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Newly Constructed Roads & Unadopted Roads On New Developments

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This is particularly relevant if you are considering purchasing a newly constructed property but it also affects a number of second hand properties where the adoption of the roads serving the property has yet to be finalised.

What is road adoption and what is an unadopted road on a new development?

An adopted road is a road that is maintained at public expense and “road adoption” is a term used to describe the local authority taking ownership of a ‘private street’. You also have a statutory right of way over an adopted road which also includes footpaths.

Not all roads are adopted – many roads are “private” which means that they are maintained either by residents or by a management company set up for this purpose who may also maintain other common areas on a housing estate such as lighting or recreational areas. Others may simply be unadopted roads on new build developments

It may be that some other roads may not meet the local authority’s road adoption policy, for example they are in poor condition.

As long as you have a legal right of way over a road serving your property and there are adequate provisions for maintenance this is perfectly acceptable. For the purposes of this article we explain the procedure for a new road becoming an adopted highway.

How does a new road become adopted as public highway?

The construction of new roads on housing estates is the responsibility of the developer, who constructs the development. In a large development, this may take some time to complete. If it is intended that the roads serving the property are to be adopted the role of the County Council, as Highway Authority, is to ensure that they are built to the appropriate standard. This process of roads becoming public highways are covered under something known as a road bond. A road bond is a financial guarantee between local council/highways and the residential building provider which means that should the road be incomplete or not to the required standard, highways can use the money to finish it.

There are two main ways in which a new road may be offered to the Highway Authority for adoption to become maintainable at the public expense.

  1. The developer may complete the construction of the road and then offer it to the Highway Authority under Section 37 of the Highways Act 1980; or,
  2. The developer may opt for the more desirable and frequently encountered route and enter into a legal agreement under Section 38 of the Highways Act 1980.

What is the difference?

Adoption under Section 37 allows the developer to construct the road and complete the development without the need for a formal road agreement with the Highway Authority. Provided the road is considered to be of sufficient utility to the public to justify it being maintained at the public expense and has been constructed to an acceptable specification, the Highway Authority would accept the notice of proposed dedication by the developer and following a 12 month maintenance period the road would become maintainable at the public expense.

Adoption under Section 38 allows the developer to enter into a legal agreement with the Highway Authority to secure ultimate adoption of a new estate road. The agreement contains a framework of clauses including the road construction duration, the responsibility for maintenance and repair of the road before adoption, the payment of the County Council’s fees and charges by the developer, any land transfer arrangements and what happens if things go wrong.

The agreement is also secured by a bond or financial payment that the Highway Authority can call upon in certain circumstances, for example the developer becomes bankrupt/goes into liquidation before the roads are completed.

When is the road likely to be adopted?

Sometimes there may be delays in completing the road adoption, this could be because the developer starts building the road before entering into the section 38 agreement, attempts to vary the standard terms of the County Council’s section 38 agreement, the road is built slowly or is unfinished, the road is not built up to the County Council’s standards, there may be issues with the adoption of any sewers under the new road, the road may be finished but there may be outstanding construction defects which the developer needs to fix. This may include things like defective street lights, potholes, overgrown verges, broken drain covers.

What can be done to speed it up?

A Section 38 agreement will require the developer to complete certain works within prescribed timescales. For example, before any dwelling fronting a new road is occupied, the carriageway must be complete to base course of the surfacing material (the layer under the final finished road surface), the footways must be complete and the street lighting must be operational. Consequently, adherence to the agreement should secure a safe and usable highway for residents prior to formal adoption.

Large developments comprising an extensive network of roads and footpaths are often divided into phases, with a separate S38 agreement for each phase, sometimes with different developers. This scenario is the most challenging in terms of establishing appropriate road construction and completion rates as developers are often under pressure to build and sell houses out of normal sequence due to marker demand. Different developers build at different rates and not all sections of road within a development may be completed in sequence. For a section of road to become adopted highway it needs to be connected to another section of adopted highway. This can sometimes result in sections of road being completed to a suitable standard but not being adopted until such time as the sections of road connecting it to the adopted highway are also completed to an adoptable standard.

What happens if the developer defaults on his obligations or becomes bankrupt/goes into liquidation?

If the developer fails to satisfactorily progress the works in accordance with the agreement the Highway Authority will always attempt first to resolve the problem by negotiating. If this fails then the Highway Authority have the option of calling upon the bond to pay for the highway works to be completed.

If developers are deemed not to have made sufficient progress in completing road works to facilitate the adoption process, within the timescales set out in the agreement, a formal notice can be served asking the developer to demonstrate that the completion of the road works is being actively pursued and the bond may be used.

Similarly, if the developer defaults due to bankruptcy or liquidation, the bond would be used to pay for the completion of any outstanding highway works.

What if I am buying a house and the roads are still not adopted despite a Section 38 agreement being in place or there is no agreement?

Prior to exchange of contracts a local authority search will be undertaken by the buyer’s solicitors. This will provide information as to the status of the roads serving the property, it will also indicate whether or not a Section 38 Agreement is in place.
In there is no Section 38 Agreement in place or there have been significant delays in adoption despite one, it is strongly recommended that the buyer, through their solicitor, retains some of the purchase price of the property to pay for possible road works in the future. Whilst it cannot be guaranteed that collectively the retention sums will cover the cost of any necessary road works to bring the road up to adoption standards, it may go some considerable way to securing adoption or achieving an outcome that is acceptable to the residents.

