David Browne, Partner, looks at “Locals Only” Planning Rules and considers whether they are contrary to European Union Law, in light of comparable cases in continental Europe:
Many people may be familiar with “Locals Only” rules in the context of Planning Permission. They can appear in many guises but, generally, they operate to restrict the granting of planning permission for a development in an area to persons local to that area or, in extreme cases, to persons who are blood relatives of a landowner in the locality. They are most often used in rural areas, with counties such as Kerry historically being home to some of the most extreme limitations.
In 2013, in the ‘Flemish Decree’ case, the Court of Justice of the European Union issued a judgment that called the legality of these “locals only” type rules into question. In that case, the Court had to consider a law in the Flemish region of Belgium that limited the transfer of property to persons with a “sufficient connection” to the locality. The applicants in the case sought to challenge the law on the basis that it contravened some of the Fundamental Freedoms of the EU – namely, the Free Movement of People, the Free Movement of Workers, the Freedom of Establishment, the Free Movement of Services and the Free Movement of Capital.
It is a well-established principle of EU Law that any national measure that is liable to hinder, or make less attractive, the exercise of any of the Fundamental Freedoms guaranteed by EU Law is contrary to EU Law unless it can be shown that the measure pursues a legitimate objective in the public interest, is appropriate for attaining that objective, and does not go beyond what is necessary to attain that objective. This is, in essence, a proportionality test. Does the measure proportionately pursue a legitimate public objective?
Restriction of the Fundamental Freedoms?
The first step for the Court was determining if the Flemish measure constituted a restriction on any of the Fundamental Freedoms. The Court was of the opinion that it did. The Free Movement of People requires that EU citizens be allowed to freely move and reside within the territory of the EU without restriction. The Free Movement of Workers requires that EU Citizens be able to move and work freely within the territory of the EU, and the Freedom of Establishment requires that EU citizens be allowed to set-up and run business ventures freely within the territory of the EU without undue restriction. It is, perhaps, unsurprising then, that the Court was of the opinion that these freedoms were restricted by the measure in question. The requirement for a “sufficient connection” in order for property to be purchased obviously made it very difficult, if not impossible, for EU citizens not operating within the locality to move there, work there, or set-up a business there. The Court also noted that the rule was likely to deter Flemish people themselves from exercising their Freedoms, as they may have felt compelled to stay local so as no to lose their “sufficient connection”.
It was also held that the principles of Free Movement of Services, which requires that no restrictions be placed on the provision of cross-border services within the EU, and the Free Movement of Capital, which requires that capital be allowed to move freely across the EU, were also restricted. The measure was likely to make it difficult for a service providers in the property sector to operate effectively within the region, and it restricted the movement of Capital in so much as outside property investors could not invest in the region.
A Justified Restriction?
That was not the end of the matter, however. The Court had to go on to consider whether the measure proportionately pursued a legitimate objective.
The Flemish Government sought to argue that the restriction served to prevent wealthy persons from other communities essentially buying up all the land, leaving the less well-off locals unable to access the local property market.
The Court was of the view that such an objective could amount to a legitimate aim, but that the measure was not appropriate or necessary for attaining that aim.
When one considers the test for establishing whether a “sufficient connection” exists under the impugned measure, it is not difficult to see why this decision was reached. In order to be deemed to have a “sufficient connection” to the region, at least one of the following had to be true about a prospective buyer:
- They had to be continuously resident in the commune for at least six years, or
- On the date of the transfer, they had to carry out activities in the commune, that, on average, occupied at least half the working week or,
- he had established a professional, family, social or economic connection to the commune as a result of a significant circumstance of long duration
The problem with these requirements is that they were not appropriate for attaining the stated objective of protecting low-income locals. There was nothing to stop high-income locals dominating the property market to the exclusion of low-income locals. Furthermore, the measure went beyond what was necessary to attain the stated objective. The Court was of the view that less restrictive measures, such as subsidies and financial assistance packages were available to the Flemish Government and, as such, a measure this restrictive simply was not necessary for attaining the stated objective.
What does this mean for Irish “Locals Only” planning rules?
If one applies the principles from the ‘Flemish Decree’ case, one can immediately see that these types of rules are likely to restrict many, if not all, of the Fundamental Freedoms listed above. It can also be seen that the Court of Justice of the European Union is unlikely to accept protection of low-income locals as a justification for the rule in circumstances were financial aid and/or subsidies to same would meet such an aim in a less restrictive manner. While these rules might be said to exist to prevent the over-urbanisation of rural areas, and/or to protect the rural character of these areas, it is not clear how restricting development to only locals achieves that aim, or that such rules restrict the Freedoms as little as possible.
Despite the ‘Flemish Decree’ ruling having been given over 6 years ago, we are still awaiting the recommendations of the Working Group established by the Department for Housing, Planning and Local Government to review the 2005 Planning Guidelines on Sustainable Rural Housing to bring Irish Planning Law into line with EU Law. It remains to be seen whether these rules will be scrapped entirely, or whether more proportionate and justifiable measures will be introduced. Any such measures must be drafted with the greatest of care in order to ensure compliance with the ‘Flemish Decree’ case.
If the Irish Planning authorities do not get their act in order, it will only be a matter of time before a disgruntled applicant will grace the floor of the Court of Justice of the European Union.
David Browne,
Partner, BDM Boylan Solicitors, dbrowne@bdmboylan.ie, 0214313333
If you have any queries about this or any other legal issues, we at BDM Boylan have the experience and expertise to help you.