The beautiful and damned
By: Kevin Davis
Tags: London, Housing, UK Politics, London Mayor, Mhclg

The local and national government fight to build more homes

“The cool stone steps were the same steps that had been trodden by generations before him. In his fifty years working in this great palace he had never thought too much about what had gone before, but this morning, as he passed the statues of St. George and St. David and brushed against Queen Victoria, he mused about what his role in national life had been on this, his last day in the legislative centre of Parliament. For fifty years he had secured and enhanced the vellum upon which much of the nation’s great laws had been written.

As he thought back on his time in this rarefied atmosphere a smile of historic amusement passed his lips. He knew, that for all the great scribes and legal minds who crafted the laws by which we all live, there was an equal set of minds, outside the Palace of Westminster, who secured their careers trying to establish ways in which they could circumvent or even ignore that which Members of Parliament had seen to fit to pass. The battle of law and precedent.

As he folded the most recent piece of legislation, the Planning Regulatory Reform Act 2021, for deposit in the Parliamentary archive, he wondered how many of the ills it was written to cure would be cured. His long history in the job led him to conclude; not many.”

Acts of Parliament are like works of art — created to suit one purpose but then the purpose changes as culture and life develop. With acts of Parliament, it changes much faster as new legislation is let lose into courts for the interpretation of other lawyers. Having spent some time considering the recently launched planning reforms I feel somewhat the same; interesting stuff, but will it change much?

The inevitability of these new laws is that even now Local Government planners will be thinking through not just the consequences of the changes but how they might use them to deliver what their Council members want of them — for most councils this means the ability to prevent the building of homes that either upset their voters or the sensitivities of their own predilections for house building. Everyone says they are pro house building but no one wants to lose an election because of it.

For the development industry, there will now be great debates about what could be done to game the system and ensure there is business as usual. The current planning laws (as amended) were put in place to build more homes, but they have clearly not succeeded.

I am going to look at two aspects of these reforms and see what could happen to local authority planning policy and the ability to get more homes built.

There is no doubt that what is proposed is a massive simplification of the system. It equally makes a lot of sense. You decide what you want to build and then allow companies to come and build precisely what you have specified without interfering in the principal of that design. As well as the “do what we have asked” zone there is the “this is a more sensitive place so there will be some controls” zone and the “no damn way” zone.

Take a Borough in a rural area. All they need do is designate most of their land in the latter “protected” zone and the majority of their existing villages in the “renewal” zone and plan a large garden village in the assumed development “growth” zone. Hey, presto, you not only get a Local Plan but the act of having the plan means you no longer have to demonstrate a five-year land supply.

When development does not happen — we see too many councils not meeting their local authority housing targets — what will happen? This is the crunch of the issue because for years Government has threatened local authorities with removing their planning powers for missing targets or not having local plans, but nothing happens. The threat has become toothless and councils know that. The planning paper talks about sanction but does any local authority believe it will happen when the government has no track record of holding local authorities to account under the current planning act?

Then there is the development side of the equation. The development industry is not blameless in the missing of house building targets. As has been often repeated, and is true, almost half of all planning applications never get built. This is partly due to some effective disconnects. About half of the development industry is not there to build houses. They are there to buy land and develop a scheme on it to raise its value for their investors and then sell it on. The trouble is those new purchasers rarely build it out because they want to go back for more development to maximise their opportunity. You cannot blame them for this as they are businesses and they are working inside the system. You see all the time planning applications in London that do not really maximise the density on sites knowing that the next owner will want to add more to it.

It is also true there is a construction industry capacity issue that restrains development and that needs to be addressed, but we need to find ways to ensure that if developers do sell sites they either get them built with the agreed permission or they are not allowed to trade sites once an application has been granted. The new planning paper does not address that issue and until we have a resolution to this it will be easy for opponents to the reforms to dismiss them as only doing half the job and making life difficult for local authorities who permit enough homes to meet their target but never see them built.

There is one very controversial proposal and something that is at the heart of the concerns amongst Councillors and those of the public who have an interest; Targets, and the distribution of those targets across the UK. Numbers of houses to be built are like tall buildings, it is very easy to point at them and say “that’s high”.

I had better clarify here that the target is for completed homes, not for homes permitted to be built. The numbers being promulgated by the Ministry are based on an algorithm which looks at current stock and projections of housing need. I find these types of calculations tricky as many councils have enough difficulty plotting the growth in school pupil numbers let alone house building. You, therefore, have to question the ability to make informed decisions on house building numbers based on an algorithm.

The numbers are startling. Below are the figures for London where the target more than doubles and it is nearly three times what is current delivery. Richmond Council has a new target nearly seven times what the current delivery is. There are good reasons for this because put simply, some Boroughs have not built enough homes in the past ten years and there is a cumulative effect in the algorithm for under-delivery. (source: https://lichfields.uk/grow-renew-protect-planning-for-the-future/how-many-homes-the-new-standard-method/#section12 )

The five-year land supply requires a council to have enough land available to support the target they have been set for five years. But this is a difficult situation if the target grows exponentially (due to cumulative underperformance) and yet you can only build the numbers for which you have given permission. As anybody involved in sales knows targets have to be reasonable or you just give up trying to meet them.

If you then add the forty per cent of applications that do not get built through no fault of the council it means that to effectively hit your housing target you need to permit 40% additional homes over your annual housing target.

Take my own Borough of Kingston. For us to hit the proposed housing target of just over 1,500 completed homes a year for ten years is 15,000 homes. With a build rate of permissions at 60% that actually means we would need to permit more than 21,000 homes over ten years to hit our target. Add to that the development cycle taking on average two years from granting to completion means you need to add two more years — another 4,200 homes, but they would need to be added into the early years because you need to start permitting homes early in the ten-year cycle for them to be built and completed in time for the target. Effectively this means to hit the target we would need to grant permission for 14,700 homes in the first five years or 2,940 permissions a year. Our current target is less than 700 and the proposed target is for 1,500 finished homes per year. That’s bonkers.

I hope that Ministers and Parliamentary draughtsman look hard at these issues because otherwise, we face another set of “radical” reforms that merely move the blame around the board. There is some real talent in Government and many of them understand the planning system — it has not always been that way — and they now need to push on and get through legislation we might not all agree with and targets that make us all face up to the reality of years of planning brinkmanship.

What we know for certain is that no one will really understand the impact of these reforms until the point when we look back after ten years and see how many homes really got built. Until then, it is left to Councils and Councillors to explain to one half of their electorate why they are not building enough homes for their kids to live in and to the other half explaining why they are building so many and at such high densities.