Agenda item

To consider the report.

1.     To accept the report, noting the observations made during the discussion.⁠

2.     To recommend to the Cabinet Member for the Environment that detailed consideration needed to be given to 'material use change' and the need to receive external legal advice when considering the next steps.

 

The report was presented by the Cabinet Member for the Environment, Head of Department for Environment, Head of Legal Services and Assistant Head of Environment Department.

 

The Assistant Head explained that there were concerns about the high number of second homes and short-term holiday lets that existed in Gwynedd, and that Cyngor Gwynedd's Cabinet had submitted a report detailing research in this area, to the Welsh Government in 2020. It was elaborated that that report called for measures to address those concerns, such as changes to the planning system to manage second homes and short-term holiday lets.

 

It was reported that the Welsh Government, in response, had introduced changes to the planning system in 2022 which created three new planning use classes. It was noted that these defined 'main home', 'second home' and 'short-term holiday let'. It was added that this gave rights to switch from one class of use to another without the need for planning permission. However, it was explained that local authorities could go through a process to introduce an Article 4 Direction for areas where there was evidence that the area was negatively affected by a high number of second homes and short-term holiday lets. They confirmed that an Article 4 Direction was a planning tool that had been used for several years to manage different types of development such as building alterations in conservation areas or to control the use of houses in multiple occupation in England.

 

It was emphasised that an Article 4 direction had not been used to try to manage second homes and short-term holiday lets.

 

It was confirmed that Cyngor Gwynedd was the first local authority to conduct the process of introducing an Article 4 Direction to try and gain better control of second homes and short-term holiday lets. It was emphasised that the Council was aware of the risks associated with introducing the direction and had ensured that this was recorded on the Department's risk register. It was reported that there were measures in place to manage the risks as far as reasonably possible, throughout the process.

 

The Head of Legal Services reminded the members that a decision was made in June 2023, to conduct the process of establishing an Article 4 direction over a two-year period. He explained that this decision had been made to ensure that it was advertised for over 12 months, to avoid compensation challenges. He reported that the direction came into force in 2024.

 

He specified that the legal challenge presented related primarily to the public consultation that was carried out, not to the process of introducing the direction.

 

It was explained that the successful legal challenge indicated that a report had misdirected the Cabinet as they came to a decision on the matter, because of the issue of material change in the report. It was added that the non-inclusion of this material change within the documentation made it incomplete and appeared misleading. It was pointed out that material change was a fundamental element of the planning area and therefore the report would not be misleading if the appropriate audience understood the area of work. It was noted that the Court considered that the Cabinet did not understand the area of work, unlike the members of the Planning Committee, although some members of the Cabinet did have experience of attending that committee as Members.

 

It was stressed that there had been no deliberate or malicious misleading as part of the process.

 

The officers drew attention to Section 31 of the Senior Courts Act which considers whether if the court came to a different conclusion, would that make a difference. It was noted that the Court had to be confident that it was 'highly likely' that the decision would have been the same in order to proceed with introducing the direction. It was explained that the Court had indicated that this case was only 'likely' to have led to the same decision, and as such it was ruled that the direction was no longer effective.

 

It was confirmed that the Council had submitted an application to appeal this decision, but that application had been refused.

 

During the discussion, the following observations were made:- 

 

Clarity was sought in relation to the definitions of a number of relevant terms such as the difference between 'change of use' and 'material change of use'. Members also wanted a further explanation on how the reports submitted to Cabinet had materially misled the Members, in the judge's opinion. In addition, they asked if there were any differences in the documentation of this meeting compared to the documentation submitted to the Cabinet when they had made their decision.

 

In response to a query on the misleading nature of the report, the Head of Legal Services emphasised that the report submitted to the Cabinet used statutory wording and was a sincere attempt to present information to the Cabinet, at its meeting on 13 June 2023. He explained that the report was described as 'misleading' because the Court highlighted the need for a higher level of explanation of the information for Cabinet members. He reminded everyone that the report submitted to the Cabinet was a response to the public consultation on the matter, where over 3,000 responses had been received, with the aim of presenting a fair reflection of the content of those responses. The Assistant Head elaborated that it was not reasonably predictable to expect a legal challenge to the process based on the use of the wording "material change of use", as the reports had used the same wording as the statute and Planning Policy Wales. It was detailed that arrangements had been put in place to ensure that reports were reviewed by experienced planners, the Legal Department and barristers before they were published. It was highlighted that all documentation of the Cabinet meetings on 13 June 2023 and 16 July 2024 remained in the public domain and that they had previously been approved by the Communities Scrutiny Committee, at its meeting on 9 March 2023 and 16 May 2024

 

Specific data was requested about the financial cost of introducing the process and responding to the legal challenge. Similarly, it was questioned why officers had decided to appeal the decision given that their documentation was flawed. A request was made to receive a summary of the failures that had led to the legal challenge and asked if any review or disciplinary processes were underway.

 

In response, the Assistant Head of Department explained that the legal costs for defending this legal challenge were in the region of £60,000. It was emphasised that the money spent to date was not considered to be a waste of taxpayers' money because it was a sound investment for the future, it had allowed the Council to develop the expertise of its officers and it had provided significant assistance to other authorities that were considering or undergoing the process of introducing an Article 4 direction. It was acknowledged that lessons had been learned. The Head of Legal Services added that the Council's arrangements required him as the Monitoring Officer, and the Head of Finance to assess the propriety of reports presented to the Cabinet and to the Full Council, emphasising that this legal challenge was the first time that a legal challenge had been brought following this procedure. It was emphasised that the decision to defend a legal case was made carefully and on a very tight timescale. He elaborated that they weighed things up seriously to ensure that a strong defence was developed. It was also noted that barristers for defending a legal challenge were carefully selected to ensure they had certain skills and experience, such as a King's Counsel (KC), and that any advice received was subject to detailed assessment.

