Planning is politics, and whilst most people agree we need more and better quality housing, nobody actually wants that housing on their own doorstep. As a result, very little new housing is actually approved and even less is built.
As long as planning remains political, and bureaucracy can be used to prevent or delay development, there will be no increase in housebuilding. This is why the Government are proposing a shake up of the planning system in the budget next week.
Government needs more new housebuilding to stimulate the flagging economy, but more importantly to provide the social/affordable housing required to make up for the massive 70% cut in the budget for this.
This will load yet another cost or ‘tax’ on developers at a time when the large housebuilders are already technically broke in large part (if it weren’t for creative accounting), and in no position to take on more cost. Self-builders will also be taxed as if they are developers – and already are in some areas.
Government is correct that planning is a big hurdle, but it is not the only one preventing new housebuilding. The risk for developers in the current market is huge, and with levies on them to provide affordable housing, the community infrastructure levy (CIL) and section 106 Agreements to provide local amenities, there is little incentive to take risk in the current market. This is reflected by the lender’s lack of appetite for funding development of any sort.
The proposed ‘fundamental’ change to the planning system could shift the presumption for planning permission in favour of development, instead of against. This would be a good thing, especially in a stronger economy. There is a strong argument that the default position should be that you are free to build what you want unless there is good reason not to be able to do so (although this brings its own inherent risks of a boom and bust in houseprices – look at Ireland, the US and Spain where planning is far more liberal and housebuilding overheated in response to the credit bubble and then promptly burst completely after the credit crunch, taking the economy down with it).
Unfortunately, whilst the current proposed presumption in favour of ‘sustainable’ development, will make great soundbites, and play well with many people. The use of the work ‘sustainable’ or any other form of words such as ‘appropriate’ development, will not really have the desired affect. The wording could simply give local authorities reason to find new ways to add red tape and bureaucracy to allow them to refuse or delay development, as it will still remain unpopular with the local communities, and politicians will still need votes.
This is already happening with commercial applications, and the costs and red tape involved in any application are growing enormously, for sustainability reports, environmental impact assessments, and more.
Another factor is that any change in policy also creates a hiatus in decision making whilst the new policies are interpreted. This may not, however, affect the rate at which consents are commences and built out – this will be down to houseprices and the relaxation of the lending market.
The proposed changes to the planning system may also contradict the idea of localism, and possibly be in direct conflict.
Localism is a popular idea – placing control of new development in the hands of local people and communities to decide what is best for them. Their instinct will still be to say no in most instances. Localism is simply another layer of bureaucracy, on top of central and local government, adding further delay and cost for developers, including self-builders. Government needs to reduce red tape and bureaucracy, not increase it.
The one good concept in the Government’s proposals is to offer local authorities money to accept new development. With reduced funding for local authorities and a freeze on council tax, LAs will have few options for raising funds to maintain essential local services.
Giving LAs additional council tax for all completed new dwellings, plus allowing them to set their own planning fees will be a massive incentive to allow new development. This allows market forces to influence the rate of development, and could put local communities and therefore politicians, in favour of attracting development to their area and approving applications. Raising money from developers to pay for local services should be a vote winner.
However, higher fees will involve further huge risk for the developer. Making an application is like putting money on a horse that interested parties will do anything they can to trip up, resulting in huge wasted fees, and costs. Localism could weigh against this.
The only way to really increase applications at significantly raised fee levels (fee increased could be huge as local authorities will have the freedom to set them as high as the market will take) would be to offer developers/self-builders a refund on the bulk of their application fee if their application is rejected or refused.
Let’s hope this concept is written into the budget too.