Spotlight: Planning: Uncertainty,

Challenges and Opportunity

Planning: Uncertainty, Challenges and Opportunity
Localism Vs Centralism

12 May 2016, by Neal Hudson

National ambitions for housebuilding and homeownership challenged by political and practical realities

The Government is firmly committed to increasing the number of new homes built, with ambitions to increase homeownership and deliver one million new homes in England by 2020 (see Measuring Success Post NPPF below). Notwithstanding these clear ambitions, there remains uncertainty about how the policies put in place to attain them will work in practice.

 

With this uncertainty, it looks likely that the Government’s ability to achieve its ambitions will be challenged by the political and practical realities faced by many local authorities. The challenge is most marked where the national pro-growth agenda for housing is not shared by local politicians. It is through the planning system that this conflict between national and local objectives is played out.

The publication of the National Planning Policy Framework (NPPF) in March 2012 marked a change in approach to housing and planning. Its focus on Local and Neighbourhood Plans appeared aligned with the Government’s Localism agenda by giving local authorities and communities greater control.

Conversely, the “presumption in favour of sustainable development”, also introduced in the NPPF, has proven to be a powerful driver for the delivery of housing targets. The result being a substantial increase in planning permissions for residential development since 2012 (Figure 1). For some, including some local politicians and organisations that engage in the planning process, the complaint is that local control is being overridden.

Nevertheless, the Government has continued to reinforce a pro-growth agenda. The 2015 Productivity Plan proposed powers for Government to intervene and speed up local plan-making, while also proposing a ‘zonal’ planning system that grants automatic permission in principle to land allocated in Local and Neighbourhood Plans or identified in brownfield registers.

The 2016 Budget subsequently drew on the findings of the Local Plans Expert Group (LPEG) of March 2016 and the measures it proposes to speed up local plan delivery. Identifying the difficulties associated with assessing local housing need, the report recommends:

■ commissioning standard housing market area boundaries;

■ a single, shorter, simpler method for calculating objectively assessed housing need (OAN);

■ strengthening the duty to cooperate;

■ creating incentives for timely plan preparation.

We are broadly supportive of the LPEG recommendations, indeed they reflect our own submission to the group. We do though see risks in some of the streamlining measures proposed. Taking too simplistic an approach to calculating OAN and using non-overlapping housing market areas may have unintended consequences and could result in planned levels of supply failing to meet national targets.

FIGURE 1

Housing delivery and pipeline

 
Figure 1

Source: DCLG, HBF, Glenigan

Local reality

For some local authorities, growing their housing stock to fully meet housing need is a core policy objective. However, overall performance is patchy. Figure 2 shows that 20% of local authorities have successfully increased their housing stock by 1% or more per annum since 2001.

A 1% national increase is broadly consistent with the level suggested by national household projections and the minimum required to meet housing need.

Creating a simpler and more efficient plan-making process should lead to more homes being built. This is assuming, firstly, that local plans produce targets that add up to national need and, secondly, that they identify appropriate sites that offer a diverse range of opportunities to encourage the full spectrum of housebuilders and the wider construction industry to participate in delivering new homes.

Meanwhile, surveys show that large proportions of people agree that there is a national housing crisis, but fewer agree that there is one in their local area.

Speeding up the process may limit the ability of local authorities and other groups to influence the plan-making process. Therefore, the increasing centralisation of housing policy may create local political issues in some authorities, including those in the ring around London where the Green Belt has long been a barrier to higher rates of housebuilding.

As the housing crisis worsens, perhaps more local decision makers and voters will recognise the positive benefits of a pro-growth approach to planning and housing.

FIGURE 2

Annual change in dwelling stock, 2001 to 2014 (% of stock)

 
Figure 2

Source: ONS

Measuring Success Post NPPF

The challenging targets for delivery

The Housing Minister, Brandon Lewis said in June 2015: “The previous system of top-down targets built nothing but resentment.” Notwithstanding this aversion to centrally set targets, the Government has set a few of its own in order to provide a benchmark for success, including to:

■ Deliver one million homes by 2020

■ Deliver 400,000 affordable housing starts by 2020-21, including:

■ 200,000 Starter Homes

■ 135,000 Shared Ownership Homes

■ Help one million more people own their home by 2020.

Meeting these national targets requires them to be embedded in ‘bottom-up’ local plans. The challenge is to get these local plans in place early enough for them to generate real change before the election. The Government’s commitment to housing delivery could therefore be tested as its term draws to a close.

 

Redefining Affordable Housing

Aspiring to homeownership

The Government looks set to expand the definition of affordable housing to include a wider range of products, including discounted market sale (i.e. Starter Homes). It suggests that policy should reflect the “requirement to plan for the housing needs of those who aspire to homeownership”.

The Government’s consultation suggests that 20% of homes on sites with ten or more homes should be Starter Homes. Alongside this national objective is the affordable housing need that local authorities will have identified as part of their local plan. Whilst the Government recognises that local planning authorities need flexibility to agree affordable housing as a component of Section 106 in addition to Starter Homes, many sites will struggle to viably deliver both the national objective and meet local affordable housing need.

The viability of providing traditional affordable housing in addition to Starter Homes will depend on the demands of the prevailing local policy and how strictly it has been enforced. Where high proportions of affordable housing are currently delivered (>25%+), the substitution of Starter Homes for some of the traditional affordable housing makes a relatively small impact on blended land value, leaving capacity to continue delivery traditional affordable housing. Where there has been limited delivery of affordable housing to date (< 10%), the 20% Starter Homes requirement may have a substantial downward effect on blended land values. Our calculations suggest that traditional affordable housing delivered through Section 106 could fall by 45%.

A different viability issue arises where the discount for Starter Homes would need to be substantially more than 20% to fall beneath the maximum value caps. The option to pay a commuted sum is proposed as an alternative option. In such circumstances there is likely to be a political imperative to spend the commuted sum within the local authority boundary, but there may not be available development land on which Starter Homes can viably be built. A more flexible approach may therefore be required.

Articles from Spotlight: Planning: Uncertainty, Challenges and Opportunity

Where's The Plan?

12 May 2016

Local authorities are under pressure to publish updated local plans by early 2017 or lose control of the planning process

If local targets are to meet the national need then a new approach to assessing housing need must be implemented

London Vs The South

12 May 2016

London’s inability to meet its housing targets puts pressure not only on the city itself but also the wider south of England

There are only 80,000 to 100,000 ‘unimplemented planning permissions’ in the pipeline, but that is still too many

Outlook

12 May 2016

What are the challenges ahead for housebuilding?

 
 

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