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Permitted development: further flex for urban and rural sites

Permitted development: further flex for urban and rural sites

Sean Farrissey, Amy Lomath & Jennie Baker 26 Jul 2023
The Government has launched a further permitted development right (PDR) consultation.
The current, lengthy consultation of 16,000 words covers:
  
This blog does not discuss the proposals for agriculture related PDRs which are numerous and might, at least in part, be dubbed Clarkson’s clauses; following on from the cutting red tape proposals announced after the UK Farm to Fork summit at 10 Downing Street. These PDRs were announced at the summit and trailed again in June’s Unleashing rural opportunity. They seek to respond to perceived rural economy planning barriers, including those presented as in the television programme Clarkson’s Farm. See Dan Lampard’s blog for more analysis of a recent planning appeal at that site.
 

Design Codes – Prior Approval

The consultation sets out proposals that would introduce compliance with design codes as a prior approval consideration for certain types of permitted development, where they have been locally adopted. Local design codes could replace the current design and external appearance considerations within prior approvals so that schemes could be assessed to determine whether they meet the local design code requirements rather than referring to national policy. The rationale behind this is to reduce uncertainty when assessing the design of applications and to reduce variation in the interpretation of design criteria.
The idea of regulating the use of design codes for assessing prior approval applications is not new. The ‘Planning for the Future: planning policy changes in England in 2020 and future reforms’  White Paper proposed a fast track for beauty and said:
[..] we also propose to legislate to widen and change the nature of permitted development, so that it enables popular and replicable forms of development to be approved easily and quickly, helping to support ‘gentle intensification’ of our towns and cities, but in accordance with important design principles.
The proposals brought forward in this consultation reflect the ideas initially proposed in the White Paper. It appears that local planning authorities who do not have an adopted design code will continue to look to national policy. Will the PDR schemes that require consideration of design come under more or less scrutiny in the absence of a design code? The level of detail required for submission could also vary depending on the requirements set out in a design code which would (quite deliberately) lead to inconsistencies across LPAs. The proposals will be welcomed by developers if they improve efficiency and consistency in the decision-making process, but it seems unlikely that this will be the case.
 

Changes to Town Centre and Commercial PDRs

Fawlty towers to healthy homes?
The Government is proposing to allow the change of use of hotels, boarding houses or guest houses (in the C1 Hotels use class) to dwellinghouses through permitted development rights. It is proposed in this consultation that this could either be achieved through an expansion to the Commercial, Business and Service uses to dwellinghouse PDR (Class MA of Part 3) or through the creation of a new right. It is noteworthy that that the former option has been proposed, as hotel uses (C1) do not fall under the commercial, business and service definition.
It is acknowledged in the consultation that hotels and guest houses play an important role in the tourism industry, helping to stimulate economic activity and drive footfall in their localities. However, the Government argues that in areas of high housing need, these buildings may better serve their local communities if repurposed as housing.
The Government is already reviewing the ease with which dwellings can become tourist accommodation and consulted on the creation of a new use class for short term lets in April earlier this year – see Alexandra Gavin’s blog
This consultation poses the question of whether there are any safeguards or specific matters that should be considered for this new PDR. In order to offset this potential impact on local tourism, it is proposed as part of this consultation to allow for local consideration of the impacts the change of use could have on the local tourism economy. It may also be the case that a “different” size limit on the amount of floorspace changing use should apply (presumably this refers to the option to expand the Class MA of Part 3 right, as no floorspace limit for this new right is found within the consultation).
The homes created under the new right would then be limited to use as a C3 dwellinghouse, and would not benefit from PDRs to change use to a small House in Multiple Occupation, or to the proposed use class for short term lets.
This move tallies with the overall aspirations of the Government to drive development within existing centres via densification and brownfield sites, rather than building outwards.
This proposed C1 to C3 PDR raises the question of the type of accommodation that would be provided as a result; the typical layout and facilities offered within many hotel buildings is reminiscent of a co-living or Purpose-Built Student Accommodation offer. Although, with many facilities already in place, such as communal areas and large kitchens, this may present a more viable option for retrofitting existing spaces than other commercial buildings.
The reuse of hotels for residential use may make some contribution to housing supply and regenerate some sites in town centres (and elsewhere) but it is unlikely to be significant or that wouldn’t have happened anyway. Nevertheless, it should be generally welcomed, subject to the concerns over quality that will inevitably follow.
The Government will need to strike a balance between protecting and supporting the local visitor economy whilst promoting the availability and affordability of housing stock and the vitality of local communities.
 
