the landowner. An option lapsing is not necessarily a windfall. Standard options and promotion agreements are normally based on market valuation calculations, to synergise the interests. A landowner is unlikely to want to sell when the market is at rock bottom.

Some of the key points in drafting such clauses are:

When might such a clause be useful? 

This could include circumstances where a contract, typically a call option agreement, has been triggered or exercised in tranches, to extend a period to acquire further tranches. Or it could apply where planning permission has been obtained or is near, but the site would not be economically viable, if there has been a sharp correction.

What counts as a significant dip in the market?

A legal clause needs a clearly defined trigger. That means setting out what counts as a significant downtown in the property market. This could be based on a % change, perhaps against an agreed index of house process or a minimum price for the site. A further factor might also be if there is a significant increase in costs of building out this site (labour and energy costs being topical).

How long to freeze?

Two years is often suggested, based on where there have been roller coaster periods in the past and to allow the market to recover. However this depends on many factors and would also depend on site and regional specific considerations. A developer will need to consider the valuation aspects and a landowner will need to consider how long land is potentially tied up, without the value being delivered. Both parties will need to consider the overall picture and agree, bearing in mind that strategic land is often developed over long time periods in any event.

Long stop?

Most property development documents will have an agreed long stop. Consideration will be needed if a freeze period interacts with an agreed long stop period. So if a long stop date specified will be a soft date that is extended or a hard, absolute long stop even if the freeze is in effect.

Extension periods and price suspension?

A freeze period may also interact with other normal provisions in property contracts. Extra thought is needed. For instance, extension periods might already built in – for planning delays or judicial review challenges. Would this overlap? Certain contracts, such as promotion agreements, also have periods for marketing and taking a consented site to the market. There can be provisions for suspension of this marketing or bid process already. For instance, if there are competing sites or an oversupply of stock in that market segment. Could there be suspension for one reason and then a downturn freeze? This could be a potential ‘double whammy’ in terms of stretching timelines and this should be factored in.

One of the reasons I chose to apply to Michelmores was its culture. At the open day I attended, I was impressed by how approachable and friendly everyone was. I felt the Firm’s values on diversity and inclusion aligned with my own.

Since I have applied to the Firm, it has moved towards a hybrid model. The Firm is maintaining its culture by combining in-person interactions with hybrid working, which simultaneously supports diversity and inclusion initiatives. Attending the office is no longer based on being “present”, and instead can provide a purpose for human interaction, collaboration, and connection. This can help foster relationships with others.

Anchor days

Each team has a charter which sets out the days you are encouraged to come in. In my current employment seat, Anchor Day is Monday. We also have an in-person team meeting on this day. This has been beneficial as a trainee, as I have been able to connect with my colleagues in the office. Also, I know I will be able to work closely alongside my team on this day.

It is beneficial to learn by osmosis from more experienced colleagues. I recently attended a tribunal for an employment case, and it developed my adversarial skills by listening to an experienced barrister.

In some teams, there are capacity trackers detailing when people will be in for the upcoming week. As a trainee, you are welcome to come in every day if this suits you. It is useful to check in with your team to see when they will be around or to see if they need you to be in on certain days.

Inter-office travel

The Firm adopts a ‘one Firm approach’. This means that we are encouraged to work seamlessly across offices and departments, and we are encouraged to work in different locations to meet more of our colleagues in-person. My current supervisor is based in Bristol, and I have been given the opportunity to work there once a week. I have enjoyed meeting new colleagues and working in a different office.

Agile working

As a trainee, there are many benefits to working from home. As the working environment in which law firms operate has changed, it is necessary that you can work effectively from home as a trainee. This is something you will continue to do as a qualified solicitor. There are of course many benefits as discussed above, to attending the office. However, if you can work from home, you may save time on commuting, and you may benefit from being able to fit your work in around other commitments.

When working from home, it is important to stay in touch with your colleagues on MS Teams and to adapt to different people’s work styles. Some colleagues may prefer to speak on the phone, whilst others may prefer to send you a quick email. Be flexible with your form of communication. Remember it is important to ask questions throughout your training contract to ensure you make the most of your personal development.

