Planning And The Proceeds Of Crime

The term “proceeds of crime” tends to conjure up images of popular HBO crime dramas and 1950s gambling rings. It certainly doesn't tend to be associated in most people's minds with subdivision of flats without planning consent.

But it should be. Southwark Council have recently won a £1.2m proceeds of crime confiscation order from a landlord who converted three flats in London Bridge into 20 studios and bedsits without planning permission (see here for Southwark's press release). Southwark Council originally prosecuted the landlord in 2010, following which he was fined and ordered to reinstate the property to its original condition. The landlord failed to comply with this order and further charges were brought in 2017. The Council conducted an investigation into the rent that the landlord obtained by renting out the studios, and successfully sought a compensation order for that amount, which it regarded as a criminal benefit. The landlord has three months to pay this amount, with the prospect of a lengthy jail sentence if he fails to pay.

What does this mean for developers?

Most developers will be aware that it is not automatically a crime - though highly inadvisable - to carry out development without planning permission. It is, however, open to the planning authority to take enforcement action in respect of any unauthorised development and it is then a criminal offence to fail to comply with that enforcement action. Fewer developers may be aware that failure to obtain what are often perceived as more “minor” consents - such as highway consents, advertising consent or listed building consent (even if making a minor alteration) - is an automatic criminal offence. It is also an automatic criminal offence to demolish in a conservation area without planning permission.

And, wherever there is a criminal offence, the Proceeds of Crime Act 2002 (“POCA”) could potentially come into play, allowing the planning authority to secure a confiscation order at the same time as a planning prosecution. This follows a Court of Appeal ruling in R v Del Basso [2010] EWCA Crim 1119 that confiscation orders can be sought in planning cases. POCA entitles the local authority to apply for an order to recover an amount equivalent to the benefit gained from the criminal conduct in question. So, this could amount to, for example:

In the case of a failure to comply with a planning enforcement action - the rental income in respect of the unauthorised development (as in...