Amendments to Class MA – a total eclipse of the PDR heart?
The Government is asking whether significant changes should be made to the commercial to residential (Class MA) PDR.
The current Class MA permitted development right is detailed in this blog New Class MA - Mercantile to Abode: a slightly reined in Class E commercial to residential PDR from August 2021.
Class MA was one of the proposals that responded to the need for amendments to permitted development rights, following the September 2020 abolition of use classes A1-A5, B1, D1 and D2, the introduction of new classes E, F.1 and F.2 and the movement of further uses outside of a use class (sui generis). The class MA PDR was consulted on from 3 December 2020 to 28 January 2021: “Supporting housing delivery and public service infrastructure” (‘the December 2020 consultation’).
All of the Class MA proposals that form part of this current consultation, had been either rejected or introduced as an outcome of that 2020 consultation (see Table 1 below).
The current consultation asks whether Class MA PD right should:
 
  • Have no floorspace cap, limit it to 3000sqm, or retain it at 1,500sqm?
     
  • Have no period of vacancy required prior to the prior approval application being submitted?
     
  • Apply on all Article 2(3) land[1] (e.g. conservation areas) but not World Heritage Sites?
     
  • Require consideration of the “character or sustainability of the conservation area” for ground floor level proposals
 
It is interesting that the Government is revisiting these matters, perhaps to explore whether fears have been realised, or whether there is in fact scope to provide more flexibility.
The vacancy requirement arose from public consultation responses to the 2020 consultation. The Government says that it would like to remove this requirement, because: “The existing permitted development right requires that the premises be vacant for a continuous period of at least 3 months immediately prior to the date of the application for prior approval. This was introduced to safeguard against businesses being displaced. However, we believe the requirement may be ineffective and could result in property being left vacant for longer periods. In order to provide greater flexibility for owners, enable more premises to change use, and therefore to deliver additional homes, it is proposed that this vacancy requirement is removed”.
Where a proposal lies in a conservation area and involves a change of use of the whole or part of the ground floor, Class MA prior approval applications are subject to an additional matter. The decision maker must consider the “character or sustainability of the conservation area”. The Government would like to remove this matter, noting that it is unique to this PDR and does not relate to the consideration of physical works. This logical argument was made in 2020, but rejected. Perhaps because there was simply too much change perceived to be happening at once and fear surrounding the successful implementation of local plan policy following the introduction of Class E and a new wide ranging permitted development right? Fear which might has rescinded or must be looked past in order to encourage re-use of buildings.
World Heritage Sites, are sometimes designated for reasons connected to their use, so their exclusion from the PDR is as logical as the inclusion of conservation areas.
The Government is alive to the potential impact of these Class MA amendments and is asking if they might affect businesses, local planning authorities and/or communities. Critically, the consultation also asks “Do you think that changes to Class MA will lead to the delivery of new homes that would not have been brought forward under a planning application?”. This nods to the complexity of this type of prior approval application and to the complexity of planning applications and the obligations arising from the permissions that follow. Are Class MA PDRs simply providing an alternative way through an onerous system, rather than simply ensuring that development with few or no impacts can proceed easily? For the experts it will be the latter, and for others they will need to employ an expert to advise them on what their options are.
Table 1 comparison of December 2020 and July 2023 PDR consultation questions
 

Expansion of PD for sui generis shops and services to residential

A smaller slice of PD for uses outside of Class E?
PDRs that allow change of use from betting office, pay day loan shop, hot food take-away/pay day loan shop/betting office/launderette/amusement arcade or a casino to residential PDRs are currently capped at 150sqm of conversion floorspace. This may mean that only part of the available floorspace may be converted without express planning permission via these Class M/N PDRs.
The Government proposes to double this to floorspace limit to 300sqm or to remove the cap altogether.
It is also proposed that instead of requiring buildings to have been in the relevant use from dates many years ago, when each PDR was announced, there would be a rolling requirement for the building to fall within the given use during the two years before seeking approval for conversion.
Furthermore, Class M and N PDRs are to be permitted on all Article 2(3) land except World Heritage Sites, as with Class MA PDRs.
 
