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. Indirect damage will also be assessed on the actual situation prior to the reference moment, 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 this first part, I discuss the new regulation on the decision causing damage. In part two I discuss the new comparative methodology and in part three I discuss the changes for normal social risk and transitional law.
Disadvantage compensation
Under the Environment Act, there is no longer any mention of planning damage. The regulation of plan damage is now subsumed under the more general heading of loss compensation. Because this is the purest term under the Environment Act, I will hereafter use the term loss compensation instead of plan damage for the new regulations.
Direct and indirect damages
When it comes to loss compensation due to a spatial decision, what matters is whether there is direct damage or indirect damage.
Direct damage means that the damage-causing decision refers to the parcel or buildings in question where the damage (such as decrease in value) occurs. For example, the situation where part of the building area on your plot is zoned away.
Indirect damage is damage caused by a decision that affects nearby land. An example of indirect damage is when a skyscraper is built opposite a home with a previously unobstructed view.
Shifting injurious decision
Based on the current Spatial Planning Act, the planning decision by which building and use possibilities are created is the decision causing damage. The idea was that if certain building and utilization possibilities already apply on site, this casts its "shadow" ahead and damage can already occur to surrounding real estate from that moment.
In the regulation of loss compensation under the Environment Act[1], indirect damage will be subject to the rule that loss compensation can only be requested when a permit is granted to actually realize those building and use possibilities. For activities for which no environmental permit is required, the damage will arise at the moment it is announced that the activity is being carried out or has actually started.
Compensation only for realized planning opportunities
This change in the system creates the situation that no compensation for loss compensation can yet be obtained if an environmental plan on an adjacent parcel already includes certain depreciating building or use possibilities, but no use has actually been made of them yet. The advantage of this arrangement is that damage only has to be compensated if the impairing activities actually manifest themselves. Moreover, compensation only has to be paid for what is actually realized and no longer for broader building and use possibilities that may never be realized.
Shadow damage
The disadvantage of this arrangement is that "shadow damage" is no longer eligible for compensation.
Shadow damage means that an immovable property may already become worth less purely because of the prospect created by the planning decision that depreciating activities may take place in the immediate vicinity. Critical questions were raised about this in the preparation of the law. The response was that ominous planning decisions would only have a very limited impact on the value of real estate. The question is whether that is always true. After all, one can imagine that a well-informed buyer will already be put off if he or she sees that a permit can be obtained for substantial construction or an intensive function on an adjacent plot without too many conditions.
Thus, the law no longer provides for compensation for this "shadow damage. Perhaps in the future - for example, through case law - a regulation for this will still be made.
Survey moment direct damage
For direct damage under the Environment Act, there may be two points in time at which damage can be claimed. For direct damage, the Environment Act does not explicitly provide that damage is only eligible for compensation when the rules causing damage are actually applied. Thus, a request for compensation for direct damage can in many cases already be made when the planning decision has been made.
Nevertheless, direct damage can also be the case that it only arises as a result of an implementation decision. The explanatory memorandum gives the example that an environmental plan contains a prohibition for certain activities and that this prohibition can be deviated from by means of an environmental permit. The owner suffers no damage if that environmental permit is still granted. The damage does occur if that environmental permit is refused. Therefore, in that case, the damage only qualifies for compensation if that environmental permit is refused.
This is important, for example, for the statute of limitations. After all, this starts five years after the decision causing the damage has become irrevocable. If it is not immediately clear which decision is causing the damage, it is necessary to apply for planning compensation within five years after the first potentially damaging decision becomes irrevocable. This does not make things easier for an injured party.
Wider zoning and prescription
The change of the cut-off point in indirect damage leads to the fact that, as far as loss compensation is concerned, wider zoning is less of a risk. Until the Environment Act, indirect damage must be compensated in accordance with the maximum possibilities, even if that is not realized (for the time being). As of the Environment Act, indirect damage will be assessed according to what is actually realized.
For direct damage, it will apply that there can be different moments of causing damage. As a result, claims for loss compensation may also lapse at different times. It is important to take this into account.
[campaigns]
[1] This article is based on the legal text dated June 4, 2021, consolidated version.
