Planning and Housing - Key issues in the “Housing Crisis”

This article was produced by Nabarro LLP, which joined CMS on 1 May 2017.

Summary and implications

With the Housing white paper expected imminently after lengthy delays, we examine the key issues affecting the housing market, how effective current policies are at tackling those issues, and what the white paper might, and needs to, address.

To claim that the UK is in the midst of a housing crisis is not a new contention. House prices remain at a record high and not enough new homes are being built, despite the government’s target of one million homes by 2020.

The Select Committee on Economic Affairs outlined in their first Report of Session 2016–2017 that at least 300,000 homes a year need to be built for the foreseeable future both to meet future demand and counter the backlog caused by previous years of undersupply. This represents a 50% uplift from the government’s previous targets.

This also raises the question of where these houses can be built. There is a lack of viable land for housing development. Add to this the criticisms of the bureaucratic and slow planning system, the government focus on home ownership and the fact that official figures show that nearly half a million homes for which there is already planning permission in England are yet to be built, and the picture becomes even more bleak.

Tensions in current housing policy

Current policies require LPAs to provide for a five-year supply of housing in their local plans. Provisions must be made according to the requirements of the area, with LPAs identifying how those requirements will be met. However, there is a tension in housing policy: the protection of green belt land. Further, there has been a greater emphasis on neighbourhood planning but at the same time provisions in the Housing and Planning Act 2016 are taking powers back from local government.

In January 2016, the House of Commons published a briefing paper on the green belt, which confirms that it is for local authorities to define and maintain green belt land in their local areas. However, the briefing points to online planning practice guidance which was published by the government in 2014, which aimed to make it clear that unmet housing need is unlikely to outweigh harm to the green belt. The protection of the green belt around urban areas is one of the 12 core planning principles as set out in the National Planning Policy Framework (NPPF). The NPPF provides that the construction of housing within the green belt should only be permitted where the harm to the green belt is outweighed by “very special circumstances”.

What constitutes “very special circumstances” is unclear, but recent trends show that an increasing amount of new development projects within the green belt are being approved. Plans for green-belt development increased by 25% from 2015 to 2016 amounting to an estimated 275,000 houses.

In the recent case of R (on the application of Smech Properties Ltd) v Runnymede BC, the Court of Appeal upheld a grant of planning permission for a mixed-use development within the green belt due to the “…great pressure of need for new housing and very limited options for meeting that need”. In December 2016, a site in Oxfordshire was removed from the green belt in line with modifications to the area’s local plan, which includes the need for 20,560 new homes to be delivered between 2011 and 2031. An outline application has now been submitted to the local council for 950 homes to be built on this former green-belt site.

Green-belt land could, therefore, provide opportunities for developers to contribute to alleviating the nationwide need for more housing, with trends suggesting LPAs may be more receptive to granting permissions where that development is in accordance with local plans, notwithstanding that development is within the green belt.

However, green-belt development is controversial and unpopular with the public. Policy continues to be restrictive on this issue, but it remains to be seen whether the increasing pressure of the housing crisis demands a relaxation of both the discretion exercised by LPAs, and of national policy.

New legislation and proposed changes

The Housing and Planning Act 2016 (the Act) received Royal Assent on 12 May 2016, though much of the Act is not yet in force. The Act introduces a range of reforms designed to address housing issues, including plans to release more land for housing, ensure planning decisions are made on time and devolve more planning powers.

Permissions in principle

“Permissions in principle” could be an answer both to criticisms of the inadequacies of the current planning system and to the lack of viable land for development. “Permission in principle” for housing-led development amounts to consent for housing schemes on sites allocated in brownfield registers, development plan documents and neighbourhood plans, when combined with an application for technical-details consent which will be determined in accordance with the permission in principle.

This may provide a viable solution to using green-belt land by making it easier for developers to build houses on brownfield sites. Brownfield land has been hailed as a solution to the lack of viable land for development. However, as land that has commonly been used for industrial or commercial purposes, it can often pose remediation difficulties, making it less desirable than green-belt land due to the costs and time involved in preparing the site for development combined with a common lack of connections and services. Brownfield sites were never intended for housing, meaning they are often in undesirable locations that are not well connected to urban centres and remain surrounded by active industrial sites.