ESG

The Environment

The Firm strives to continually improve its ESG goals: it’s working with Planet Mark to improve its sustainability and social outputs and has recently achieved certification. For businesses to be certified they need to pledge to measure and reduce their year-on-year carbon footprint by a minimum percentage. The Firm has considered the status of their ‘Scope 3’ emissions and is currently measuring their business travel (excluding air travel for the current certification),  waste, water and paper procurement.
Through reporting on its carbon and energy usage in its annual report and financial statements filed at Companies House, the Firm will be able to analyse and reduce its emissions.  Between the year ending 30 April 2020 and the year ending 30 April 2021 the Firm was able to achieve a 2 tCO2e reduction in their ‘Scope 1’ and ‘Scope 2’ emissions, which means the consumption of energy by our own assets and equipment, and the assets and equipment which we pay to use. This was as a result of a number of energy efficiency measures taken by the Firm, including installation of LED lighting, timers and sensors for lighting and applying heat reflective film to windows. In addition to these steps, the Firm has also transitioned to paperless invoicing, adopted a ‘zero to landfill’ waste disposal contract, as well as green energy contracts at the majority of our offices, and has replaced the on-site van with an electric vehicle.  Notably, Michelmores moved its London office to 100 Liverpool Street, a building nominated this year by the Royal Institute of British Architects for the Stirling Prize for its green credentials.

Since having begun working with Planet Mark, the Firm has also been able to improve methods of data collection, and will use the data from the year ending 30 April 2022 as a baseline for future reduction targets.

Social

• Diversity and Inclusion

The Firm adopts a multitude of diversity and inclusion initiatives. Recently the Firm has hosted an online seminar celebrating PRIDE and International Women’s Day. These events are easily accessible on MS Teams, and they are recorded. This means they can be watched at another time, if you do not have the capacity to attend them. Last week, the Firm held its National Inclusion Week which sought to celebrate inclusion in the workplace and our everyday lives.

• Access to the Legal Profession

The Firm partners with The Sutton Trust as part of their Pathways to Law programme. This aims to widen access to the legal profession by providing opportunities for students from less advantaged backgrounds to experience working in a law firm. The Firm has been involved with this for several years and offers work experience to students in Exeter and more recently, Bristol.

There are also opportunities for support staff to become apprentices and the Firm sponsors people who would like to qualify through Cilex.

Next year, the Firm will offer school leavers’ the opportunity to apply for a solicitor apprenticeship or graduate apprenticeship – an alternative path to qualification which some find better suits their personal needs.

Recently, the Firm has partnered with VisionPath to create our Momentum programme which involves partnering with three local schools. The programme aims to increase social mobility and access to the workplace by enabling employees to run career skill workshops and mentoring.

The Firm adopts a ‘recruit to retain’ policy. As a trainee, you will be given a good level of responsibility and coaching as the Firm develops you through your career. This year 100% of trainees accepted a NQ role at the Firm (the average rate is 97%). We are proud that some of our partners started as trainees at the Firm and have progressed to become great role models and leaders in the organisation. We are keen to support our colleagues, encourage their progression and recognise their successes.

Client work

The Firm’s values are linked to the work we take on. For example, we have undertaken work for the country’s first habitat bank for biodiversity net gain and assisted on a joint venture between TESCO and The WWF exploring the use of insect protein as animal feed. MAINstream and MiVentures, our Firm initiatives also support start-up and disruptor companies.

• Events

Recently the Firm hosted its annual Charity Run for the Charlie Waller Trust. The Firm encourages trainees to attend networking events and socials. For example, trainees are encouraged to assist with events such as MAINstream, the angel investment network. As part of the business department, I recently attended the away day which was held at the Kenton Park Estate in Exeter. This enabled me to catch up with and meet new colleagues in an informal way. We also had the trainee social during the summer. This was a great opportunity to meet incoming trainees and I have volunteered to assist with the trainee Christmas social.

•  Policies

The Firm has opened the conversation on menopause and is working in partnership with Henpicked and Menopause Friendly to develop new policies. There will be Menopause Champions to offer support and guidance to colleagues or those interested in developing their knowledge of menopause. We held a Firm-wide webinar about this and information on how to support others.

The Firm offers enhanced maternity and paternity policies to ensure we are supporting colleagues as best we can when they are going through challenging times such as pregnancy loss and premature birth. We have partnered with Employer with Heart to ensure we are providing the best support possible to colleagues affected by premature birth. We also have other policies around adoption leave, shared parental leave, domestic abuse and fertility leave.

