14th October 2016
How will the Government’s package of housebuilding measures, announced at last week’s Conservative Party Conference, work and will they fit with existing reforms? Nathan Smith, Associate Director, takes a look.
Strong rhetoric marked last week’s conference - Sajid Javid, the Communities Secretary, referred to tackling Britain’s longstanding housing shortage as a ‘moral duty’. Mr Javid announced what he called the ‘largest state-backed’ housing programme since the 1970s and signalled that there would be more measures to come in a White Paper later this year.
The measures announced so far have been broadly welcomed by the housebuilding industry. They represent a shift of focus away from home ownership, and towards building more homes of all tenures, including rented housing, whilst encouraging smaller developers and new entrants to the market. Mention of the Starter Homes initiative was conspicuous by its absence last week – a softening of approach to this policy is already being considered, with rent-to-buy models being promoted.
Accelerated Construction Scheme and Relaxed Planning Rules
Mr Javid announced that the Government will borrow £2bn to support the Accelerated Construction scheme which will make publicly-owned brownfield land available for swift housing development. He said the money would encourage new developers to build up to 15,000 homes by 2020.
This initiative is to be welcomed. Its success, though, will depend on the availability and quality of brownfield sites, how the release of land is managed and how quickly new changes to the planning system can be brought in. Even with government funding, many sites will still present challenges. Firstly, the fund should not be seen as a solve-all and, secondly, onerous planning obligations should not be sought if these sites are to be delivered quickly.
Mr Javid also heralded the further relaxation of the planning system to encourage urban regeneration and building on brownfield land. The government intends to ‘strengthen national planning policy to create a “de facto” presumption in favour of housing on suitable brownfield land and to drive up density levels in high demand areas while ensuring that developments are well-designed and respect the character of the local area.
Greater clarification is needed on what this means and more is likely to be revealed in the forthcoming White Paper. But some measures are already in place, such as Local Development Orders and permitted development rights from office to residential development which were made permanent earlier this year. Others, such as permissions in principle (PIP) for some sites, are already referred to in Section 150 of the Housing and Planning Act 2016. The regulations relating to PIP as well as brownfield registers are expected by the end of 2016.
Home Building Fund
Mr Javid also unveiled the £3bn Home Building Fund. This is a flexible source of funding administered by the Homes and Communities Agency (HCA) on behalf of Government. The funding consists of:
Some of this funding was already available to the market - essentially, the new fund rolls several streams into one pot. The loans are available to smaller builders, as well as larger companies who are new entrants to the housing market and housing associations. To be eligible, an applicant must demonstrate that the loan will allow schemes to progress quickly.
Infrastructure investment in particular is to be welcomed – its importance is recognised not just by the industry but is also a key factor in winning community support for schemes – and it potentially unlocks sites.
The acknowledgment of alternative solutions, such as custom-build and off-site construction, is also timely as is the acceptance that home ownership isn’t the only solution. This broader approach could give more of a boost to housebuilding than previous incentives such as the Help-to-Buy scheme.
The missing pieces: greenfield and green belt sites?
What was missing from the announcements last week was commentary on green field sites, which may be necessary to achieve the step-change in supply needed across the UK. Comment on potential Green Belt development, an issue traditionally unpopular with Conservative voters, but perhaps essential in meeting supply in the South East, was also absent.
The UK (excluding Scotland) is currently building around 150,000 homes per year1 but needs to be delivering at least 250,000 homes per year (Department of Communities and Local Government). So, whilst the Government’s measures are welcomed, it is questionable if they will go far enough.
As viable brownfield sites are built out, we are left with a growing need to deliver more development on greenfield and Green Belt land. The viability of many brownfield sites is a challenge, especially in parts of the UK where values are more challenging.
Adopted, sound Local Plans can support the delivery of greenfield development alongside Green Belt Reviews. But this work relies upon political support at a local level, and the necessary resources in place for local authorities – something which is sorely lacking.
Mr Javid said in his speech that the Conservative Party was "willing to take difficult decisions, make the hard calls, in order to build a better Britain for everyone".
So will the Conservative Party also be “willing to take the difficult decisions” in urban areas, on green field sites and ultimately in the Green Belt? Perhaps the White Paper, due later this year, will show that the Conservative Party “means business”.
For more information contact Nathan Smith on 0113 219 2553 or at email@example.com.
1 Department for Communities and Local Government - Live tables on house building