Fixing our Broken Housing Market

8th February 2017

The Government published its long awaited Housing White Paper this week. Neil Henderson, Head of Planning at H&H Land and Property summarises its contents and examines whether the white paper will deliver what its ambitious title – Fixing our Broken Housing Market – promises.

The White Paper acknowledges the need for 250,000 new homes a year in England and offers four steps to tackling the housing crisis:

  • Planning for the right homes in the right places
  • Building homes faster
  • Diversifying the market
  • Helping people now

The scale of the problem has been well known for many years however so the question is will the actions the White Paper promises deliver those aspirations?

The White Paper is a big document, hard to summarise in its entirety, I have therefore looked at some of the key objectives the government wishes to achieve under each of the four steps.

Planning for the right homes in the right places
The Government wishes to make sure all planning authorities have an up-to-date, sufficiently ambitious Local Plan; that plan-making is simplified; and, that plans start from an honest assessment of the need for new houses.

While this is all very well there has never been a time when Governments have not called for up to date plans to be in place. Delivering this aspiration has been much more difficult to achieve. A standardised way of assessing housing need and supply will however help local authorities defend their housing numbers.

Similarly the aim to maximise the contribution from brownfield and surplus public land and regenerate estates has been part of planning policy for as long as I can remember. More interesting is the plan to release more small and medium-sized sites and allowing rural communities to grow – the problem is that this sometimes clashes with local communities views of their neighbourhoods’ future.

Despite speculation the current strong policy protection for the Green Belt is to be maintained, so that Green Belt boundaries should be amended only in exceptional circumstances.

Finally we seem to be seeing a return to encouraging high density development and a review of space standards, despite concerns that average new build houses in the UK are amongst the smallest in Europe.

Building homes faster
Providing a standard housing land supply calculation method to avoid confusion and argument about the level of housing need in each authority is very welcome, as is the intention to boost local authority’s capacity and capability to deliver. The latter does come at a cost however and there is a proposed 20% rise in planning fees from July 2017 with the increased income going to planning departments. The Government is also considering introducing a fee for planning appeals to discourage unnecessary appeals.

Delays caused by planning condition are to be addressed by prohibiting conditions that do not meet national policy tests, and by prohibiting pre-commencement conditions unless agreed by the applicant. I have some doubts as to the effectiveness of such proposals because if an applicant has the option of gaining permission with a pre-commencement condition or having their application refused they are likely to choose the former. Nevertheless anything which makes authorities think carefully before imposing conditions is to be welcomed, as there is a tendency to apply conditions unthinkingly.

Reviewing Community Infrastructure Levy payments and Section 106 planning obligations is an acknowledgement that such provisions are not as straightforward as they should be in providing a contribution to infrastructure while not deterring development.

National planning policy is to be amended to encourage local authorities to consider how realistic it is that a site will be developed, where previous permissions have not been implemented. The Government is also mulling over whether a developer’s track record of development should be taken into account when determining new applications and whether the timescale to implement housing permissions should be reduced from three years to two. These proposals are intended to address the perceived problem of “land banking” but sometimes land with planning permission is not developed quickly for very good reasons.

The Government intend to simplify and speed up the completion notice process so, where development on site stalls and has little prospect of resuming, planning authorities can withdraw permission from the remainder of the site. The Government also wants to encourage more active use of compulsory purchase powers to support the build-out of stalled sites. Planning authorities have been reluctant to serve completion notices or use their compulsory purchase powers so a simplification of this system could have a positive impact on building rates even if the powers are not widely used.

Local authorities in which the delivery of housing falls below certain rates will be required to produce an action plan, or allocate additional housing land, or apply a presumption in favour of sustainable development. In the latter case this means that authorities will not be able to rely on their planning policies to refuse development, which runs counter to the Government’s professed commitment to localism.

Diversifying the market
The number of small builders has declined significantly as has the number of homes registered by them – down from 44,000 in 2007 to 18,000 in 2015 – so the government wishes to help them grow through the Home Building Fund. The Help to Buy scheme would also be weighted towards such builders. Any attempts to reverse this decline is to be applauded.

I also welcome some of the more imaginative proposals to diversify the market including supporting Custom-build homes with greater access to land and finance, giving more people more choice over the design of their home and the encouragement of modern methods of construction in house building.

The support offered to housing associations and local authorities to build more homes appears to reflect Gavin Barwell, the Housing Minister, comments that the Government’s proposals would represent a “change in tone” from previous Conservative policy, and is an acknowledgement that the longstanding championing of a “home-owning democracy” has had its downsides.

Trying to attract more institutional investors into housing, and encouraging family friendly tenancies is recognition that renters have been neglected for many years compared to home owners.

Helping People Now
The Government will continue to support people to buy their own home – through Help to Buy and Starter Homes and the introduction of the Lifetime ISA. New developments will be expected to provide at least 10% affordable housing and the Starter Home Land Fund will be invested to support the preparation of brownfield land for development.

Households who are priced out of the market should benefit from investment in the Affordable Homes Programme. This programme was originally designed to focus on delivering shared ownership but will now also be available for houses for affordable rent.

It is proposed to ban letting agent fees for tenants (although some have speculated that this will simply lead to an increase in rent to compensate), and to promote longer tenancies on new build rental homes to make renting more family friendly.

What does this all mean?
The meat of the white paper is rather milder than the bold title, largely promising refinements to the existing system rather than radical reform. Local authority planners will welcome the promise of more resources and greater powers to enforce the build-out of permissions; and developers might appreciate the promised review of developer contributions, but the problem of where to put new housing where there is a tight Green Belt remains stubbornly unaddressed.

The National Planning Policy Framework, which at five years old is showing its age, will be replaced. The concern is that every time there is an upheaval to the planning system it takes a while to get back to an even keel, while the professionals and lawyers pick over the interpretation of every word.

Moreover, some of the proposals appear to counteract one another. For example the government wishes to encourage house building but reducing the duration of planning permissions has the potential to deter applications if developers are concerned that building might not commence within two years. Similarly the Government wishes to encourage new small and medium scale developers but are putting up planning fees by 20%.

The major shift in philosophy is the recognition that there is no short-term fix to the decline in home ownership, and that the sheer number of renters is a reality that’s not going to change anytime soon.

Overall the White Paper covers a wide range of issues but the overall direction is a little confused. It represents an evolution of the existing planning system, whereas to solve the severe shortage of homes probably requires a revolution including dare I say it major public sector investment in building affordable housing.

Neil Henderson, Senior Planner 01228 406260