 
Scrubbing away the launderette to residential PDR
In 2015, Lichfields questioned the wisdom behind then proposed launderette to residential PDR. Noting that launderettes are already in decline, converted launderettes would create small dwellings, not everyone owns a washing machine and perhaps most critically, it would make a negligible contribution to meeting housing needs, with potentially adverse consequences.
Seven years after its introduction, the Government has concluded:
“Launderettes can provide a valuable community service in certain areas”.
Accordingly, this PDR is to be repealed.
  
More time for markets?
PDRs allow for the temporary use of land for any purpose for up to 28 days per calendar year, of which up to 14 days can be used for markets, motor car and motorcycle racing (under Class B of Part 4 of the GPDO). Views are being sought on whether this is amended so that markets can operate for a different number of days, potentially 28 days per calendar year, which would bring it in line with other uses permitted under this PDR. Temporary use for motor car and motorcycle racing would remain limited to 14 days. This tidying up exercise seems sensible.
 

Extensions to non-residential buildings

Commercial Business and Service use extensions
PDRs permit the extension or alteration to a Commercial, Business and Service establishment, under Part 7 Class A of the General Permitted Development Order (GPDO). Currently, the gross floorspace of the original building cannot increase by 50% or 100 square metres (whichever is less). The consultation proposes providing greater flexibility, so that the current floorspace limit of extensions or alterations is increased from 50% or 100 square metres of floorspace (whichever is less) to 100% or 200 square metres of floorspace (whichever is less). The floorspace thresholds for extensions or alterations on article 2(3) land or a site of special scientific interest will be retained. 
 
Industrial and warehousing extensions
Presently, PDRs (Part 7, Class H of the GPDO) allow for the erection, extension or alteration of an industrial building (Use Class B2) or warehouse (Use Class B8). The consultation proposes that the current floorspace threshold of new buildings permitted under the right in non-protected areas should be increased from 200 square metres to 400 square metres (other limitations remain). These changes would not apply to new buildings on article 2(3) land or a site of special scientific interest. 
It is also being proposed to increase the floorspace threshold for existing warehouses and industrial buildings. In non-protected areas it is proposed to increase floorspace thresholds from 1,000 square metres of floorspace or a 50% increase over the original building (whichever is less) to 1,500 square metres of floorspace or a 75% increase over the original building (whichever is less). Once again these changes would not apply to buildings on article 2(3) land or a site of special scientific interest and height restrictions and other limitations remain.
 
Open prisons to benefit from closed prison PDRs
Part 7 Class M of the GPDO allows for certain “extensions etc for schools, colleges, universities and hospitals”. This was amended in 2021 to increase the threshold for the amount of new floorspace permitted and to change the height limitation, while also allowing closed prisons to benefit from the right, alongside education providers and hospitals.
Since 2021, buildings benefiting from Part 7 Class M have been allowed to expand their facilities significantly - by up to 25% of the footprint of the current buildings on the site, or by up to 250 square metres, whichever is the greater. See this Planning Matters blog for more detail.
The proposed changes in this consultation would see Part 7 Class M apply to open prisons as well as prisons with a closed perimeter. It is not proposed to make any changes to the existing limitations.
 

A nature-based solutions PDR?

Within the consultation there is a call for evidence by the Department for Environment, Food and Rural Affairs (DEFRA), regarding nature-based solutions, farm efficiency projects, and diversification.
Of interest beyond the agricultural sector is the discussion regarding some nature-based solutions need planning permission. Nature based solutions include projects seeking to use, manage, change or restore an area of land to address environmental issues, such as nutrient pollution, flooding, climate change or biodiversity loss. It is noted that use of land for agriculture or forestry does not require planning permission, but associated works, such a flattening the land might. In this context the consultation says:
“Some planning decisions have considered that changes in land use from agriculture to non-agricultural landscapes (such as peatland restoration, sand dune reprofiling and the creation of wetland habitats) have constituted a material change of use that requires planning permission”.
Acknowledging PDRs do not apply to EIA development or development requiring Habitat Regulations assessment, the call for evidence asks, among other things:
“Q.69 Would a specific and focused permitted development right expedite or resolve a specific delivery challenge for nutrient mitigation schemes?
Q.70 Please provide specific case studies (including planning reference numbers where available) which can help us understand what issues farmers and land managers are facing in relation to nature-based solutions.
Q.71 Would these issues be resolved by amending planning practice guidance or permitted development rights, or any other solutions?
Q.74 Do you foresee any unintended negative consequences that may result from more nature-based solutions coming forward (e.g., impacts to other species, flood risk, wildfire risk, risk to public safety, releasing contaminants from contaminated land or hydrology etc.)? How could these be avoided?”
It is encouraging that DEFRA is seeking to smooth the way for nature based solutions, in order that development relying on their implementation can proceed swiftly.
 

