In its 2019 election campaign, the Government pledged to "level up" the United Kingdom, addressing historic disparities between London, and the South East, and the rest of the country. This followed an ongoing trend towards greater devolution of powers throughout the UK, to give local leaders and communities the tools they need to make better places.
To that end, on 11 May 2022, the Government unveiled the Levelling Up and Regeneration Bill (the "Levelling Up Bill"). The Levelling Up Bill will provide for a reduction of spatial disparities to be at the heart of government decision-making, while incorporating a range of planning reforms and allowing for powers over budgets, transport and skills to be devolved to all areas of England.
In return for granting greater powers at a local level, and streamlining the planning process to draw in developers, the Government has also taken steps to increase the accountability and transparency of those same bodies. The Levelling Up Bill isn't, therefore, just about levelling up but requiring openness and transparency in relation to land contracts.
What is being done?
Part 11 of the Bill sets out provisions to increase the transparency of arrangements, contractual or otherwise, used to exercise control over land in England and Wales. The Government's policy paper suggests that the intention of these provisions is to expose perceived anti-competitive behaviours by developers, while helping local communities to better understand the likely paths of developments.
The Government's plan is to establish requirements for disclosure of information about such arrangements. It sets out three "permitted purposes" around which the Secretary of State may, through their own regulations (for which they receive a great deal of discretion), require disclosure:
- the beneficial ownership purpose - meaning information that helps to identify people who are the beneficial owners of land in England and Wales, and to understand the relationship of those people with the land they beneficially own;
- the contractual control purpose; and
- the national security purpose - meaning it relates to land appearing to the Secretary of State to be used for a purpose, or located in a particular area, that gives rise to a national security threat.
The beneficial ownership purpose and national security purpose have already seen significant changes under recent legislation, such as the Economic Crime (Transparency and Enforcement) Act 2022 and National Security and Investment Act 2021.
The contractual purpose
This, broadly, captures any information that appears, to the Secretary of State, to be "useful for the purpose of understanding relevant contractual rights". Thankfully, the legislation does flesh this terminology out somewhat.
"Understand" includes identifying persons holding contractual rights, and understanding the circumstances in which they were created or acquired.
"Relevant contractual rights" are defined as rights arising under a contract relating to the development, use or disposal of land in England or Wales. The inclusion of development, rather than just disposals, significantly widens the range of contracts potentially captured by the Levelling Up Bill.
"Contract", in turn, has a broad meaning that captures not just transfers and leases but also includes any deed regardless of whether it was made for consideration. The language of the definition is open enough that one can see other documents, such as options or purchase agreements, being captured. The devil is in the detail and we will need to see what is contained in the regulations, when they are published.
It could get wider!
The Levelling Up Bill states that disclosure may be required of information relating to "things done or arising before the coming into force of this [Part 11] section".
The intention is to ensure developers and authorities cannot avoid being captured by the Levelling Up Bill by exchanging or completing contracts before it receives royal ascent. As elsewhere, the broad wording and lack of hard limits on the Secretary of State's powers means the Levelling Up Bill has the potential to be quite onerous. However, this yet to be seen as the Levelling Up Bill also establishes criminal offences and penalties for failure to comply.
In turn, we understand that the Department for Levelling Up, Housing and Communities is currently working on how to implement the data collection process. This includes the trigger, dictating what kinds of contracts require submission of information. We expect to see proposals and possibly draft regulations later this year.
The Levelling Up Bill is a mammoth piece of legislation, at nearly 500 pages, and is still being debated at this time. The provisions relating to this particular area, however, appear to be largely settled. We will continue to watch the Levelling Up Bill's progress, so while we wait for the specific regulations to be ironed out by the Secretary of State, and potentially the courts, this has the potential to be an interesting few years indeed.
To discuss any of the points raised in this article, please contact Matt Walker.