The Perpetuity Problem: Crest Nicholson Regeneration v Calvert

How long is too long?

In this episode, hosts Richard and Lizzie unpack the High Court decision in Crest Nicholson Regeneration Ltd v Calvert [2026] EWHC 531 (Ch) and what it tells us about the enduring, and often misunderstood, rule against perpetuities.

The rule against perpetuities is designed to stop property from being tied up indefinitely. Traditionally, any future interest had to “vest” within a fixed period — often described as a life in being plus 21 years. If there was even a possibility that it wouldn’t, the arrangement could fail altogether.

That creates real tension in modern option agreements, a staple of long-term development deals, where buyers secure the right to purchase land years (sometimes decades) into the future, often conditional on planning.

Richard explores:

• how the rule against perpetuities developed, from The Duke of Norfolk's Case (1682) through to modern application; 
• why option agreements have historically sat uncomfortably within that framework; and 
• how the Perpetuities and Accumulations Act 2009 has reshaped the landscape by effectively removing the rule for options over land.

For developers, landowners and advisers, the message is simple: timing, drafting and structure matter, because even historic rules can still have modern consequences.

Other cases mentioned:

• The Duke of Norfolk's Case (1682)
• Street v Mountford [1985] AC 809
  
  

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Transcript

Lizzie C
In development, we're often thinking years ahead, sometimes decades, locking in options now for land that won't be built out for a very long time. The law hasn't always been comfortable with that, and in fact there's a long-standing rule designed to stop property being tied up indefinitely, the rule against perpetuities. So where does that leave modern option agreements? in this episode, we're going to be looking at Crest Nicholson Regeneration Limited and Calvert, and whether the rule of perpetuities is still something developers and landowners need to worry about, or whether the Perpetuities and Accumulations Act of 2009 has changed the game. So I'm going to hand over now to Richard Snape, who's going to make sense of what is a rather vague definition, and give us some more background into this particular case. Hello, Richard.

Richard Snape
Hello, Lizzie. And how are you?

Lizzie C
How are you? Oh, jinx again. I'm good, thank you. We're here to talk about a new case from the 11th of March that was at the Business of Property Court, to be precise, which is part of the High Court. And it's about something we haven't really covered before in relation to options, and that's the rule against perpetuities. So I guess a good starting point would be for you to explain what that means and what it is.

Richard Snape
Yeah, well, that's my whole favourite, the rule against perpetuities. Historically, it goes back, I'm doing a bit of history now, to 1682 in a case called the Duke of Norfolk's case, and it's about not being able to tie up land, doing nothing. for long, long periods. In the original common law rule, again, perpetuity is pretty incomprehensible. It basically says that no interest is good unless it must vest, if at all, within 21 years of the death of a life and being alive at the creation of the interest. Does that make sense?

Lizzie C
Yeah.

Richard Snape
No, it doesn't. It's it's doesn't at all. It's the most vague. It goes on to talk about things like things like the fertile octogenarian rule and things like this. And when I was a landlord lecturer at university many years ago, I used to discuss the rule against perpetuities and no one understands it. It's a bit like Palmerston, Schleswig, Holstein. affair. You know, basically, there's only three people who understand it. One's dead, one's mad, and the other's me, and I've forgotten it. But anyway, there we go. And I mentioned this before to you, Liz. It's the only article I, academic article I wrote when I was a university lecturer. My first year on the basis, they told me I wouldn't get a renewal of my contract unless I write a lecture, write a article. So I chose the rule against perpetuities because I knew no one would read it. And even if anybody did, they wouldn't understand it. And that was it. But it's been taken over over the years. There was a 1964 Perpetuities and Accumulations Act, which for our purposes here says various things. But section 9 of the Act, subsection one of the Act says that the rule against perpetuities won't apply. to an option for a tenant to acquire a reversionary interest in the lease, and provided that the option can't be exercised more than one year after the end of the lease, and it's for valuable consideration. So with those provisors, it won't apply to options to, say, create a, for tenants to create a reversionary interest. Section 9, subsection 2 basically says that there's an automatic, for options, there's an automatic perpetuity period of 21 years. But then there was the 2009 Perpetuities and Accumulations Act that came into force. I remember it well, I was talking about it at the time, April the 6th, 2010, just before the 2010 general election, they decided to bring it into force. And I wanted you to know, Lizzie, that's the thing that settled me and who I was going to vote for. Any parliamentary party who goes down the route of reforming the rule against perpetuities gets my vote. But they basically, I want to get a long story short, it's basically for interests that come into place from the date it came into force April the 6th, 2010, 1615 says they'll come within the 2010 Act. And Basically, to cut out a long story short term, I mean, Section 1 limits dramatically when the rule against perpetuities applies generally, and it doesn't apply to options anymore. It's mainly interest behind the will and trusts and the likes. So that's some of the background. But if you fall foul of the rule against perpetuities, your interest is void. And that caused a problem, certainly for agreements before 2010, if you wanted a time period of more than 21 years. before the, interest, the option might be exercised. If that makes sense.