Closing thoughts

This is a wide-ranging consultation and, from a town centres perspective, little trailed.
The revisiting of concerns raised in the past to see if they remain valid is positive provided the Government truly engages with the responses. It is of interest that the questions seek to understand the perspective of the consultation respondent.
The repealing of the launderette to residential PDR and the proposed changes to (encouragement of) other high street PDRs shows the Government turning the PDR taps on and off, or setting them at half flow, trying to balance the planning and associated political impact of the PDRs vs planning permission conundrum, while still being seen to be cutting red tape. Given the relatively limited advantage of the prior approval route to applicants, in some cases due to numerous prior approval matters, it is interesting that this consultation is still trying to get it right. With so many uncertainties around timescales for the determination of planning applications, and the numerous submission requirements to be met, perhaps the background to these new PD proposals lies as much in an acknowledgement of the complexity and risk of planning applications, as it does in a view that there are insufficient planning freedoms to allow the delivery of much needed homes?
The same questions will flow from this consultation as from the last, such as how do the planning obligations, such as affordable housing, apply to large scale conversions?
The Government has asked the key question itself “Do you think that changes to Class MA will lead to the delivery of new homes that would not have been brought forward under a planning application?” And it has anticipated concerns that will inevitably follow about the quality of some of what is provided.
The acknowledgement of the need to support nature-based solutions is good news.
The permitted development rights consultation will run until 25 September 2023
 

[1] Article 2(3) land is defined as conservation areas, areas of outstanding natural beauty, areas designated under s.41(3) Wildlife and Countryside Act 1981, National Parks, the Broads and World Heritage Sites are Article 2(3) land.

 

 

CONTINUE READING

Long-anticipated plan-making reforms were launched by Government in the early hours of 25 July, for public consultation (running for 12 weeks until the 18th October). The consultation sets out its ‘direction of travel’ and how the Government proposes to re-shape the system in light of the legislative changes in the Levelling Up and Regeneration Bill (LURB). It also comes hot on the heels of a somewhat negative report from the LUCH Select Committee which criticised various aspects of the planning reform proposals[1].
The central vision for reformed plan-making is for simpler plans, prepared quickly, updated frequently and reflective of local needs. The Government envisages a phased roll out, with the new local plans system commencing in November 2024 and sticking to the timescale it announced in December 2022[2], even though the parliamentary timetable is running some months behind schedule.
Much of the announcement relates to recent consultations on the Environmental Outcome Reports; Infrastructure Levy; LURB reforms to national planning policy[3] (Dec 22) and the May 2022 Policy Statement on LURB[4].
 

What is being Consulted on?

The consultation covers the following proposals: 
 
     
 

Making the role and content of plans clearer:

  • A clearer set of expectations for what a local plan must contain.
     
  • National development management policies will be re-consulted on but remain key to focussing local plan content to local issues only.
 
     
     
 

Speeding up the process for preparing a plan:

  • A timeframe of 30 months (two and half years) to prepare and put in place (adopt) a plan. 
     
  • Three new Gateway assessments to provide live assessments and support and reduce time spent at examination. 
     
  • A requirement for planning authorities to start updating their plans every five years.  
 
     
     
 

Ensuring local communities are engaged:

  • Additional to the existing two periods of public consultation, a new requirement for planning authorities to “notify” and “invite” early participation on matters that might shape the direction of the plan, to ensure that communities and other key stakeholders are able to participate much earlier in the process.
 
     
     
 

Dealing with complexity:

  • The proposals aim in sum to add clarity about what is expected at every stage of the plan making process and to reduce repetition through the development management policies.
 
     
     
 

Making the most of digital technology:

  • In keeping with the ongoing commitment to digital transformation, digital technology is highlighted as a way to speed up the production of plans and consultation and make the process simpler and more accessible.
 
     
 
 

Are changes needed?

In short, yes, these proposals arrive with plan making at a particularly low ebb.
The hiatus that began in 2020 with the publication of the Planning for the Future White Paper[5] continues; the rate at which local plans were submitted or adopted last year fell to its lowest level since the NPPF was introduced (see charts below). Scores of Local Plans have been put on hold, particularly following the December 2022 Ministerial Statement[6].

