Planning matters

James Fennell’s sabre rattling blog ‘Finking about Future Opportunities’ pointed towards exciting times ahead, as the planning sector responds to an array of new challenges in a rapidly changing market-place. As part of Lichfields’ 60^th anniversary celebrations, he prefaced a series of blogs to follow on from his crystal balling, that examine prospects in different parts of the property market. As leader of Lichfields’ infrastructure offer, the blog baton has quickly passed to me.  

You might think an infrastructure-themed blog would naturally focus on planes, trains…. and energy, perhaps showcasing Lichfields’ myriad of work in these pub-profile projects. But ‘infrastructure’ as a sector extends further than those schemes that get a minute on the 10 o’clock news just before the funnies. A sector that is central to the successful operation of UK plc, underpinning pretty much all economic activity is worthy of inclusion within the increasingly fashionable infrastructure sector. I’m talking about logistics: the facilitator of economic growth; the protector of our cost of living; and a key to the UK’s economic competitiveness.  

The status of the HGV driver in public perception has never been higher. Critical workers certainly, and whilst perhaps the highest-profiled evidence of their important role incorrectly focusses on toilet rolls (a shortage brought about by panic buying rather than any collapse of the distribution chain), Government has stepped in to ensure our planning friends correctly give weight to driver’s needs.

The warehouse buildings which they serve also deserve a higher profile in planning decisions. I recall that one of my first inquiries was focussed on a local authority’s attempt to secure delivery of a ‘sustainable business park’, which in policy terms translated to a simple ban on warehouse and logistics development. That warehousing could actually positively contributing towards a sustainable way of living was at the time a nuance completely ignored, and we were faced with the familiar task of justifying (ultimately successfully) that the job creation ratio for B8 development was still sufficient to justify the development.   

Disappointedly, this prejudice against B8 in the planning system, despite the helpful additions to the NPPF (paragraph 83), continues today in some parts of the country. Only last year, I witnessed an authority happily reject the principle of B8 allocations in its Local Plan, despite an evidenced and unchallenged need for more space, on the grounds that there was ‘not enough room to accommodate it’. Instead we see a penchant for ego-massaging glass-clad business parks, offering promises of high job ratios, global HQs and national recognition. All this is marvellous, but tends to rely on such allocations being successfully built out and occupied by the blue chips they are designed to attract. Plus this rather ignores the attractive job creation characteristics of the distribution sector and the range of opportunities available therein, often well-suited to local social economic demographics. It also ignores the acute need for more strategic warehousing.

Much is made of the ‘perfect storm’ in logistics, referencing how we are all now shopping; the desire of business to increase on-shore stock v’s just in time demand, and the combined impacts of Brexit, Covid and the Ever Given at Suez. Whilst the relative importance of each of these factors is open for debate, the combined implication is less so –there is strong demand for new warehouse space across the UK. Thankfully, we are seeing a growing recognition within planning decisions that a failure to provide for this demand will have significant economic implications - not just toilet rolls, but on the Country’s ability to function sustainably and efficiently. Each planning appeal decision, of course, is subject to its own unique set of circumstances but the increased weight given to meeting demand for B8 floorspace is very welcomed. Hopefully the days of dismissing B8 as the ‘inferior’ and unwanted employment use have passed.  

History does have a tendency to repeat itself. Working on a new data centre proposal, I overheard Members discussing the relative merits of the new 100MW facility, noting support for every aspect of the scheme, other than the fact it was a data centre. A familiar land use prejudice and perhaps understandable when presented with simple job creation characteristics of this new type of infrastructure proposal. The wider role of data centre development in the efficient and successful operation of UK plc is a challenging story to relay, not helped by an ignorance of what they actually are, and how we all benefit from their provision. Challenging colleagues to give me an appreciation of what a data centre actually is rarely elicits a response beyond “buildings that store data”.