As a trainee, you can be involved with ESG, diversity and inclusion, and internal and external events. If there is a club you would like to be involved with that does not already exist, you can request that a new one is set up. The change of direction of agile working at the Firm means the culture is being maintained in newly accessible ways.

Cast your minds back to March 2020. Of course, this date will be etched into all of our minds forever more as the start point of the pandemic and the introduction of the first (of many) lockdowns and restrictions. Social interaction of any kind under the ‘rules’ was significantly limited.  One of the few benefits of this was that employers were granted a hiatus from having to conduct an in-person right to work process and were permitted to undertake right to work checks via a video call, with copy documents in place of originals.

Sadly, the government has announced that this flexible way of conducting checks will come to an end on 30 September 2022. It is not entirely clear why this decision has been taken, given the remote checks seemed to be working well for both employers and employees alike.  However, we are where we are, so here is everything you need to know about the upcoming changes.

Before jumping into the changes, what would a legal article be without a quick lecture on the subject matter. Having a robust right to work check process in place is crucial for every UK business. Employers can face civil penalties of up to £20,000 if they are found to be employing people who do not have the right to work in the UK. Further, if the employer knows, or ought to have known, that the employee in question does not have the right to work, they can also face criminal sanctions in addition to the fine.

From 1 October 2022, employers will only be able to use one of three methods of checking an individual’s right to work. That is an online check, the traditional manual check or by using an Identity Service Provider (IDSP).

Online check

This method should be used where the employee holds a Biometric Residence Card, Biometric Residence Permit or a Frontier Worker Permit. The position here is unchanged following the most recent right to work update on 6 April 2022, so employers should (hopefully) be familiar with the online method.

In order to complete this check, employers need to simply request a share code from the individual and then follow the steps on the Gov.uk website to complete the checks online. A careful review should be conducted to ensure the details presented match up with the individual to whom the check relates, then a copy of the result should be saved (digital copy is fine) to confirm the check has been completed.

The Employer’s Checking Service

This can be used in a number of circumstances to establish a statutory excuse, where the individual does not have the documents required to perform the online check. These may include where:

• The employee has a document to confirm they have applied via the EU Settlement Scheme and are awaiting a decision, e.g. Certificate of Application, or an email/letter of acknowledgement;
• The employee has claimed asylum and holds an Application Registration Card;
• The employee has an outstanding application and is awaiting a decision – provided the application was submitted before the expiration of their previous visa;
• The employee has an outstanding appeal or administrative review; or
• The employee is a long-term UK resident, who arrived in the UK before 1988.

The Manual Check

Very much a return to the status quo with no updates to report. Full guidance on conducting the manual checks can be found here, but the principle steps are:

• Meet the individual in-person;
• Check the original (copies will no longer be permitted) documents; and
• Retain a copy of these documents.

In order to obtain a statutory excuse, employers should ensure they only accept documents from Lists A&B of the Home Office guidance as proof of the person’s right to work in the UK.

Lastly… Identification Document Validation Technology

This was initially introduced as part of the April 2022 changes and can be used for anyone who is not eligible for online checks, so by and large this will be UK and Irish passport holders. More detailed information can be found here. In essence, this is a paid for third party service, which must be Home Office approved, that will conduct checks remotely.

It is unclear to date how this has landed with UK employers. Broadly speaking, this may be beneficial for businesses where a large portion of their workforce works remotely making in-person checks difficult and burdensome. It is unlikely to be particularly appealing to small or medium businesses who have the infrastructure to conduct manual checks, due to the additional cost.

Hopefully you should now be up to speed on the upcoming changes. It is certainly disappointing that, seeing as so many aspects of our work and personal lives have now been digitised and altered to suit a more remote and agile setting following the pandemic, the government has reverted to the traditional right to work check model (with very little warning), but this is the decision and now we must all follow suit.

If you have any specific questions or concerns, please do get in touch with the Immigration team to discuss further.