Sometimes however, it can be difficult to get developers or subsequent sellers of recently completed properties to agree to any form of retention. The usual argument put forward is that there is a covenant in the original Transfer Deed requiring the developer to make-up the roads. This is only of any value while the developer still exists and would require very expensive Court Proceedings to enforce.

Buyers are therefore left in a difficult position. There is no real legal requirement on anyone to make-up the roads to an adoptable standard if the agreement is not in place and ultimately the highway authority could come back to whoever owns the property at the present time to contribute to the considerable costs involved. If you are purchasing property with the assistance of a mortgage this situation will need to be reported to your mortgage lender who may not proceed. Even if you do not require a mortgage for your purchase you should consider the implications when you come to sell the property.

There is a form of indemnity insurance which can be taken out to cover the failure of any developer to make-up the roads. Each application is considered on its merits and there is no guarantee cover can be obtained in every case.
We are committed to ensuring all clients are fully informed about any possible difficulties that clients might face in the future regarding responsibility for roads. It does not necessarily have to relate only to new build properties, as problems concerning highways can drag on for many years.

Section 38 – a detailed guide to what you should know.

What is a Section 38 Agreement?

A Section 38 agreement is a voluntary agreement entered into between a developer and the local authority, detailed within Section 38 of the Highways Act 1980. It is used where a developer wishes to construct new estate roads on a development, which will be offered to the local authority for adoption in the future. The agreement may also cover any associated infrastructure such as lighting and drainage.

What does adoption mean?

An adopted road is a road that is maintained at public expense and “road adoption” is a term used to describe the local authority taking ownership of a ‘private street’. You have a statutory right of way over an adopted road which also includes footpaths.

Not all roads are adopted – many roads are “private” and may be maintained either by residents or by a management company set up for this purpose, who may also maintain other common areas on a housing estate such as lighting or recreational areas. Others may simply be new un-adopted roads on new build developments.

What is contained within agreement?

Prior to entering into the agreement, the developer must have obtained planning permission for the development and usually the general layout of the roads will be detailed within the planning permission.

The agreement will usually make reference to the planning permission and include a framework of provisions including:

  • Plans/drawings of the proposed roads and any associated works;
  • The road construction duration/timing;
  • Responsibility for repair and maintenance before road adoption;
  • The procedure for inspection and approval of the roads;
  • Provisions for any subsequent land transfer;
  • What happens if things go wrong;
  • The developer will usually be responsible for any associated fees;
  • The agreement will usually be secured by the payment, by the developer, of a bond.

What is the purpose of the bond & What happens in the meantime?

If the agreement is also secured by a bond or a financial payment, the local authority can call upon it in certain circumstances. For example, if the developer fails to complete the works, maintain the roads in accordance with the agreement or if the developer becomes bankrupt/goes into liquidation before the roads are completed.

Until a road is adopted, it’s maintenance remains the responsibility of either the developer or the home owners that front the affected road.

What if I am buying a house and the roads are still not adopted despite a Section 38 agreement being in place or there is no agreement?

Prior to exchange of contracts a local authority search will be undertaken by the buyer’s solicitors. This will provide information as to the status of the roads serving the property, it will also indicate whether or not a Section 38 Agreement is in place.

In there is no Section 38 Agreement in place or there have been significant delays in adoption despite one, it is strongly recommended that the buyer, through their solicitor, retains some of the purchase price of the property to pay for possible road works in the future. Whilst it cannot be guaranteed that collectively the retention sums will cover the cost of any necessary road works to bring the road up to adoption standards, it may go some considerable way to securing adoption or achieving an outcome that is acceptable to the residents.

Sometimes however, it can be difficult to get developers or subsequent sellers of recently completed properties to agree to any form of retention. The usual argument put forward is that there is a covenant in the original transfer deed requiring the developer to make-up the roads. This is only of any value while the developer still exists and would require very expensive Court proceedings to enforce.

Buyers are therefore left in a difficult position. There is no real legal requirement on anyone to make-up the roads to an adoptable standard if the agreement is not in place and ultimately the highway authority could come back to whoever owns the property at the present time to contribute to the considerable costs involved. If you are purchasing property with the assistance of a mortgage this situation will need to be reported to your mortgage lender who may not proceed. Even if you do not require a mortgage for your purchase you should consider the implications when you come to sell the property.

There is a form of indemnity insurance which can be taken out to cover the failure of any developer to make-up the roads. Each application is considered on its merits and there is no guarantee cover can be obtained in every case.

Should you have concerns as to whether the road your property fronts onto is adopted or not and your rights, please contact our Residential Property & Conveyancing Team who will be able to provide you with advice and help establish your rights. Speak to our Conveyancing Team on 0800 088 6004 for further advice

Jenny Woodruff

Posted:

Jenny Woodruff

Partner

Jenny is a Partner and head of the Residential Conveyancing Team. She has extensive knowledge of the conveyancing process, including: dealing with freehold and leasehold sales & purchases; new build purchases; remortgages; transfers of equity; shared ownership; help to buy transactions & general property advice.