In truth, they have an increasingly important role in supporting pretty much everything we do online.  Data centres are responsible for data backup and recovery, as well as networking, hosting websites, managing e-mails and instant messaging services. They support cloud storage applications and e-commerce transactions. Even the apparent insatiable appetite for online gaming (witnessed first-hand in my household) relies on the presence of data centres. They are essential for the individual, for business, for Government; for cities and for countries. How this critical economic role can be accurately quantified to appropriately influence planning decisions is what is (almost) keeping me up at night.

As a starting point, it would be helpful to see some specific policy guidance on the need to support data centre development. We enjoy the positive recognition provided to high technology industries in the NPPF (para 83) noting that as above, this same paragraph gives a ‘leg up’ to the distribution sector, but alas such is the scope of this description, it remains of questionable value and often limited weight to data centre promoters.  We need to get to a position where there is recognition in policy that data centres are good things, playing an essential role in supporting the economy. Until this is in place, we will struggle against those who focus an assessment of a scheme’s virtues with reference to simple job numbers.  We have been there before and as a consequence, we are faced with an a shortage of strategic distribution development opportunities. We really can’t afford to let the data centre become the next shed, dismissed as someone else’s problem, pushed aside for traditional employment uses that promise more locally, but deliver far less to a successfully operating economy.

Image credit: Brett Sayles via Pexels

With our return to office-working back in full swing we can embark on celebrating our 60^th anniversary with clients and staff in-person, and look forward to the opportunities that lie ahead for our clients in the aftermath of the pandemic. Off the back of record turnover last year, we have increased capacity in the business in anticipation of the strong demand for our planning and development services continuing throughout 2022.

As planners we are faced with responding to the rapid pace of change – climate, health and wellbeing, geo-political and economic – while planning reform flounders and the levelling-up agenda flatters to deceive (see our analysis). This blog is the first in a series examining prospects in different parts of the property market as we continue to shape our business around our clients’ needs, informed by our own thought-leadership agenda.

BlackRock’s Larry Fink writes an annual letter providing an insight into the perspective of the world’s largest asset manager. Others, such as Aviva do the same, and some common themes emerge relevant to those investing in or involved with property. Fink states that over the last four decades that there has been an explosion in available capital and that banks are no longer the gatekeepers to funding. This is evident now in our work as latent demand for good quality assets has seen a massive increase in our due diligence work, emerging from fund managers, developers and state-funded institutions. Irrespective of Brexit the UK is a safe haven for investment in land and property. More generally, the availability of capital and diversity of the market continues to fuel development activity and should help see us through a period of rising inflation, and higher interest rates, without momentum being lost.

But the availability of funds is conditional on a commitment to good stewardship, as Aviva puts it; or in Fink’s more straightforward language, “…..access to capital is not a right. It is a privilege.” Central to where investment will (and won’t) flow now and in the future is a need to be able to demonstrate a genuine commitment to Net Zero Carbon (NZC), dealing with the effects of climate change and bio-diversity gain. There hasn’t been a time, since the World War II, when planning has been so key to the future of the UK land and property sector; at this point to assist the transition to a NZC future and help our clients deliver a lot more new homes. In order to do that planning reform has to look beyond the horizon of the next General Election and genuinely simplify the system to help speed up innovation and investment in new buildings; whilst pushing a bolder NZC and bio-diversity policy agenda with the backbone of Science Based Targets (SBT). Rapid digitisation will be central to the success of this (and that’s on its way soon); alongside investment in more human resources, not less. Moreover, the Government must recognise the pivotal role of planning in dealing with the effects of climate change and delivering the development needs of the Country; while not referring to it in the derogatory terms that it has too often become accustomed to.

For our part we are on our pathway to NZC by 2030, underpinned by SBT, and we have just launched our Environmental, Social and Governance web resources Lichfields | Giving more to demonstrate our corporate social responsibility to those that wish to employ our services or partner with us. We are adapting to the ‘new normal’ of blended working, informed by the outcome of our own research report undertaken with Savanta, commissioned by Barratt, one of our leading clients Working from home: Planning for the new normal?. The welfare focus that was central to Nathaniel Lichfield’s philosophy in the early years of our business is now reflected in the success of our Wellbeing Team and the investment we make in our learning and development programme.

