£10 million pound block of flats to be torn down after it was built in London without planning permission

This article was first published in the June edition of Builder & Engineer.

A block of flats worth £10 million pounds is to be demolished after it was built in London without planning permission. Headlines like this have made national news and shocked both planning professionals and lay people alike.

Garland Developments built 34 flats at a site in Hoxton, East London. The company looked set to make a fortune as each flat is estimated to be worth around £300,000; bringing the total development value to in excess of 10 million pounds.

There was just one problem - the development didn’t have planning permission. In fact planning permission had been granted in July 2006 but this was for something quite different, namely a 5 storey block plus basement level building to provide 650 sqm of business floor space and 14 residential units.

Why the company decided to build 34 units instead of 14 is unclear.

In August 2011, the London Borough of Hackney served the company with an enforcement notice ordering it to demolish the building. Garland appealed against the notice and submitted (summarised in the appeal decision by the Inspector) that the revised drawings submitted in 2007 superseded the original planning decision so that it had permission to build what was shown on the 2007 plans and secondly, "even though it was acknowledged that what had been built was different to what was shown on both sets of plans, the development was not materially different and came within the scope of what had been approved (whether that was the original plans or the amended versions)."

The Enforcement Appeal was determined on 1 June 2012, the appeal was dismissed, and the inspector found that what had been built was: 

"completely different both in terms of the physical appearance of what is there (whether compared to the plans forming part of the planning permission or the later plans submitted for approval as amendments) and in terms of the use of the building (it has been constructed as a purely residential building with 34 flats in it) which, consequently, materially affects the impact that the development has on its surroundings and on those occupying properties immediately adjacent to it."

It was agreed that demolition could be delayed until March 2013 (due to tenant leases) and since 2014 the owners have been applying for retrospective planning permission but this has yet to be determined.

The building remains in place and therefore as the owner had failed to comply with the enforcement notice they were prosecuted and fined £10,000. The London Borough of Hackney also sought a confiscation order which serves to confiscates monies under the Proceeds of Crime Act. The Council was successful and was granted an order for seizure of £700,000 - being the rental payments received from the 34 illegal flats.

Whilst to many people these headlines give the impression that a developer had simply built a six storey block of flats in London without any permission whatsoever, and without any consultation with the local planning authority, this is not the case. It does however dramatically highlight the potential consequences of developing land other than in accordance with the requisite planning permission. 

Consequences of developing without planning permission

The most notable consequences in this case were the severe financial penalties, criminal sanctions and the draconian requirement of having to tear down a fully built residential block of flats (which at the time of writing is still to be demolished) not to mention the cost of demolition and presumably the substantial costs incurred during the original construction phrase.

However, not all development which is carried out without planning permission or which fails to comply with planning conditions will be subject to an order for demolition.  In every case any enforcement action has to pass the test of being expedient. In some circumstances a corrective retrospective planning application may be appropriate. Alternatively, it may be possible to negotiate changes to the development, in which case the developer may find themselves being served with an enforcement notice requiring cessation of a particular activity rather than outright demolition.   

In addition the case is unusual because the developer must have been self-funded.  Where a developer is being funded it is highly unlikely that funds could be drawn down to finance such a non-compliant venture.  Far more common is the construction of a building with minor discrepancies compared with the plans.

The first sign of possible enforcement action is what is known as a planning contravention notice. From the receipt of this warning shot any developer would be well advised to try and negotiate a solution. At the very least, the consequences of having a battle with the local planning authority will be unsold units until the position is regularised.   

If an enforcement notice does get served and is upheld the ramifications of failing to comply with it can be severe and include criminal liability, a possible prison sentence, and severe financial penalties which we have seen above. It is unusual to see the full use of these powers, but this case demonstrates that they are effective in the rare cases where they are needed.