The competition for training contracts is rife, with the number of applicants far exceeding the number of vacancies at most firms. It is therefore essential that applicants stand out by differentiating themselves from their competition. A great way to do this is through work experience – I worked as a paralegal prior to obtaining and subsequently starting my training contract with Michelmores. Whilst obtaining paralegal experience is not a prerequisite for securing a training contract, and some applicants may successfully obtain a training contract during their studies, it can be beneficial for the following reasons:

1. Standing out: Whilst strong academics are a requirement for most firms, having prior work experience enables you to stand out from other applicants by drawing on personal experiences when answering questions throughout the recruitment process. Using real-life workplace examples as opposed to hypothetical scenarios will take your answers to the next level as you will be able to demonstrate the development and application of key skills such as commercial awareness, communication and organisation. Applying the popular STAR method: Situation, Task, Action and Result – will ensure that an answer is fully developed and meets the assessment criteria, thus enhancing your chances of success.
2. A way in: Many law firms like to recruit trainees internally from their paralegal pool. A paralegal role can therefore be a stepping stone to obtaining a training contract, which is especially useful if you are struggling with applications. The paralegal experience enables you to demonstrate your abilities, build relationships and create a positive reputation within the firm, which, whilst not applicable to all firms, can be helpful if the firm has an internal application process for training contracts. This has been the case here at Michelmores as we have had several paralegals qualify with the firm via various routes including the traditional training contract.
3. Qualifying work experience (“QWE”): Having prior work experience may reduce a trainee’s period of recognised training by up to six months, which means a trainee could qualify after just 18 months of training. However, with the new SQE route, it is now possible to use two years’ paralegal experience towards satisfying the QWE requirement. This could greatly accelerate the qualification process for some.
4. Confirming that a legal career is for you: A paralegal role is also beneficial if you are unsure whether a career within the legal profession is for you. I worked as a paralegal prior to and during the LPC, which allowed me to gain an invaluable insight into the working life of a solicitor and the culture and working practices of a law firm, which ultimately reassured me that I wanted to pursue a career in law.

Biodiversity Net Gain (BNG) delivery will become mandatory for the majority of housebuilders and developers in November 2023, and a growing number of local authorities are already imposing it as a planning requirement.

Please see two articles we recently published on this topic below:

• Overview of the basics: Biodiversity Net Gain: the basics | Michelmores
• Steps developers can take before November 2023:  Biodiversity Net Gain : An update for developers | Michelmores

Achieving BNG – the mitigation hierarchy

Developers will be required to demonstrate that they will deliver a minimum 10% net gain from the pre-development bio-diversity value of new developments.

To achieve net gain in a way that is consistent with the mitigation hierarchy, developers will be required to follow these steps in order:

1. aim to avoid or reduce biodiversity impacts through site selection and layout

2. enhance and restore biodiversity on-site

3. create or enhance off-site habitats, either on their own land or by purchasing biodiversity units on the market, and

4. as a last resort to prevent undue delays, purchase statutory biodiversity credits from the UK Government where on-site and off-site options are not available.

In practice, delivery of BNG on-site may not be viable or attractive and developers may need to turn to the off-site options. These are essentially the developer buying off-site land to deliver BNG itself, or securing an agreement or conservation covenant from a third party who will then deliver off-site BNG, or buying biodiversity units on the newly emerging market, for example, from a habitat bank.

Future proofing acquisition contracts, options and promotion agreements

These delivery requirements will need to be reflected in land acquisition agreements. Some examples of the provisions that we expect to see built into acquisition contracts, options and promotion agreements to address BNG requirements are:

• Clauses which set out a route map of options for satisfying BNG requirements, for example, by the landowner agreeing to make nearby land available under a conservation covenant at low cost on agreed terms.
• Clauses which provide checks and balances and address the respective parties interests, for example, landowners may want to incentivise developers to go down the off-site route despite the attendant ongoing management obligations and costs, whereas developers may prefer purchasing biodiversity units which may be more costly but will be a one-off payment.
• Price calculations which expressly allow for the deduction from the price of BNG acquisition costs, potentially subject to approval of the costs by the landowner acting reasonably. Landowners will want to incentivise developers to minimise these costs and therefore BNG cost-sharing provisions may emerge.
• Contracts which are conditional not only on the grant of planning permission but potentially on the securing of off-site BNG land where relevant. A planning permission will only become implementable when the BNG plan has been approved by the LPA, and this means that the developer will want to have secured any necessary third party interests before buying a development site.
• Long stop provisions which recognise that additional time may be needed to secure not only the planning permission but also any third party land interest that is required for BNG. Potentially we may see extensions of time which are triggered by ongoing BNG negotiations.
• Flexibility in requirements for a minimum number of units to be achieved, since developers will be concerned that on-site BNG may reduce the number of units that can be built. A scheme which falls below a specific number of units or value may not however be viable to the seller.
• Overage clauses are being agreed upon more widely to address landowner’s concerns over the developer getting a “second bite of the cherry” when the 30 year biodiversity maintenance period has expired, with provision for future enhancements in value to be shared.