The future is strong and bright for those making their first steps into planning. Come and join us, it’s such a fulfilling profession and there are countless opportunities across the whole of the UK, ranging from consultancies like us to housebuilders, infrastructure providers and local planning authorities. The next exciting and unpredictable 60 years demand perception and foresight. We look forward to working with vision and discernment for our existing clients and to forging fruitful relationships with new partners during the rest of this year and beyond; and it's down to me to thank all of you, on behalf of everyone at Lichfields, who have supported us as clients, associated consultants, and former staff members, thus far on our incredible journey.

Following the approval of The Control Area Regulations in February 2021, which permits local authorities to establish short-term let control areas, the Scottish Government has approved The Licensing of Short-term Let 2022 Order which will allow local authorities to set up short-term let licensing schemes. This legislation is the next step in managing short-term lets in the country.

The approval of the licensing scheme means that local authorities will be required to establish a short-term let licensing scheme by October 2022. Existing hosts and operators will have until 1 April 2023 to apply for a licence for each property that they operate as a short-term let. All short-term lets in Scotland will have to be licensed by 1 July 2024. On or after 1 April 2024 operating without a licence is unlawful in all cases and those hosts should not be taking bookings.

Where a short-let property is located in a short-term let control area, such as the proposed control area for the whole of the Edinburgh council area, a condition of obtaining a short-term let licence will be proof of planning permission. The licence application will be refused where a property that requires planning permission does not have it. The licence scheme will be a separate process to the planning system and regulations, but they are ultimately entwined in short-term let control areas.

Outside of short-term let areas, a council still has the authority to judge applications on a case-by-case basis meaning they can decide if a change of use of a dwelling house is material and therefore requires planning permission.

Any short-term let licence granted by the Council is subject to mandatory conditions set out in Schedule 3 of the Order, which includes conditions on fire, gas and electrical safety. In addition, the Council has the authority to apply its own standard conditions to all licences granted or specific conditions on any particular licence.

This legislation is a response to ongoing concerns raised by residents and communities about the impact of short-term let properties in their area which include impact on housing supply, affordability, noise and antisocial behaviour. It is also about ensuring that short-term lets are safe and the people providing them are suitable hosts.

If you are the owner of properties that you let out short-term within a proposed short-term let area now is the time to consider applying for planning permission. Without planning permission you won’t be able to gain a licence and you then won’t be able to operate.

If you wish us to make a planning application on your behalf or are looking for planning advice regarding short-term let properties, please get in touch with our Edinburgh office.

 

The Levelling Up the UK White Paper, published on 2 February, describes the practical steps the Government will take that “will make this a better, fairer country for us all", according to the Prime Minister's foreword.

The White Paper is not a consultation exercise; it is a series of missions against which the Government is to be measured, albeit the Levelling Up Minister said, in a written answer, that the Government intends to “continue to engage with a wide range of stakeholders and partners".    

Edward Clarke's blog considers what the Levelling Up White Paper's missions mean for the development industry.  

In terms of future changes to the planning system specifically, there are several statements that show the elements of planning reform that are still favoured and provide hints on timescales for announcements, which we set out below.

 

The Chief Planner identified what she considers to be the key planning changes highlighted in the White Paper, in her February 2022 Planning Newsletter:

• “The simplification of local plans ensuring they are transparent and easier to engage with
  
  
• The consideration of new models for a new infrastructure levy
  
  
• A number of policies and powers to enable planning to better support town centre regeneration
  
  
• Improving democracy and engagement in planning decisions
  
  
• Supporting environmental protection through planning”

The Planning Newsletter said that there will be further updates on changes to the planning system “in the Spring", albeit a day earlier the Net Zero Minister’s response to a written answer asking when a Planning Bill would be published was much less specific, and reflected the White Paper:

The anticipated Levelling Up and Regeneration Bill, which will contain whatever changes to the planning system/reform that require primary legislation, is not mentioned in the White Paper.

Planning-related matters and proposals are presented under the overarching mission 3.4 “Restore a Sense of Community, Local Pride and Belonging”. And then under two White Paper missions shorthanded “Pride of place” (which includes heritage) and “housing” (missions 9 and 10 respectively). The technical annex to the White Paper explains that the metrics for measuring success against both are in their infancy.

