In many areas, the Environment Act is "policy neutral," meaning that the applicable standards remain materially the same as current law. With regard to planning damage, however, the Environment Act leads to major changes. For example, the Environment Act means that planning damage can be claimed from a different point in time. In case of indirect planning damage, the actual situation prior to the moment of assessment will be taken into account and a fixed percentage for the normal social risk will be included in the law. These changes can have major (financial) consequences for real estate developments.
Environment Act entry into force
In the run-up to the entry into force of the Environment Act, we have written several articles on partial aspects of that Act. For example, we have informed you about fees under the Environment Act, flexibility and procedures under the Environment Act, the Decree on Building Projects in the Living Environment, the technical construction activity, coordination under the Environment Act, the changed system for an application for a test against the environment plan, steering options, transitional law and we have explained the difference between a zoning plan and an environment plan.
The Environment Act significantly changes the regulation of planning damage. In part one, I discussed the new regulation on the decision causing damage. In this second part two I will discuss the new comparative methodology and in part three I will discuss the changes for normal social risk and transitional law.
[campaigns]
Planning comparison
Based on the current Spatial Planning Act, a request for planning damage requires a comparison between the maximum planning possibilities based on the old planning regime and the maximum planning possibilities based on the new planning regime. It must then be assessed to what extent the new planning regime has a depreciating effect on the property in question (direct damage) or nearby properties (indirect damage).
Comparison with actual situation
With the entry into force of the Environment Act[1 ], indirect damage is subject to a comparison between the actual situation prior to the decision causing damage and the licensed situation. This change may have major consequences.
The rationale behind this is that it is often difficult to explain to local residents if the planological comparison shows that under the old planning regime there were already substantial building and use possibilities and therefore no damage is suffered with the new planning regime. After all, local residents often compare with the actual situation. A new building plan does often have clear consequences compared to this.
Plan comparison in direct injury
In the case of direct damage, this does not apply. In that case, as now, a comparison is made between the (real) maximum possibilities of the planning regimes. It must then also be assessed at what point that planning damage manifests itself. For example, the introduction of a permit requirement does not necessarily cause damage because that permit may be easily obtained. I will go into that in more detail in the first section on planning damages.
Potentially large impact project development
Although this does not seem intended, this change in the law may result in more compensation being payable under the new law for indirect damages than is currently the case.
For example, in the following situation. A property developer purchases a plot of land and demolishes the dilapidated buildings, partly because otherwise danger could arise. Based on the existing planning possibilities, a lot of construction is allowed on site, but that construction is not appropriate in the current spirit of the times or not for the desired functions. Therefore, under the Environment Act, the developer obtains a new planning decree in order to realize the desired building and use. As a result, the building possibilities do not differ so much in size from what was already possible from a planning perspective, but a better plan can be realized.
Based on current law, little planning compensation would then probably have to be paid because a comparison must be made between the maximum planning possibilities based on the old regime and the maximum planning possibilities based on the new regime.
Under the Environment Act, there is a chance that a significant amount of compensation for loss will have to be paid. After all, a comparison must be made with the actual situation before the environmental permit was granted. That actual situation is a vacant lot, so for local residents there was no nuisance due to construction on that lot. The licensed situation assumes a new building plan. The decrease in value due to that building must be compared with decrease in value due to the vacant lot. Even though building was possible based on the previous planning regime.
As mentioned, this does not seem to be intended. The Advisory Division of the Council of State has also raised critical questions about this. However, this has not led to a change in the premise that a comparison must be made with the actual situation before authorization.
Do not demolish until new building plan is licensed?
As a project developer, it is very important to take this into account. For example, based on the new system, it could be unwise to already demolish buildings and leave a plot undeveloped before a permit is obtained for the new building and use.
This could have the undesirable side effect of keeping dilapidated structures standing longer. That too does not seem to us to be an intended effect of this legislative amendment. We therefore do not rule out the possibility that this will be fine-tuned - in case law or otherwise.
[1] This article is based on the legal text dated June 4, 2021, consolidated version.