The involvement of any third party land outside the development site may cause delay and uncertainty and we are already seeing the structure of transactions changing to address these risks.

A lot of landowners are used to working with their neighbours. In the rural context in particular, neighbours are often willing to recognise their land is interdependent with, not independent from, the wider landscape. Hence it was interesting to see a form of words being by the Chancery Lane Project suggested for collaboration agreements on environmental schemes. See link here:

Heads of Terms for Landowner Collaboration on Environmental Schemes | The Chancery Lane Project;

The notes with the draft wording state:

“Privately-funded projects which seek to provide a means for businesses to offset greenhouse gas emissions are becoming more prevalent, but can be limited in their scope and ambition by a fragmented ownership structure. This drafting sets out a framework by which multiple landowners can collaborate in putting forward and utilising their land for public and private environmental schemes and projects.”

Collaboration agreements are fairly common in real estate transactions. Most often they are used between groups of owners bringing forward housing developments. However that does not have to be the only use of this type of legal tool. The big benefit of collaboration agreements is to streamline the interactions between the owners so as to maximise the benefits overall. It is interesting to see examples of how that might work in sustainable and environmental schemes.

Some of the key take aways are:

Drafting objectives: It is also important to define the goal. The notes to the draft wording suggested both with words and hard data, to set out the environmental benefits of the proposed. This could be the potential outcomes in a local area or landscape and, longer term, whole ecosystem recovery at scale. The examples noted are climate change mitigation and the promotion of carbon sinks, as well as biodiversity and nature based solutions.

It also makes sense to set out what potential schemes the landowners are aiming to come under. Potential schemes for landowners include: the Biodiversity Gain Site Register (created by the Environment Act 2021); the new ELM Scheme (including the Sustainable Farming Incentive, Local Nature Recovery and Landscape Recovery schemes), the Countryside Stewardship Scheme (until replaced by ELM); and The Woodland Carbon Guarantee (among others, as they are brought forward).

Time scales: These steps can require long term commitment. It was interesting to see minimum and maximum durations as a key point to agreed. Contractual certainty and long stop dates are important parts of drafting any property agreement.

Agreed responsibilities: It can be important to agree not only on what is done on the land but what will not be done. It was interesting to see a mutual agreement to restrict the land use, in the suggested wording and a suggested list of prohibited activities. The legal position with enforcing this is something that requires careful consideration,

Dealing with the land: The transmission of land is something to think about and the legal means for securing the obligations. This is especially over the longer term. The draft wording talks about not disposing of land during the period of a scheme except to a person who promises (via a deed of covenant) to comply with the terms of the collaboration agreement. The notes to the suggested wording had an interesting example, that the desired environmental impact could be lost if sequestered carbon becomes re-emitted once land is used for agriculture again. It might be worth thinking if there should be some first refusal or pre-emption procedure, in case plans change.

Division of profits: It is always worth thinking about the divvy up. It is interesting to see the comments and wording proposed, which is aimed at how to share the receipts of the scheme and coming up with an agreed division. This may be on a pro rata basis but there is the potential for it to be more site specific.  For example, what if one party controls land essential to the core delivery of the scheme? It might also be worth thinking about a third party or expert determination process in the legal wording.  This would be in case of disagreement or dispute, to work out a fair return.

Division of liabilities: It can avoid future dispute risk to set up a framework for liabilities. This could be if one party does something which is in breach of the agreement or a proposed scheme/grant regime. So, what if one ruins it for the others? There could also be loss or damage flowing from the activities undertaken and how the risk of this is allocated can be considered and specified in the legal drafting.

Ongoing funding and management: It will reduce friction and is normal in collaboration contracts to set out how decision will be taken. This can cover how costs are occurred and the discussion before they are taken. A mechanism to deal with this and drafting to cover how potential disagreements can be dealt with are common in dispute resolution clauses in collaboration contracts. This is a sensible and easy import into a new context.