The Importance of ‘Lift and Shift’ Provisions to Registered Providers

Traditionally, a registered provider of affordable housing (“RP”) will enter into contract with a developer in respect of the delivery of affordable housing units (“units”) on a development site as part of the affordable housing provision prescribed by a Section 106 planning agreement. The developer either transfers the land to the RP at ‘golden brick’ stage, or once the units have reached practical completion and are ready for occupation, the units are transferred to the RP). Under either arrangement, the developer will contract with the RP to deliver serviced and completed units in return for payment of the sum specified in the relevant contract(s).

However, it is becoming increasingly common for RPs to redevelop existing stock that they own or acquire land with a view to procuring the construction of units on a development site themselves (or in collaboration with a venture partner). In this context, the existence of service media (e.g. pipes, wires, cables, ducts etc. for the passage of services such as electricity, gas, water and telecommunications) and the ability to relocate that is one that the RP must pay attention to.

What is a ‘lift and shift’ provision?

‘Lift and shift’ is quite simply exactly what it says. It is the ability to relocate (or request relocation of) existing apparatus on or under a prospective development site and move it to an alternative location. Whether or not this is something that an RP will be able to rely upon will depend on the provisions of the relevant agreement or deed with the utility company (which will supply the services via the service media).

What can RPs do?

Prior to acquisition of the site, an RP should undertake suitable due diligence at the earliest opportunity into title matters and existing service media relating to a prospective development site. This should include at the minimum a site inspection, commissioning appropriate surveys and investigations, undertaking utility searches and raising enquiries of the landowner/seller, in order to gain an appreciation for any constraints that would impact on viability, cost and deliverability of a proposed scheme.

This will help identify any service media and check how this could impact on development proposals. For example, whether that apparatus can be accommodated as part of the redevelopment proposals or whether the proposed development will require a relocation of the apparatus.

Why is ‘lift and shift’ important?

Without adequate ‘lift and shift’ provisions, an RP may (a) incur significant time and cost in reaching an agreement with the relevant service supplier to relocate its equipment with their consent; or (b) reconsider the scope/extent of the proposed development.

The costs associated with relocating service media to ensure the diverted route is accommodated as part of the development proposals for the site (i.e. relocating service media so that it will be constructed under the estate roads intended for construction) can be significant, which could impact on the viability of a proposed development scheme.

It may be the case that the relevant deed or agreement may not include a ‘lift and shift’ provision, and so there may not be any ability to relocate the equipment. RPs may need specialist advice on their rights and options available to them to divert existing service media if the underlying documents do not appear to contain an explicit ‘lift and shift’ provision (i.e. exploring the statutory rights of utility providers).

RPs should also be aware when dealing with ‘lift and shift’ provisions or the relocation of apparatus by agreement (outside of existing ‘lift and shift’ provisions), of ensuring that all relevant steps are followed to ensure onward sales are seamless. In the example of relying on existing ‘lift and shift’ provisions, the underlying document will often prescribe the process that is to be followed, for instance, once the diversion route is agreed, the rights as granted in the underlying deed will be treated as applying to the diverted route and extinguished in respect of the old route. Or it may be that the underlying document envisages a new deed is entered into, formalising the new route and extinguishing the old route.

When agreeing the relocation of existing media outside of existing ‘lift and shift’ provisions (and entering into a new deed), it is important to ensure that the ‘old’ rights relating to the original route of the service media are fully extinguished. If this is missed it can cause issues when an RP looks to dispose of the completed units which have been constructed on the original service media route.

An interesting point to note – in the absence of any ‘lift and shift’ provisions, a utility provider may consider undergrounding an overhead line, or a section of that line where; the likely visual impact on a publicly accessible and recognised view or prospect visited and enjoyed by a large number of people within an area of importance for its scenic beauty, character, amenity or historical importance (which may include listed buildings and conservation areas) is very significant, and no alternative route for an overhead line can be identified. It is generally accepted that any new overhead lines are subject to the ‘Holford Rules’, one of which means that conservation areas and major areas of the highest amenity value should be avoided altogether.

Other Issues with ‘Lift and Shift’

‘Lift and shift’ can also become problematic when connections for a new route are required over third party land (i.e. land other than the prospective development site). An RP may not be in the strongest bargaining position and could be held to ransom by the relevant landowner. The RP will also have to factor in additional costs for legal fees of the third party landowner and the relevant service supplier, which may result in unforeseen additional costs.

It may be that RPs can agree with the utility provider that the utility provider will pay a contribution towards the diversion costs (on the basis of an ‘improvement’ to the service media and the wider network, particularly if the original apparatus had been laid sometime ago). However, utility providers are not inclined to pay costs if service media have a long life expectancy with further operational use left in them.

Key takeaways

• Early and detailed due diligence is key – instructing utility searches and reviewing the route, extent and location of service media.
• Understanding the results of surveys, searches and relevant title constraints are critical to effective planning and development. If you intend to rely on existing ‘lift and shift’ provisions, ensure that these are adequate for your intended purpose and assess the cost implications.
• When requiring extinguishment of rights over the original route as part of the grant of rights over the diverted route, factor in all potential costs (i.e. third party payments, legal fees, cost of providing the new service media, etc.).