9 October 2015
The Government unleashed a flurry of planning announcements at the Conservative Party Conference this week. Can these latest reforms, some of which are already on the legislative agenda, really make a difference in the long term? Jeremy Gardiner, WYG director, reports.
First out of the goody bag was Chancellor George Osborne’s speech which included a new National Infrastructure Commission and the relaxation of planning rules on surplus public brownfield land. These are welcome initiatives that will enable and deliver housing and infrastructure, although there will need to be more clarity on how such brownfield development is to be controlled.
But the planning reform that really grabbed the headlines was the Prime Minister’s announcement about Starter Homes in his speech on Wednesday. The Government’s Starter Homes for first-time buyers will be classified as a form of affordable housing which means that the proposed 200,000 homes, for those people under the age of 40, will replace current affordable housing obligations for rent, offering developers a choice. Part of the Conservative Party’s long-held ambition to widen home ownership, this means that obligations will allow starter homes for sale, rent or intermediate products. The Westminster approach contrasts to that of Scottish Government which is not so fixated on home ownership. Rather, it encourages all housing tenures while maintaining support for Housing Associations.
The Prime Minister’s announcement has a number of positive implications for house-builders. Some housing schemes had stalled after the last budget because of the changes to affordable housing funding. These changes undermined many commercial deals between house-builders and Registered Social Landlords (RSLs) - so the opportunity to replace social rented units with discounted market units could make those schemes viable again. There will also be some re-working of consented but unimplemented schemes in the short-term to make them more profitable. The Government’s approach may also require unpicking or modifying of s106 obligations and conditions on planning permissions, whether implemented or not, which currently restrict the sale of affordable housing in perpetuity. Development plan polices may also require a review.
So is the Prime Minister’s announcement just a short-term trick? The move will halt the delivery of new social rented accommodation through s106 agreements , so exacerbating supply problems. Moreover, the new Starter Homes only have to stay as such, subject to a 20 per cent discount below market value, for ‘up to five years’. It is not yet clear whether the property could be sold at the full market price after the first five years. If so, the shelf life of these properties as affordable homes will perhaps be short-lived. Negotiations between local planning authorities and developers over suitable planning controls, discount rates, and the time period of discount could be protracted without further guidance.
Other Government measures, intended to ease the housing crisis, could also backfire. The Secretary of State for Communities and Local Government, Greg Clark, in his speech on Monday, referred to the current Housing Bill’s proposal to extend the ‘right to buy’ to Housing Association tenants. For every home that is bought by a tenant, it is intended that a new one will be built. But this is easier said than done, especially in areas where land values are high. It may be difficult to ensure replacement homes in the same local housing area. It seems inevitable that RSL housing stock will fall as RSLs struggle to compete with the open market. In the meantime, there will still be demand for social rented property. There is an opportunity for local authorities to increase delivery, either directly or in partnership with RSLs, but how many of them can step up to the plate? Can private rented sector housing step into some of this void in the rental sector but at market rents?
What is certain is that the housing crisis is not about to go away. The supply of housing on the market fell to an eleven year low in August, according to the National Association of Estate Agents. Our own research, to be published next week, shows that, based on their own figures, nearly 30 per cent of South East planning authorities do not have a five-year housing land supply. We are simply not building enough homes – the problem is deep-seated and complex.
Presumably the Government has focussed on first time buyers because this will also further energise the housing market. But other areas of the housing market are also suffering from chronic under-supply – for example, purpose-designed schemes for the private rented sector, for students, and for the elderly. Some developers have recognised this and responded to the opportunities, but incentivising developments for these groups would also help in increasing supply in ways which would have longer-term benefits.
So rather than quick tricks or even treats, we badly need to comprehensively address the strategic planning of housing at the national level. This is too important and too urgent a social issue for it to be the subject of politicking. Unpopular as it might be with voters, this must include an urgent review of our Green Belt policy. Limiting the initiatives to vote-winners is not the solution.
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