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19/01/2017

Legal landscape - Second homes restrictions - Where are we now?

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Jack Parker of Cornerstone Barristers looks at which questions have been answered – and which haven’t – by the recent High Court ruling dismissing a challenge to the St Ives Neighbourhood Plan.

Residents of St Ives in Cornwall, who have long been concerned about the impact of second homes on their town, were given cause for celebration by the dismissal of a challenge to the St Ives Neighbourhood Plan (RLT Built Environment Ltd v Cornwall Council [2016] EWHC 2817 (Admin) per Hickinbottom J). 

The plan, which requires new residential dwellings to be subject to a restriction that they be occupied as a person’s ‘principal residence’ is clearly popular with the local community (83 per cent of voters who voted in the referendum were in favour of the plan). While the judgment no doubt paves the way for similar restrictions to come forward in other neighbourhood plans, critics argue that the restrictions are variously discriminatory, counterproductive (insofar as they will further inflate the cost of market housing) and unenforceable. 

While questions no doubt still remain, Mr Justice Hickinbottom’s judgment provided important guidance in relation to at least some of them.

"The plan, which requires new residential dwellings to be subject to a restriction that they be occupied as a person's 'principal residence', is clearly popular"

As to whether a principal residence restriction was an appropriate response to the issues created by second homes, the claimant argued that the “obvious solution” to the lack of open market dwellings for local people to buy was the provision of more market housing and that this option should, at the very least, have been assessed as a “reasonable alternative” in accordance with Article 5 of the SEA Directive (2001/42/EC). The judge rejected the argument. The aim of the policy was not merely to meet the housing needs of local people, but also to safeguard the sustainability of development by reducing the proportion of dwellings not occupied as a principal residence. Of course, if a consequence of the plan is a discernible rise in prices (and we will obviously not know for some time to come), the extent to which the plan would nonetheless be able to achieve its aims will no doubt be hotly debated. For the time being, however, and in the plan-making context, the judgment will surely provide a response to those critics who focus solely on the market implications of second homes restrictions.

So far as discrimination was concerned, while the claimant had originally argued that the council had failed to give consideration to the potentially discriminatory effects of the policies contrary to s. 149 of the Equality Act 2010, this ground was not pursued at the hearing. While the judge therefore gave no guidance on the point, it is difficult to see (so long as appropriate consideration is given to the issue) how such an allegation can be made out. 

As to enforcement, we are, of course, yet to know the precise legal form that the principal residence restriction will take, whether circumstances will arise that require enforcement action to be taken and the issues that might arise at that stage.

Given the way in which the policy is worded, judgments (and possibly difficult judgments) may need to be made as to whether a person is occupying the dwelling as a principal residence. However, in rejecting a submission that the policy was insufficiently certain as to when enforcement action against a particular occupier would be taken (allegedly so as to breach Article 8 ECHR), the point was made that the purchaser of a dwelling subject to a restriction will be aware of the ‘risk’, in making the purchase, that if he chooses to move away, or circumstances force him to do so, then the restriction will require him to sell the dwelling. It is that risk, irrespective of the other uncertainties, which will surely ensure that the plan is effective at least in preventing new homes being marketed and sold as holiday homes and, in that regard, decrease the proportion of second homes in accordance with the aim of the policy.

Jack Parker (with Mark Lowe QC) was instructed by Elizabeth Dunstan on behalf of Cornwall Council

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