Can’t connect, won’t connect

A buyer of a new-build property tends to get bogged down in the finer detail of making sure the property looks “just right”. The reality for the developer of connecting utilities supplies to a development is not always so easy. The issues for a developer will broadly be as follows: Which services are crucial for the development? Are the existing services sufficient or is upgraded service infrastructure required? Where are the nearest mains services located? Does the site already have adequate rights to maintain existing service conduits? If existing infrastructure is insufficient, does the site have adequate rights to lay new service conduits across third-party land? Why can’t I connect? Water, sewerage, gas, electricity and telecommunications lines usually run along the public highway so where a development site abuts the public highway it is usually straightforward to connect to those existing utilities. The developer should be mindful of the fact that the highway authority’s interest will be in the surface of the road so they will need to check whether the subsoil could be registered to a third party whose consent may also be needed to any disturbance of the subsoil. But what about when the development site does not immediately abut the public highway? Where a site does not abut the public highway or is within a private development, the intervening land (no matter how small) may cause problems. In rural areas, there may be large stretches of land between the boundary of the site and the nearest public highway. The title to the site will often contain rights to use and connect to existing service conduits but this will not automatically include rights to install new services. This will be relevant where the number of units on the site is to be substantially increased. If the title is silent as to rights to use and connect to existing services, the consent of the adjoining landowner(s) will be required. Furthermore, gas and electricity statutory distributors will usually require their own right (known as an easement or wayleave) directly between them and the adjoining landowner as they have no automatic statutory right to lay services under land which is not public and not owned by the developer. If such consent is not obtained, the adjoining landowner will be able to claim an interference with its private rights. Where direct negotiations with adjoining landowners fail, the service provider may be able to exercise statutory rights to insist on the required easement, but this is seen as a last resort due to the time and cost implications, which the utility company would expect to be paid by the developer. There is no requirement for the adjoining landowner to act reasonably and a well-informed landowner will most likely charge a premium for such an easement, which is of real value to the developer. Similar issues may also arise with private roads that are not publicly maintained and so effectively become ransom strips. Where the existing supply to the site is sufficient but there are no documented rights to these services, title insurance may be a quick and cheap solution but this would be inappropriate for a site that requires upgraded or new service media. Statutory duties Service providers have certain statutory duties to provide a connection to their network if requested to do so by a landowner. Broadly, a new connection to electricity, water and the sewerage system must be provided, if requested. A gas connection is not regarded as an essential service, so the duty to provide a connection is less wide-ranging. An electricity distributor has a duty to connect its distribution system to the premises, if required by the owner. There is an exception to this duty where it is not reasonable in all the circumstances for the distributor to be required to do so. For example, the absence of third-party consent. A water supplier has a duty (subject to conditions) to provide a water main that can be used to supply premises in its area with water for use for domestic purposes (drinking, washing, cooking, central heating and sanitary purposes). Any main or pipe that connects to the water supply system must vest in the water supply company when the work is complete. Therefore, there must be an adoption agreement in place, before the connection works are done, between the water supply company and the developer or third party over whose land the water main or service pipe will pass. If the service pipe will pass through thir-party land, the third-party landowner will normally have input into the terms of the adoption agreement. A sewerage undertaker has a duty (subject to conditions) to provide both a public sewer and a lateral drain to connect premises to that sewer. Carry out thorough due diligence Developers will need to ensure that their solicitor carries out thorough due diligence in relation to services and the rights to connect to and/or install new service conduits, as well as the usual title investigations. Where the title to the site is defective in relation to services (ie. the rights are insufficient), conversations with statutory undertakers and adjoining landowners should be started early. Indemnity insurance may only be an adequate solution where no intensification of user is anticipated. Title investigations by solicitors can only go so far. Developers should also appoint surveyors early on to advise on any practical solutions if adequate rights do not exist. Why this matters If a developer buys a potential development site and later finds out that it cannot connect to existing service conduits or cannot install new conduits then the development may never complete and may never sell. There are ways around this problem, such as indemnity policies or statutory rights, but these may significantly increase the cost of the development and may ultimately delay completion, which will eat into the developer’s profits. A prudent developer will know what services already exist and which new connections are needed. They must ensure that these matters are put in hand (including direct negotiation with any third party landowners) in good time so that the development proceeds smoothly and is ultimately delivered on time. Key points Development sites may not have sufficient rights to connect to existing service conduits Adjoining landowners can make developments costly if their land becomes a ransom strip preventing access to essential services Utility providers have statutory rights to lay new conduits to a development site, but any compensation payable to adjoining landowners would be payable by the developer Developers must consider utilities rights before purchasing development sites as a lack of rights can prevent completion of the development Who is it relevant for? Developers Lawyers acting for developers Amy O’Gorman and Sam Shurkin are associates in the real estate team at Howard Kennedy