Public space

The requirement by planning authorities for public spaces to be provided by private developers does not sit entirely comfortably with English law’s concept of landownership. Exclusivity of use of land, including the ability to control access, is considered an intrinsic element of landownership. Requiring private land to be accessible to the public clearly contradicts this.

What is public space?

Public space embraces all open spaces freely accessible to members of the public. Indoor covered spaces, such as in shopping centres, can also count as public space even though access may be restricted.

Ownership and adoption by local authority

Where roads, streets and other vehicular or pedestrian ways are to be open to the public, it can be attractive to developers to have these adopted by the local authority under the Highways Act 1980. This passes liability to repair and maintain the highways. Similarly, under the Open Spaces Act 1906, open spaces can be transferred to local authorities for them to maintain at public expense.

This is obviously attractive from a cost perspective. It also removes the need for a structure to provide maintenance and recover costs from the occupiers.

The benefits of control

Retaining ownership makes possible a more comprehensive maintenance programme and allows more control over who has access to the public spaces and how they are used.

Retaining ownership means retaining the ability to benefit from future development. Control can be used to prevent dedication of open space as a highway. In years to come, the reduced risk resulting from the ability to close and reconfigure public realm may make future development more certain.

Be aware, though, that opportunities may be limited by Section 106 agreements preserving the nature of the public space. Local authorities may even seek a share in any commercial opportunities.

Meeting the cost of ownership

Maintenance costs will inevitably be borne by a developer who owns and manages public spaces. Even if the local authority takes over the public space, it may still require the developer to contribute to the cost in advance by a commuted sum.

If paying for maintenance, developers look to occupiers to fund these costs, often via service charges. If the development is sold on a freehold basis, an estate service charge could be set up either through the use of rent charges or by a chain of positive covenants to contribute to maintenance cost when purchasers acquire their “plot”.

Ongoing responsibilities

Many developers wish to avoid continuing responsibility once a development has been completed and sold. If public spaces are not already sold to others, the developer will need to transfer ownership and management to achieve this.

Where the development is sold off on a leasehold basis, the developer is most likely to sell the freehold of the entire development, including the public space, to an investor.

If the development is primarily residential, developers need to be aware of the statutory rights of residential tenants to acquire the freehold. The value of the freehold to a potential third party buyer is likely to be reduced as a result and the developer may prefer to sell the freehold, including the public space, to a management company controlled by the tenants. Indeed, as residential tenants have a collective statutory right of first refusal, there may be no choice.

Where the development is sold on a freehold basis, public spaces may be transferred to a specially set-up management company, usually owned by the owners of the individual plots. The developer is likely to set up a management company for the ownership and management of common parts which are not public spaces (for example, private car parks or lifts) and vesting the public spaces in such a company would therefore make sense.