Unlock planning system to boost housebuilding – published in the Construction News Magazine

Published in Construction News Magazine – 25th March 2015

Written by :

George Osborne delivered his last Budget of this parliament two months before the general election. As expected, voters in the industry are asking, ‘What’s in it for us?’

Measures affecting the delivery of housing are easily the most significant and politically sensitive.

The demand for housing is exceeding supply and has been doing so for at least a decade.

For example, London’s population has grown by approximately one million people over the past 10 years, yet only 202,400 new homes were built over the same period.

“While some of these are reasonable, other demands are so disproportionate they represent an unfair tax on development”

The capital’s population is set to grow by a further million people by 2021, yet the latest figures show only 18,380 new homes were built in 2012/13. The housing shortage shows little sign of abating.

Developers have been ready, willing and able to deliver as much as is practicable of this self-evident additional housing requirement but are being severely hampered by the planning system.

The key criticism is that the system appears designed to hinder urgently needed development rather than encourage it.

Planning departments appear to be inherently under-resourced, contributing to ever increasing determination times.

Even when developers and planners have agreed plans to be approved, the local authority’s demands for affordable housing and other charges such as section 106 agreements constitute a further hindrance to development.

While some of these are reasonable, other demands are so disproportionate they represent an unfair tax on development.

This, before the developer has even begun enabling works let alone contemplated making any profit.

Needlessly complex

Furthermore, some of the rules are unnecessarily complicated, such that to have any chance of reducing the size of these demands, developers require specialist legal advice in negotiating the reduction of whichever ‘toolkit’ contribution that local authority has chosen to adopt.

While the chancellor’s help for first-time buyers is welcome as it will support the demand side, it is in fact the supply side that is in greater need of assistance.

Any planning powers devolved to the mayor should be used to implement London-wide policies designed to remove the bottleneck in the planning system.

The aim should be to ensure planning applications for housing schemes are expedited to shorten the time span between developers submitting planning applications and their commencement on site.

Enabling such an outcome will see marked increases in housing starts, narrowing the gap between demand and supply.

This will contribute to slowing house price inflation – a major problem for the first-time buyers the chancellor is attempting to help, but may not actually be hitting the nail on the head.

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