Bernard Ralph | 08.03.2019
09.04.2018 Ross Jarvis
There is no escaping the fact that in this country we have a disparity in the number of planning permissions implemented compared to the number of permissions granted. Research from the housing charity, Shelter, suggested that less than 45% of all permissions granted between 2006 - 2014 were ‘built-out’ and that this was withholding access to nearly a million potential plots. In a political climate focussed on getting Britain building much of the blame for this has landed at the developer’s doorstep with Housing Secretary Sajid Javid promising a more ‘muscular’ approach from the Government towards housebuilders. Is this focus on developers fair and what responses might we see as an attempt to stop ‘land banking’?
Stuck in the mud at the Pre-Commencement stage
It should be noted that Shelter’s research allowed for an 18 month implementation window which might be viable for smaller schemes but for larger developments (often consisting of tens, if not hundreds of conditions, may of which will be ‘Pre-Commencement’) that is simply not sufficient time to obtain the necessary discharges in order to commence works on site. Further, the Home Builders Federation has alleged that under-resourced local planning authority departments are at least partly to blame for the delays in getting conditions signed off and for preventing a smooth transition from the post-permission stage to the point at which construction can commence.
That being the case, developers should welcome the recent proposals published in the Government’s housing White Paper and its ‘Planning for the Right Homes in the Right Places’ consultation which aim to streamline the above process. One of the proposals put forward in that consultation which received an 87% positive response rate was a requirement for applicants to set-out estimated start dates and build-out rates at the outset of their application. That might seem a daunting prospect but for developers who can get their timescales right, the onus would then be placed on LPAs to cater for the pace of delivery in their localities and resource appropriately.
The importance of the local plan
In her housing speech last month, Theresa May claimed that ‘a well-designed local plan won’t keep your children safe and warm at night’. Perhaps not, but it could well aid the production of more ‘implementable’ planning permissions; something which many of the UK’s major housebuilders say ought to be distinguished from the bulk of un-workable or un-implementable permissions which they say comprise at least part of the 423,544 unimplemented planning permissions recorded last year.
More than ever we are seeing Local Plans circumvented for being outdated and failing to demonstrate a 5 year housing land supply (at the beginning of March for example we saw Sajid Javid determine a number of permissions to Mid Sussex District Council for 504 homes as a result of its outdated local plan). That is unquestionably a positive move but the worry in these circumstances is that more and more viability assessments are required on a site-by-site basis which does not promote consistency in policymaking. So for developers the chances of obtaining permissions with unexpected levels of contributions and /or obligations (which could well leave them with no option other than to abandon the permission) are surely likely to be higher in regions with outdated Local Plans which do not provide for a 5-year housing land supply – certainly it would be interesting and perhaps necessary to see some detailed research on this correlation.
Commercial Reality Check
Like the Government, housebuilders need to provide for the future and for many this necessitates the assembly of a ‘pipeline’ of suitable development land. The expectation for housebuilders to develop all of their land simultaneously ignores the cash-flow pressures of residential development and those who allege that land banking is rife practice ought to be mindful that with the exception of staggered development funding a housebuilders main pay day ultimately arises on the sale of completed plots. That creates a significant window between investment and return.
In addition, further practical day-to-day challenges for housebuilders have been identified in Sir Oliver Letwin’s recent letter to the Chancellor and Secretary of State for Housing as part of his Independent Review of Build Out. Sir Oliver’s feedback from industry witnesses cited a range of commercial and industrial constraints, including:-
The political reaction to allegations of land banking has placed a spotlight over many reputable housebuilders. Commentators within the industry do not doubt that land-banking does happen but do stress that Sajid Javid’s comments should be taken into context (i.e. his use of the words ‘some’ and ‘nimby’ when referring to the tactics of a minority of developers). This spotlight would be better placed on addressing the practical issues discussed above in order to increase the much needed delivery of housing in this country. Certainly we await the outcome of the Letwin review with much anticipation.