Regeneration is one of three strands of the pride of place mission, the other being communities, culture, heritage and sport. The regeneration policy programme is focused on transformational projects (e.g. projects identified for Wolverhampton and Sheffield), high street rejuvenation and green spaces. The housing mission includes sub-missions of home-ownership and housing quality and planning reform – albeit changes to the planning system fall under other missions too.

The High Street rejuvenation’s section celebrates recently introduced permitted development rights, business rates relief and the High Streets Task Force.

The White Paper refers to the intentions to “incentivise landlords to fill vacant units by giving local authorities the power to require landlords to rent out vacant properties to prospective tenants. This will tackle both supply and demand side issues to avoid high levels of high street vacancies and blight, and in turn increase the attractiveness and vitality of our high streets”.

During the Oral Statement introducing the White Paper, the Levelling Up Secretary (SoS) said that this proposal builds on work by Jonathan Gullis MP. Jonathan Gullis has campaigned in Parliament for buildings not to be allowed to fall into disrepair. He is the sponsor of the Planning (Proper Maintenance of Land) Bill Private Members' Bill. This may provide clarificatory context when considering how far reaching the powers of the LA might be and when they should be used. Having said that, measures could of course go much further and might apply to all properties in a given location, rather than to certain use classes, although a wide variety of potential tenants might be put forward by the LA for Class E properties, given its breadth.

On a larger scale:

A key part of regeneration proposals is ‘refocusing’ Homes England so that it uses its statutory powers to partner with local leaders and to unlock barriers – which links to proposed changes to CPO powers.

Green Belt is to be enhanced and maintained - with “further greening the Green Belt in England".

Other plans for “green" spaces generally include bringing wildlife back, aimed at increasing public access while simultaneously delivering nature recovery; and securing further environmental improvements.

The greening of Green Belt may be linked to repeated criticism that the Green Belt isn’t green. Support is not given to the principle behind a Private Members' Green Belt Protection Bill, which is to require local planning authorities to allocate new Green Belt land of the same size when removing Green Belt land; such a decision is still considered a local matter.

This sub-mission pulls together various proposals that are intended to have a more localised role in the future, whether this is put forward in the White Paper or elsewhere.

In this section there are also references to a review of neighbourhood governance, pilots of new models for community partnership and testing the proposed Community Covenants, which lead to an identified role for planning within Mission 9:

The 'encouragement' of hybrid models for planning committees - but not expressly committing to legislate for them - is noteworthy and comes ahead of publication of the call for evidence or response to it. Support for virtual committees had been expressed by the SoS but not confirmed by the Government.

A proposed UK Strategy for Community Spaces and Relationships would link to planning policy (UK-wide) in due course. Notably this, the third of four guiding principles of the Strategy, would be:

Neighbourhood planning hasn’t been front and centre for some time. Its mention in the White Paper comes alongside funding for pilot schemes to fund neighbourhood planning in deprived and urban areas or areas piloting a simpler approach to neighbourhood planning. There has also been confirmation from the (then) Housing Minister that “we are committed to retaining neighbourhood planning as an important part of the planning system, and we will set out our proposed way forward shortly”.

The White Paper confirms that there will be neighbourhood portion to the new Levy, reconfirming that a new Levy is on the way and suggesting that the legislation behind it is likely to be similar to the much-tweaked existing CIL Regulations. According to the White Paper, the ways in which CIL can be spent locally will be explored while a new Infrastructure Levy is developed.  The Government is to “explore how the existing Community Infrastructure Levy (CIL) can be used to support neighbourhood and community activity where Parish Councils do not exist across England”.

In the planning reform section, it is made clear that the new Levy is intended to increase land value capture and that affordable housing is to be provided via the Levy:

The policy programme for home-ownership and housing quality form part of the housing mission: a. making home-ownership a reality; b. improving housing quality; and c. reforming the planning system.