Lizzie C
But I know more about it now than I did when you started.

Richard Snape
But you didn't know anything at all about it when I started.

Lizzie C
Exactly. Well, should we get on to talking about the case? Okay. The background facts to it.

Richard Snape
Was a high school, Homebush Farm, near Crawley, somewhere near Crawley. between Crawley and Horsham and West Sussex. And back in September the 25th, 2002, Chris Nicholson entered into several agreements, but they entered into options to purchase the freehold part of this land for 21 years. And the Calverts, Mr. Calverts, the original party, died and the people who were now sort of on the other side were his executives and family. But they entered this option to buy the freehold, but also an option to enter into a lease of land which didn't form part of the land that was subject to the freehold option. And the lease included a provision whereby there was a right for the leaseholder to acquire the freehold reversion. They basically did that like that to try and avoid the rule against perpetuities. The solicitors had advised them on this and apparently they've done it and tried it on another couple of sites near Swindon and Beast Grinstead. Basically the idea is that if you exercise the freehold option within a year of entering into the lease, then it It won't be within the rule against perpetuities. And as long as you sort of enter into the actual option within 21 years, neither will it be against the rule against perpetuities. But the lease was on strange terms. It was going to be on the same terms as the lease was on strange terms in that it didn't give a right to occupation for the leaseholder. To go the long story short, there was in 2010, Chris Nicholson got planning permission for 2 1/2 thousand houses on this particular land and more houses at a later date. So they, on September the 19th, 2023, which was six days before the 21 year time period, they So you've noticed exercising the option to enter into the lease. And there were several issues, primarily if this was a lease in the 1st place, because if it's a lease, it's going to be outside the rule against perpetuity, section 9, subsection 1 will apply. And the court decided that you might call it a lease, but it's not a lease. They talked about some quite famous cases that I've mentioned in years past Street and Mountford, 1985 House of Lords case, where the Lord, Lord Templeman said that, you know, basically if it's a five-pronged instrument used for digging and you call it a spade, it's still a fork, which always annoyed me because forks don't have 5 prongs, they have 4, sometimes three. I did write to him actually, but it ruined, he didn't hear anything. It ruined my whole law degree, that did. But anyway, you can't just call something a licence and make it a licence. If you've got exclusive possession for a term at a rent, unless it's an exceptional circumstance, it's a lease and there was no exclusive possession. You can't have a lease where you can't have a right to occupy the premises. There are other cases that said pretty much the same thing. It's a sham or a pretense. Antinidadism Villiers from 1990, I remember House of Lords case, said pretty much the same thing. and various other we've done a few years back now. We did podcasts on these guardian schemes, if you remember those. You put a empty commercial property in, but people would otherwise be homeless in there to prevent squatters getting in and trespasses and the likes and vandals. And they're a bit of an exceptional circumstance, you know, but Usually these things are leases, they might be what you call them if you've got exclusive possession, but no exclusive possession, no lease. And so it wasn't the lease in the 1st place. So in the face of it, the rule against perpetuity does apply. But they went on to say the option to require a lease was entered into just before the 21 year time period, six days beforehand. And so that was valid. And they went on to say the relevant date for deciding whether the option for the leaseholder to purchase the freehold was not when it was first drafted, but it was when it was exercised and it was exercised after 2010 where the rule against perpetuities doesn't apply to options. So Kress Nicholson won in case. You'll be glad to know.

Lizzie C
Indeed. So what's the implications of a case like this?

Richard Snape
Well, one thing is, probably doesn't, I think it was a bit of a non-starter in the 1st place, is that you can't just call something a licence and make it a licence. And also, if you haven't got the right to possession of the land, the court talked about pie and Graham, which I've lost me a little bit, which is what I had first possession and what it means to be in possession. I think that was a bit of a red herring, frankly. But, you know, if you're not got a right to possession, it's not a lease in the 1st place. You can't have a lease without occupation. And also after that, it's important for developers if they've got pre-2010 options which they exercise post 2010 because they'll potentially come within the new regime. And there are a lot of them out there. I mean, a lot of these developments are very, very long term ventures. So there depends on the intricate planning permission and the right moment and the likes. That's quite significant. And it's nice to talk about the broadcast perpetuities after all these years.

Lizzie C
For old time's sake. Thank you very much, Richard.

Richard Snape
My pleasure, Lizzie.