Planning to solve the housing crisis

Planning to solve the housing crisis
 
Making planning work with the market

12 June 2017, by Savills Research

The planning system could do much more to support economic growth. There is a shortfall of more than 90,000 consents where housing need is highest. Future policy must ensure consents are granted where they are most needed

 

The number of full residential consents reached 293,000 in 2016. This was a 56% increase in annual consents in the four years since the NPPF was introduced. But only 210,000 new homes were completed.

It is widely accepted that to achieve an improvement in affordability, 300,000 new homes are needed in England every year. A core goal of the NPPF was to ensure the planning system delivers sufficient land of the right type in the right places to support growth. It specifies that local plans should take account of market signals and plan to build enough new homes each year to improve housing affordability.

Our analysis of planning consents and housebuilding shows that this goal has not been met. The total number of consents has increased. But there has not been any greater increase in the areas where affordability is most stretched. The distribution of housing delivery and planning consents between areas of different levels of affordability has not changed. This means we are not building enough homes in areas where they are most needed to improve affordability and support economic productivity. The shortfall in consents is more than 90,000 units per year in places where affordability is worse than the national average.

FIGURE 7

Market signals – To improve affordability, new homes should be delivered where it is most stretched. Our analysis (below) shows that more needs to be done

 
Figure 7

Source: Savills Research, DCLG, Glenigan

Consents where demand is highest

Housing delivery has increased alongside growing market strength since the global financial crisis in 2008. But the growing gap between consents granted and new homes started suggests that if we are to continue to rely on the market to boost delivery, we must ensure that consents are delivered in the areas where need is highest and market demand is strong enough to absorb more new homes.

For housing delivery to reach 300,000 homes per year, we need to make full use of the untapped market capacity in higher-demand areas.

Increasing delivery through build-to-rent, custom-build and accelerated-construction schemes will also work best in these areas. Housing Associations need to make the most of market demand to drive the success of their market-sale programmes and generate subsidy for affordable housing.

With housing policy ever more reliant on the market to deliver, it has never been more important that the right numbers of planning consents are granted in the right places.

FIGURE 8

Housing mismatch – Locations where housing consents have been granted are not aligned with where affordability is most stretched and, consequently, where need is highest. This table shows how consents should be distributed to align with need

 
Figure 8

Source: Savills Research, Glenigan, Hometrack, DCLG

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