The Secretary of State for Communities and Local Government, Sajid Javid, unveiled the much anticipated Housing White Paper ('HWP'), today. As many predicted, it is a mixture of 'carrots and sticks' designed to fix the 'broken housing market'.
The clear message is that the problem won't solve itself. It requires government intervention, but it will also need '...partnership between central and local government and developers'.
In essence the government will provide the support to enhance the capacity of local authorities and industry to build the new homes this country needs. In return it is expected that professions and institutions '.play their part and turn these proposals into reality'.
Some central themes and objectives have emerged from the HWP which seeks to address;
- Concerns raised by developers, linked to the perceived delays and inefficiencies of the current planning process;
- Issues arising from delays and uncertainties with the Local Plan process, with more powers to compel councils to produce updated Local Plans based on a 'real' assessment of housing need;
- Providing council's with additional powers to drive forward consented development schemes;
- Measures to diversify the housing market and support housing associations and local authorities to build homes as well as introducing new and better protected schemes for rent;
- Measures (including changes to National Planning Policy) to boost the reuse and redevelopment of brownfield land and increase density of development in urban areas;
- Confirmation that the Green Belt will continue to be protected from development in the absence of 'exceptional circumstances' which justify its release for housing.
The HWP supports the government's commitment to build at least one million homes by 2020. That is 200,000 per annum. However, even this falls short of some calculations which indicate the shortfall in housing is much larger and potentially two million homes. .
Even the government's own ambitious target will struggle to keep pace with current demand which requires circa 250-275,000 new homes to be built per annum. To put this in context, only 190,000 homes were built in 2015/16 and the average build rate since the 1970's is 160,000, so the target remains an extremely challenging one. We also now have the potential additional uncertainty over funding and resources that could arise from the impact of Brexit.
In that respect the HWP acknowledges that more needs to be done now to invest in and train the construction workforce of the future, so as to address industry concerns over reliance on migrant labour in some areas, such as London and the South East.
One of the causes of the failure to achieve a higher build rate is identified as the time and costs incurred in securing planning permission. This is seen as a major impediment to development actually being 'delivered' on site. The HWP seeks to speed this up by:
- reducing the council's scope for imposing 'pre-development' conditions on planning permissions;
- increasing planning fees by up to 40% in some areas to ensure that planning departments are adequately staffed. The government will also consult on the introduction of fees for planning appeals to discourage spurious appeals and free up capacity at the Planning Inspectorate;
- consulting on a standard methodology for calculating 'objectively assessed need' to improve transparency and reduce delay Plan making;
- taking forward changes to National Policy including strengthening the presumption in favour of sustainable development and introducing a requirement for 'great weight' to be attached to the value of using suitable brownfield land for homes.
The government will also examine the options for reforming the system of developer contributions including ensuring direct benefit for communities, and will respond to the independent review and make an announcement at Autumn Budget 2017. The independent review of CIL and its relationship with Section 106 planning obligations, published alongside this White Paper, found that the current system is not as fast, simple, certain or transparent as originally intended.
Despite this, the government accepts that 'no one can live in a planning permission'. Therefore, while these tweaks may be welcomed by developers, 'delivery' of housing on any site is reliant upon many other external factors including:
- impediments to delivery as a result of third party land interests or financial viability;
- availability of suitably qualified contractors to build the homes required;
- accessibility to construction materials (Persimmon Homes has invested in its own brick factory to avoid delays encountered in recent years in this respect);
- the developers commercial assessment of 'the market' and demand within that market; and
- the potential purchaser's ability to access finance/mortgages for the potential purchase of the homes built
These are just some of the fundamental issues which can contribute to reduce the supply of housing land coming forward for development. Ultimately, these are external factors that cannot be addressed adequately or at all by a change in planning policy or process itself and will rely on the co-operation between landowners, local authorities, professions and institutions advocated in the HWP.
The 'stick' in the HWP includes provision to:
- prevent land banking;
- strengthening local authority powers to serve completion notices or acquire land by compulsory purchase where consented development schemes are not built out within a reasonable timescale; and
- impose tax/financial penalties to encourage early delivery of schemes.
Whether such measures will work in practice will have to be seen. Not least because shareholders in the construction industry will be anxious about any attempt to restrict the number of sites held as part of their investment portfolio. In addition, banks and other investors will be nervous about lending to developers who appear not to have a stream of sites capable of coming forward for development in the future.
There is also a tension in the HWP between the government's aspirations for significantly more housing delivery as set out in the HWP and the reiteration of what some see as outdated existing Green Belt protection.
The 'exceptional circumstances' test is retained and in fact strengthened by government statements suggesting that other alternatives (presumably brownfield sites), should be looked at first. This rather places Green Belt as a development area of last resort which is clearly not how the Policy has been interpreted to date.
This must be seen as a chance lost to get to grips with an issue which has effectively stifled development for many years in areas of high demand for housing which is well related to existing transport links and facilities and where the original purpose of Green Belt designation has long since become redundant.
Other headlines include more details about Starter Homes, which will be introduced as a form of Affordable Housing in National Policy. However, the government will not be introducing its proposed mandatory requirement of 20% starter homes on all developments over a certain size. Starter
Homes will also be means tested so that they are only available to households with an income of less than £80,000 (£90,000 in London).
Surplus government land will also be identified and packaged for sale for housing with local smaller developers being encouraged to take on those sites. A £3 billion fund to help smaller building firms will be made available including support for off-site construction, such as so called 'modular housing' where parts of buildings are assembled in a factory prior to construction on site.
Whether the HWP proposals can or will succeed in delivering the extent of the housing needed within the aspirational timescale is debatable. However, the HWP does feed into a wider discussion in the residential industry about just how government targets are to be achieved, the nature of that provision and where that will take place.
Inevitably this must involve further conversations about Green Belt land and how central government can intervene financially to unlock 'difficult' sites or those where there are clear impediments to development such as contaminated sites or areas of low demand.
Further in-depth briefings on these and other specific topics in the HWP are being prepared by the Shoosmiths planning and residential teams and will be available on our website soon.
The HWP consultation will run for 12 weeks and will close on 2 May 2017.
This document is for informational purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given.