Government proposes changes to local housing supply requirements. Evans Jones
8th October 2024
By David Jones, managing director of Evans Jones
As the government approaches the first 100 days in power, it is appropriate to consider, from a planning and development perspective, changes which have been made or are likely to be made in the coming months.
The new government's stated agenda is to Get Britain Building. Policy announcements to date are focused on the aim to significantly increase house building - seeking to meet the manifesto commitment to build 1.5 million homes during the first term in office.
Mindful that policy changes take time to implement, and it is rare for a government to run the full five-year term, this in practice equates to deliver at a rate of around 370k new dwellings every year in England.
For context, the expected completion rate for 2024/25 is likely to be around 160k dwellings. This downturn is as a result of national housebuilders slashing output in response to high mortgage costs and reduced demand, and a similar downward shift from housing associations and councils, which are struggling to build, given increased debt and property maintenance costs.
The SME market is equally challenged, with many SME developers having left the industry altogether. Those remaining are struggling to secure viable development sites against a backdrop of lower demand, rising build costs and a disproportionate financial burden in meeting recently introduced obligations, including biodiversity net gain and nutrient neutrality.
In response, the government proposes a number of measures aimed at boosting supply including:
• Revising the "Standard Method" by which housing need is calculated - the ONS assessment identifies that the number of dwellings to be provided across England would increase significantly outside London. Nationwide, the housing need is set to increase by circa 50% across England.
• Reinstating the requirement for councils to demonstrate a five-year supply of deliverable housing sites. (Reversing the lower four-year requirement introduced in December 2023).
• Reinstating mandatory housing target. Reversing the former Conservative government downgrading of mandatory targets in December 2023.
• Review of Green Belt boundaries, where identified need for housing cannot otherwise be met.
• The introduction of a new land classification as Grey Belt, supporting the development of previously developed land and/ or degraded land within the Green Belt.
• The establishment of a New Towns Task Force and New Home Accelerator Programme.
Prime minister Sir Keir Starmer emphasised that communities must be prepared to accept new developments in their areas, describing these changes as long overdue. The changes are part of the government's broader efforts to address the country's housing supply shortage.
Locally, all planning authorities in Gloucestershire are likely to be subject to an increase in their housing requirements, ranging from +10% for Gloucester city up to +94% for Cotswold district. For Gloucestershire as a whole, the increase equates to +48%.
The proposed changes follow controversial adjustments made by the Conservative government in its final months, which some critics argued could lead to fewer homes being built, even in areas where they are desperately needed. Notably, former Levelling Up secretary Michael Gove admitted that the revisions to the National Planning Policy Framework (NPPF) in December 2023 sent the wrong message to local councils, implying they did not need to meet their housing targets.
In addition to increasing housing supply, the government is exploring ways to boost development on brownfield land. At the Labour Party conference, it was confirmed that work was underway on the preparation of a working paper aimed at supporting brownfield site development. This includes a proposed 'brownfield passport', which would make approval of development on brownfield sites the default position.
Whilst the various policy initiatives are required to redress the contrary messaging and policy changes brought in by the outgoing Conservative government, it is also the case that housing land supply alone is not the panacea that so many propagate.
Housing delivery in the UK is subject to three primary constraints: the ability of developers to secure planning permission; the commercial viability of schemes which are permitted; and the availability of resources (labour and materials) to build out schemes.
Developers are motivated by profit, and many are answerable to shareholders. In this respect, they are little different to any other business. If one compares housing development to car manufacturing, it is clear that, if the demand for cars declines then the number of cars built is reduced. Conversely, housing developers will operate in a similar way, accelerating or decelerating build out rates to meet expected demand.
Whilst local and central government can broadly control the number of homes consented, it is the market which determines the build out rate.
But it is true to say the planning system is too slow. Houses which could and should have been built have been delayed due to inertia in the planning system, which is all too often unresponsive and impacted by external influences. Whilst releasing more land for housing and speeding up the planning process will increase the supply of sites, the increased supply will not necessarily reduce house prices.
Policy changes are currently set out within the Draft National Planning Policy Framework, for which consultation closed at the end of September. The final version is due for publication early next year. Landowners, promoters and developers are preparing applications ready for submission before publication or upon publication of the new framework.
For more information, go to https://www.evansjones.co.uk or call 0800 001 4090.
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