Plastering over the cracks?
What are the Government's plans to fix our broken housing market, and will they work?
“Fixing our broken housing market” is the ambitious title of the Housing White Paper (“the White Paper”) that was published on 7 February 2017. As the title proclaims, its purpose is to outline proposed changes to planning policy and legislation with the aim of fixing the housing crisis. It also consults on the proposals, and the deadline for responses is 2 May 2017.
The changes will be introduced predominantly by amendments to the National Planning Policy Framework (“NPPF”) later this year and the introduction of new regulations or guidance. The proposals are now a material consideration in planning decisions, although the weight to be given to them will be a matter for local authorities and planning inspectors, and will no doubt be widely debated at planning committees and inquiries.
The Government blames the housing crisis on a lack of forward planning, slow delivery of housing, and over-reliance on a small number of large housebuilders. The White Paper proposes a number of solutions, and this article concentrates on a selection of the main planning issues.
The uncertainty created by out of date local plans increases the number of contested planning applications, delaying the grant of planning permissions and slowing housing delivery. Building on existing proposals to require all local authorities to adopt up to date local plans promptly, the White Paper proposes that local plans are reviewed at least once every five years.
Local authorities will also have to prepare a statement of common ground detailing how they will work together to meet housing requirements straddling their boundaries.
The linked issue of determining objectively assessed need (“OAN”) for housing is also tackled. A standardised methodology for assessing need is proposed, which will become the baseline for calculating OAN from April 2018 – this should create more certainty and reduce the amount of time spent at planning inquiries arguing the point.
There are also proposals to amend the NPPF to address issues surrounding five year housing land supply. Authorities will still be required to demonstrate a five year supply in order for their policies relating to the supply of housing to be considered up to date, but this is to be supplemented by allowing supply to be agreed on an annual basis – in that case, housing supply policies will be deemed to be up to date for the following year for the purpose of planning decisions.
A new ‘housing delivery test’ is designed to encourage authorities to meet their housing delivery targets. It will be assessed using a rolling three year average and penalties for not meeting targets could result in contingencies being built into housing land supply projections, and potentially policies relating to the supply of housing being deemed to be out of date.
Many see the existing Green Belt protection as a key barrier to housing delivery that could be unlocked by a sensible release of Green Belt in appropriate areas. Whilst the White Paper proposes that the NPPF should include greater clarification of the exceptional circumstances where Green Belt boundaries may be amended, it does not include proposals that would make it easier to obtain permission for development in the Green Belt.
The White Paper also proposes compensatory improvements and better access to retained Green Belt, where some is released, as well as higher development contributions – it is not clear if this is intended as a further deterrent or an acceptance that more Green Belt will have to be released in future, and that developers will have to pay if it is.
Other policy changes
Changes to the NPPF will encourage more efficient use of land, including higher density development in urban locations with good public transport provision, and the use of upwards extensions. New permitted development rights for upwards extensions had previously been favoured, but there has been a change of direction and planning permission will still be required, but with greater policy support in appropriate locations.
The promotion of starter homes appears to be on the wane, and build for rent is in favour. A 20% requirement of starter homes on relevant developments will no longer be prescribed – instead, the delivery of a minimum of 10% affordable homes will be expected. Authorities will have to plan proactively for build to rent where there is a need and the proposals will make it easier for build to rent developers to offer affordable private rental homes.
Concern for developers
A number of other proposals will not be welcomed by developers. Planning application fees are to be increased by up to 20% from July 2017 if the fee income is invested in the authority's planning department. A further 20% increase may also be allowed for authorities that meet their housing delivery targets. These are potentially significant increases that will be harder for smaller housebuilders to swallow, going against the Government's ambition to diversify the market. The proposed introduction of a maximum £2,000 fee for planning appeals is unlikely to act as a deterrent in the same way, as it would be a relatively small element of the appeal costs.
To address the perceived practice of land-banking, time-scales for implementing planning permissions and submitting reserved matters applications are proposed to be reduced from the default position of three years to two. This will be of great concern to developers who already struggle to meet the current three year period for a number of reasons that have nothing to do with land-banking. The associated proposals to simplify the completion notice procedure where developments stall, which could culminate in permissions being withdrawn, is worrying and could have the unintended consequence of sterilising development of the land.
The track record of major developers in constructing housing on large scale sites may also become a consideration for authorities when deciding planning applications, creating the inevitable problems of how to assess fairly what a good and bad track-record would be and the underlying causes of poor performance.
Encouraging local authorities to use CPO powers may be the Government's solution to unlocking difficult or sterilised sites, but those powers have existed for some time and there would need to be big incentives for local authorities to change tack.
The White Paper sets out the Government's direction of travel, but there is a great deal to be resolved. There are some worthy, although not entirely new, proposals, and others that are concerning and may have consequences that hinder rather than improve housing delivery. A major obstacle remains the blanket protection of the Green Belt, and it is difficult to see the Government succeeding in its quest to deliver the housing that is needed to fix the "broken housing market" if policy continues to prevent the sensible release of appropriate Green Belt land.