 

It was enquired whether the Council had altered its arrangements in any way following this legal challenge. In response, the Head of Legal Services confirmed that lessons had been learned following this process. He said that one of those lessons was the need to ensure that all reports submitted were complete, by ensuring that there are no gaps in the information presented. It was emphasised that this lesson had been learned across the Council and not just for this topic.

 

In response to an enquiry, the Head of Legal Services explained that witnesses had not been called during the legal challenge due to the nature of the case.

 

He noted that because the use classes introduced by the Welsh Government were new, there was no precedent for introducing an Article 4 direction for the use proposed by Cyngor Gwynedd. In response to the comments, the Assistant Head confirmed that the three new classes of use developed by the Welsh Government in 2022 remained in force, and owners can change the use class of their property without the need for a planning application. It was noted that there was no legal definition of material change of use and that this was a matter of fact and degree to be considered on a case-by-case basis, taking into account issues such as frequency and scale of use. Nonetheless, it was acknowledged that a change of use class could not be prevented at present as the Article 4 direction was not in operation.

 

In response to a question regarding the Council's Local Development Plan, the Assistant Head of Department explained that the introduction of the classes which enabled local authorities to issue an Article 4 direction was likely a tool used by the Welsh Government to allow for a rapid response. It was pointed out that introducing new primary legislation to introduce the concept of requiring a planning application to change a property's class of use would be a slow process with the risk that it would not receive sufficient support at a national level as the number of second homes and short-term holiday lets and their impact varied greatly across Wales. Reference was made to the Council's new Local Development Plan, stating that this process would give consideration to introducing planning policies relating to second homes and short-term holiday lets in line with the requirements of Planning Policy Wales. It was highlighted that losing properties that are a primary residence to be converted into short-term holiday lets or second homes cannot be prevented because it was not regulated. However, conditions could be imposed on dwellings that were part of new developments so that they could only be primary residences.

 

A member asked what input was received from the residents of Gwynedd as the Council considered introducing the direction. In response to the query, the Assistant Head of Environment Department specified that extensive public engagement had been carried out as part of the process. He noted that this included engaging with all households within the Gwynedd planning authority area, engaging on social media and in the press and installing notices on sites. It was explained that officers had considered all responses received. It was explained that the responses had not been grouped into those comments that supported or opposed the introduction of the direction. However, it was explained that officers had given detailed consideration to all points of view and data presented.

 

The Head of Legal Services reiterated that this legal challenge had contended the introduction of an Article 4 direction in Gwynedd on four grounds. It was pointed out that three complex grounds for the challenge had been dismissed as grounds of appeal by the courts, with only one ground succeeding. The Assistant Head of Department highlighted that the fact that the direction was intended to affect the entire planning area of Gwynedd, had not been challenged. It was confirmed that should the Council decide to attempt to reintroduce the direction, it was likely to do so with the entire area in mind again. It was confirmed that specific communities could be looked at within the new Local Development Plan. In response to these comments, the Members considered that it would be sensible to obtain additional external legal advice on the necessary terminology definitions in the field to ensure that no legal challenges could be made in the future.

 

Comments were received from Members that any future attempt to reintroduce the direction in Gwynedd should be marketed differently to gain more support. It was detailed that the work to date had led to several successes and that making residents aware of this would be very effective for any future attempt. Support was expressed for reintroducing the direction in future as it was an effective tool for the department and protected the communities of Gwynedd. The Department was asked if it planned to reintroduce the direction and what the next steps were.

 

In response, the Cabinet Member explained that there was a desire to reintroduce the direction again in the future. However, he noted that there were no definite plans at present as the term of this Council was approaching its end. The Assistant Head of Department elaborated that the work that had been completed as part of the process so far could be reused when the process was recommenced. It was considered that there was an adequate budget to complete the process if it were to be reintroduced. It was reported that there was grant funding of £402,330 from the Welsh Government to successfully prepare and implement the Article 4 direction, with Cyngor Gwynedd contributing match funding of £400,000. It was confirmed that £465,654.53 had been spent to date (on staffing, administration and legal matters) and that £336,675.37 remained in the fund if the direction was to be reintroduced.

 

Thanks were received from Councillor Edgar Wyn Owen, former Chair of Eryri National Park Authority, for the support and guidance the Authority had received from Cyngor Gwynedd throughout the process of introducing the Article 4 direction for the authority. In response to an enquiry about the success of Eryri National Park Authority in introducing an Article 4 direction, the Assistant Head of Department explained that there was no difference in their process compared to the Gwynedd arrangements. It was highlighted that since the timeline for the Park ran behind that of the Council, they had been able to draw on the information received during the legal challenge against the process in Gwynedd, ensuring that their reports were amended to ensure that there was a specific reference to material change of use. It was added that a legal challenge had not been lodged against the Park Authority within the specified deadline.

 

In response to an enquiry, the Assistant Head of Department acknowledged that the guidance had not been in place in Gwynedd for long enough to be able to measure its impact. It was highlighted that some data was available and would be assessed but it was difficult to know at present whether there was any impact because of the direction or whether it was due to other measures that were in place to address second homes and short-term holiday lets.

 

At the end of the discussion, Councillor Berwyn Parry Jones, (a former Cabinet member who was involved in the Cabinet's decision to approve the Article 4 direction at its June 2023 meeting), confirmed that he had been aware of 'material change of use' and was aware of the relevant information before reaching a decision.

 

The members thanked the officers for the report.

 

Resolved:

 

1.       To accept the report, noting the observations made during the discussion.

2.     To recommend to the Cabinet Member for Environment that detailed consideration needs to be given to 'material change of use' and the need to receive external legal advice when considering the next steps.