The challenges of unlocking the planning system to boost housebuilding - Published in Construction News Magazine

Published in Construction News Magazine - 12th October 2015

Written by : Samuel Okoronkwo

Generation Rent or Generation Buy, which one should it be? Effective housing policy should properly provide for adequate housing for rent as well as to buy. The two are not mutually exclusive and ought properly to coexist comfortably.

Several contributing factors to housing supply shortages include, but are not limited to, dwindling skilled workforce, materials price inflation, limited development funding for SME builders and chiefly difficulties within the planning system. See “Unlock Planning System to Boost Housebuilding, Construction News 25 March 2015”.

In an attempt to alleviate these planning difficulties, the Department of Communities and Local Government in November 2014, issued a ministerial guidance from the Housing and Planning Minister, Brandon Lewis, exempting small developments from requirements to provide affordable housing under s.106 Town and Country Planning Act 1990. This was prompted by the recognition that the viability of smaller schemes were being undermined by this affordable housing payment obligation, which in effect risked the delivery of any homes at all.

This revised national planning policy guidance pleased housebuilders even as it offended certain local authorities who saw it as an attack on their source of social housing funding. They promptly challenged the policy guideline in the case of West Berkshire District Council Reading Borough Council –V- Department for Communities and Local Government [2015] EWHC 2222 (Admin). The claimant local authorities applied for judicial review of the defendant Secretary of State’s decision to alter national policy in respect of planning obligations for affordable housing.

The national planning policy framework required local planning policies to make provision for affordable housing. Following concerns about the decline in the small-scale housebuilding industry, the Secretary of State carried out a consultation exercise and subsequently amended national planning practice guidance, by way of a ministerial statement so that developments of 10 units or 1000 m² or less will be excluded from affordable housing levies and tariff-based contributions, with a threshold of five units or less applying in designated rural areas. The claimants were concerned that this new policy will effectively negate or “trump” local plans and policies and contended that,

a) the new national policy was inconsistent with the statutory scheme and its purposes. The Minister had exercised a prerogative power which could not be exercised incompatibly with, or so as to frustrate the relevant statutory scheme;

b) the consultation process had been unfair. Local planning authorities had not had an opportunity to give a meaningful, intelligent response on the key justification for the proposed policy, namely that affordable housing requirements imposed a disproportionate burden on small schemes;

c) the Secretary of State had failed to take into account certain material considerations; and

d) the Secretary of State had failed to comply with the public sector equality duty as per Equality Act 2010 s.149.

Mr. Justice Holgate in the High Court agreed with them and granted their application. This decision has, unsurprisingly, caused uncertainty given other decisions upholding the exemption of small schemes from the statutory contributory framework in accordance with the ministerial policy guidance. As such, the Secretary of State has appealed the judgement and the bottleneck in the planning system remains.

However, David Cameron’s intervention by his announcement during the Conservative Party conference that he will abolish the requirement that developers provide a certain amount of affordable housing to rent in new developments, would remove the bottleneck for good, when it is implemented. The new policy initiative is termed boosting starter homes, of which the Prime Minister hopes to deliver 200,000 units over this parliament. Developers would instead be required to sell the starter homes at 20% discount with a price cap of £450,000 in London and £250,000 outside of London. While this will assist supply for those able to buy, those only able to rent must not be forgotten.

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