The Chancellor, Philip Hammond, announced the 2017 autumn budget on 22 November. Reactions to the budget have been mixed and questions have been raised about whether he has really gone far enough to address key issues within the planning system that can prevent or delay development from coming forward. This article highlights some of the measures which will be relevant to developers and local planning authorities.
Building more homes
It is often said that land is being underused in our towns and cities. The Budget revealed planning reforms which seek to ensure that more land is available for housing, while at the same time maintaining the government’s resolute commitment to protect the green belt.
An ambitious new policy was revealed, which aims to increase the housing supply by 300,000 homes per year, the highest level since 1970. £15.3 billion of new financial support for housing is being made available over the next five years, taking the total up to at least £44 billion over this period, and further support is being pledged to help SME housebuilders.
The housing crisis is at its most acute in the South East. The Budget reaffirmed the government’s support for strategic investment in the Cambridge-Milton Keynes-Oxford corridor, targeting up to 1 million new homes in the area by 2050 to maximise its economic potential.
A further £2 billion of funding for affordable housing was announced in October and is confirmed in the Budget – taking the total budget for the Affordable Homes Programme to £9.1 billion to 2020-21, which is expected to deliver at least 25,000 new affordable homes.
This new policy flows from the Housing White Paper that was issued in February this year and the Conservative Party Manifesto, which repeated the 2015 pledge of 1 million homes by the end of 2020 plus an additional 500,000 by the end of 2022. These numbers are challenging and delivery will need to be significantly increased if these targets are to be met.
The reforms also include measures to increase housing density in urban areas, including:
- ‘minimum densities’ for new housing in city centres and around transport hubs
- policy changes to support conversion of empty space above high street shops and to convert retail and employment land into housing
- permitted development right to allow the demolition of commercial buildings where they are being replaced with new homes.
Further details are expected from DCLG in due course.
Intervention with local plans
The government will consult on strengthening policy to ensure that land allocated in local plans is deallocated if there is no prospect of a planning application being made.
Also tied to local plans, the Budget indicates that the government is considering introducing policy in favour of granting permission for housing, outside of the local plan, where a high proportion of homes will be offered to first time buyers or at an affordable rent. This would take the form of a new ‘exceptions site' policy.
Intervention in local plans will also be possible where local authorities fail to put an up to date plan in place.
Build out times of planning permissions
The government remains concerned that development is not being delivered quickly enough and is introducing measures to try and ensure that planning permissions are built out faster. These include an expectation on local authorities to bring forward smaller sites (which should make up 20% of housing supply) and a change to the threshold at which the presumption in favour of development applies (75% of housing delivery by 2020).
In addition, the exemptions will be removed from the deemed discharge rules to try and avoid delays in discharging planning conditions. This will no doubt be welcomed by developers, but could cause concern for local planning authorities as it will mean that the deemed discharge rules would apply to EIA development and conditions relating to flooding, contamination, archaeology and highways, which had previously been exempted.
Sir Oliver Letwin will chair a review panel looking into how to close the gap between planning permission being granted and houses being completed. The findings are expected during the course of 2018.
Compulsory purchase
The Budget gives greater support for the use of compulsory purchase powers to assemble housing sites in urban areas, which may assist in bringing forward stagnant sites.
The Chancellor also stated in his speech that land being ‘banked’ and not being built on by developers (for commercial, rather than technical, reasons) could be subject to expanded powers of compulsory purchase. This follows the recent Welsh Government Budget, which considers measures to end ‘land banking’ by introducing a 'vacant land tax'. This is likely to be controversial for developers, who will argue that they would not choose to sit on land and avoid building out a site if it is viable to do so.
Developer contributions
The Budget also reveals that a consultation has been launched into the contributions that developers pay towards local infrastructure. This includes much-needed reform to the Community Infrastructure Levy (CIL) and the removal of restrictions to the ‘pooling’ of section 106 contributions in certain circumstances.
The government intends to consult on speeding up the process of setting and revising CIL and allowing authorities to set rates which “better reflect the uplift in land values between a proposed and existing use", rather than setting a flat rate for all developments of the same type. This proposal has the hallmarks of the pre-1947 planning legislation where local authorities were able to take an uplift based on the increase in land value from development. Although this will be subject to viability considerations, this is likely to be a controversial proposal. Indexation of CIL rates is also proposed to change, to link to house price inflation rather than build costs.
This proposals contradict some previous rumours that CIL may be abolished altogether and it will be interesting to see whether the proposed reforms have the desired effect of simplifying the CIL regime.
The potential to introduce a Strategic Infrastructure Tariff has also been set out, which would be in addition to CIL and act in a similar way to the funding of Crossrail through the London Mayoral CIL. This is slightly different to the Local Infrastructure Tariff, proposed by an independent review of CIL which took place earlier this year.
New garden towns
The Budget announced that five new ‘garden’ towns are to be built, through the use of public and private capital. The proposed locations, although not identified, will include areas of high demand such as the South East.
Infrastructure
Funding (£1.7 billion) has also been allocated to transport development across England, to be distributed partly to combined authorities with mayors, with the remainder to be allocated by a competition. Various other transport project funding was also announced, including the Midlands Connect motorway and rail projects and improved transport links along the Cambridge-Milton Keynes-Oxford corridor.
Conclusion
While some of the measures and policy changes outlined in the budget could make a real difference to much-needed housing supply and development, some would argue that the Chancellor has not gone as far as he could have to deliver ambitious and comprehensive change. It is likely that some of the proposals will attract more attention over the coming months, in particular the CIL reforms, the potential increase in use of compulsory purchase (especially to combat ‘land banking’) and the removal of the exemptions for deemed discharge of planning conditions.
Burges Salmon regularly advises developers and local authorities on all aspects of planning and compulsory purchase, including housing, consenting and infrastructure. For more information or to discuss any of the issues raised in this article please contact Gary Soloman or Jen Ashwell.