That planning reform sits under the White Paper mission devoted to home-ownership and housing standards, is interesting in itself, given continued criticism that planning equals housing in the Government’s eyes:

The mission discusses the wider benefits of housebuilding, including removing constraints of productivity by allowing labour mobility, restoring a sense of community, having a stake in society through home-ownership.

The rhetoric is therefore on a housing system that works for everyone, rather than a planning system – which is recognised as being an element of the housing system objective.

There is a continued reference to housing availability and the demand for/push towards home-ownership, hence a reference to First Homes.

An important housing quality announcement is that there will be a Government appointed task force “launched shortly to look at ways better choice, quality and security of housing for older people can be provided, including how to address regional disparities in supply of appropriate and where necessary specialised housing".

There is an acknowledgement that falling access to home-ownership and social housing has resulted in a doubling in the size of the Private Rented Sector over the past two decades and that many are in temporary accommodation. In February, Tom Walker, one of the authors of the White Paper told Local Government Chronicle (£) that there will be a Private Rented Sector White Paper in June, which may be relevant to planning, given this mission.

There are references to planning and CPO powers beyond housing, and while the section quoted below is a bit of a round-up of planning related proposals not covered elsewhere in the White Paper, the intention to set a more positive approach to employment land in national policy is encouraging.

While the Government is insistent that the south east will not be levelled down, there are references to diverting funds away from the south east and measuring successful delivery of missions by measuring against the south east.

The White Paper says “UK Government investment in housing has been concentrated in areas where the private sector has already been investing most heavily, disadvantaging the North and Midlands”.

With regard to making home-ownership a reality, funds already announced are to predominantly deliver housing outside of London/South East, where housing pressure is among the greatest. The majority of homes to be delivered via the £1.8bn brownfield land fund will be targeted on brownfield sites outside London and the South East. The £11.5bn Affordable Homes Programme will deliver up to 180,000 affordable homes, with 75% of these delivered outside London.

While this says where investment is going, the intention that there will be a related outcome beyond funding allocations is there too. With reference to the Building Better, Building Beautiful Commission’s recommendations and communities to be developed in the future:

Many in the development sector have raised concerns that levelling up will mean a levelling down of areas with significant housing pressure. The Government has repeatedly sought to emphasise that this is not the case.

And in November the SoS said in response to Theresa Villiers' request to “halt urbanisation and save the suburbs" that the way housing need is assessed needs to be updated and “every part of England—indeed, every part of the United Kingdom—will have to share in making sure that we can meet the housing needs of the next generation, but we are seeking to achieve a fairer and more equitable distribution of need across the country.

In a January debate housing on housing and North Kent, the (then) Housing Minister reminded the House “housing need numbers, as calculated, are a starting point, not an end point" and, as such, housing numbers are decided locally. He indicated that the current standard method was devised to reflect the circumstances of the time: “We took a view a couple of years ago that, particularly given the pandemic, local authorities needed consistency and certainty, so we chose not to change the local housing need calculations for all but the 20 largest cities in our country".

A further revised standard method formula continues to be anticipated by developers and local planning authorities.

In the same debate, the Housing Minister indicated that the Government would still look at concerns around land banking, notwithstanding the outcome of the Letwin Review:

And in a later written answer said “where delays in starting or progressing sites may be avoidable and the Government wants to empower authorities with the tools to respond to such cases”.

November 2021 Lichfields research for the Land Promoters and Developers Federation and the Home Builders Federation explored the extent to which the house building sector must scale-up their delivery to achieve the national 300,000 homes per annum ambition. It found the equivalent of English LPAs granting permission for an extra 4 to 5 medium sized sites per year, or alternatively 4 to 5 large sites which deliver each year over a longer period, would be necessary - in addition to LPAs continuing to approve its usual ambient level of permissions being granted.

A Lichfields research piece for Barratt has found “existing housing mix policies will be based on evidence that pre-dates the pandemic and thus is unlikely to reflect the changing way in which people will now occupy their homes. This shift makes it more likely that the LPA’s review should conclude that the local plan must be updated to revise policies on housing mix, including to support provision of homes that are suited to working from home".