With 66,000 hectares of brownfield sites in England, this equates to around 200,000 plausible new homes. Permissions in principle may help to achieve the government’s aim to secure planning permissions for 90% of suitable brownfield sites for housing by 2020. Despite this, development on brownfield land cannot be a long-term solution. In London, use of brownfield land alone will mean available sites are used up completely in just six years.

Starter homes

The Act also provides for measures to promote starter homes in England. These provisions have been controversial and, it should be noted, are not yet in force. It remains in doubt whether these starter-home measures will be brought into force, following a change in government leadership since the Act received Royal Assent. A starter home is a building, or part of a building, which is a new dwelling available for qualifying first-time buyers to purchase at a discount of at least 20% of the market value and to be sold with a price cap. Qualifying first-time buyers must be between 23 and 40 years old and meet any other criteria specified in regulations. The current price cap is £450,000 in Greater London and £250,000 outside Greater London.

The Act imposes an obligation on LPAs to carry out their planning functions with a view to promoting the supply of starter homes in England. It is expected that LPAs will have to consider starter homes when preparing local plans, co-operating with neighbouring areas on strategic planning matters and determining planning applications. For example, the Act envisages regulations providing that an LPA may only grant planning permission if a person has entered into a planning obligation to provide a certain number of starter homes or pay a sum to be used by the authority for providing starter homes.

These homes could provide significant opportunities for developers and make the grant of planning permission for developments more likely. The proposed starting point is that 20% of all housing should be starter homes. However, it is not clear how strict LPAs will be in enforcing these initiatives.

There are concerns that this 20% requirement will take precedence over the delivery of affordable housing. The cap on the prices in different areas for starter homes is likely to restrict the viability for the additional provision of affordable housing. In this way, the scheme has been criticised over concerns it will help a limited number of well-off buyers, reduce the amount of genuinely affordable housing and fail to remedy a shortage of homes available to rent.

We must wait for the detail in the regulations before we can assess how effective starter homes will be in tackling the housing crisis, if these initiatives even come into force.

Housing white paper

It is anticipated that the Housing white paper will address some concerns about the lack of housing supply. Guidance in the House of Commons briefing paper on planning reform proposals was published in December 2016 and indicates that the white paper will aim to set an overall strategy for building new homes with a focus on urban regeneration.

The briefing predicts that the white paper may contain provisions such as:

• ensuring local planning departments have the necessary resources and skills to drive house building;
• incentivising councils to use the duty-to-cooperate more effectively in respect of housing provisions;
• minimising planning decisions that are contrary to Neighbourhood Plan policies;
• policies on the setting of planning fees;
• the time and costs involved in making a Local Plan; and
• the relationship between Neighbourhood Plans and a LPA’s potential lack of five year housing supply.

It is also expected that the White Paper may include provisions on the release of land and focus on building different types of homes.

Provisions such as these indicate a positive step towards addressing the issues that underpin the housing crisis, such as the lack of viable land for development and complex planning system. In this way, the white paper arguably needs to address, amongst other issues:

• obligations to produce local plans and their contents;
• timescales for large developments;
• local government resources;
• the provision of affordable and rented housing; and
• the viability of undeveloped land and more dense development in urban areas.

Rhetoric about the 2020 aim is expected to continue, but the white paper will need to set out a much longer term approach to housing.

Conclusion

The Act demonstrates the government’s commitment to their 2020 goal of one million new homes by introducing provisions that focus on releasing land for housing, speeding up the planning process and assisting first-time buyers. We must, however, wait until the details in subsequent regulations are formally published before we can assess what real impact the Act may have on the supply of housing. In addition, predictions about the contents of the white paper suggest it may go some way towards addressing continuing concerns, but we must wait and see.

If you have any queries about housing developments or how the new legislation or policies may affect you, please do not hesitate to contact us.