Coverage of ‘up-to-date’ Local Plans is low and declining. Recent Lichfields analysis (on behalf of the LPDF) shows that, in July 2023, just a third (33%) of Local Plans were ‘up to date’ and less than five years old[7]. The consultation itself acknowledges “few [local authorities] are at an advanced stage of preparing a new one”. Under prevailing trends, we estimate it will fall to just 22% by the end of 2025 under the current situation.
A plan-led approach to house building relies on sites being allocated in local plans. Currently, the aggregate annual housing requirement figure (so-called targets) across all adopted local plans in England is circa 224,000[8], well short of the Government’s 300,000 ambition, but remarkably similar to the number of homes built each year[9]. Instead of rising to meet this figure, recent trends have started to show a fall in the number of planning permissions granted for residential development.
The Government has set a 30-month timeframe for preparing and adopting a local plan or minerals and waste plan . In practice, taking into account six months for examination and one month to adopt – this becomes 23-months. A new local plan timetable (to replace Local Development Schemes) formalises the path to an adopted local plan. Helpfully for local authorities, a scoping period before the “clock starts” could provide some wriggle room to what is a challenging timeline.
The consultation includes proposals for a set of revised tests of soundness; gateway assessments during plan-making; examinations; community engagement and monitoring. There is also a recognition of the growing importance of supplementary plans, setting out their appropriateness (e.g. bringing in a design code), rather than sometimes being used to adapt local plans.
Community land auctions are also discussed with the process for pilot authorities set out, including the potential financial benefits to the Council from these auctions - we will be revisiting this area in further research.
Revisions to the test for soundness are intended to reduce the amount of evidence required to develop a plan and defend it at examination, but still ensure high quality plans are delivered. This would be done through (a) increasing the standardisation of key evidence and data, (b) freezing data or evidence at particular points of plan making, (c) streamlining new style plans to focus on local issues, and (d) support on building the evidence base through new formalised gateway assessments.
Three formal Gateway Assessments at the beginning, middle and end of the process for preparing a plan, are proposed to support plan preparation and help identify issues in local plan evidence bases before examination. Additionally, a timetable of plan development will be introduced to be updated every six months and publicly available. There is also a ‘light touch annual return’ monitoring process, as a minimal version of an annual monitoring report.
A six-month target for examinations of local plans is set out; however, acknowledging that this could impede on thoroughness in the most complex of examinations, this is advisory and not set out in regulations.
The changes proposed also aim to increase community engagement opportunities without slowing down plan making through using more digital opportunities, greater monitoring (through the gateway assessments and timelines) and a more standardised approach to consultations (defining the role more closely for the two mandatory consultation windows).
A key theme of the changes envisaged to help quicken plan-making is reform through digitalisation (a task with which Lichfields is providing assistance to DLUHC), but this runs alongside a more fundamental overhaul of key elements and processes involved in plan making.
 

Will these changes make the difference needed?

In sum, the Government seeks a more streamlined, standardised approach to plan making with clear timelines and reporting against milestones and outcomes to keep things on track. Supporting this objective is the aim of reducing the scope of local plans, as discussed, including by introducing national development management policies, as previously announced.
While the stages that a planning authority has to go through will be set out in regulations (Reg 18 and 19 to be replaced with new stages), the requirement to achieve it in 30 months will only be in policy and guidance, not the regulations.
Lichfields’ assessment of local plan completion timelines found that some local authorities have managed to complete local plans from ‘Issues and Options’ to formal Reg 22 submission within the 30 month time period set out, notably Broxbourne, Maidstone, Crawley and Northumberland. However, given most local authorities have taken far, far longer (the consultation acknowledges seven years on average), the new 30-month timeline will be a significant challenge, particularly in locations where decisions on how to meet development needs results in difficult political decisions.
Our forecast of local plan coverage by 2025 shows areas with the highest coverage of constrained land (protected by policies listed Footnote 7[10] of the Framework) will be more likely to have a local plan that is ten or more years old (see Chart below).
Slow plan making and attempts to speed it up are not new. The Planning Advisory Group (PAG) was set up in 1964 and made recommendations to simplify the process of producing plans and increase the speed at which they were prepared. In 2003, Lichfields carried out a review for Government on the implementation of PPG3 and found that only 13% of local plans and 35% of structure plans had been adopted to implement the then new ‘brownfield-first’ planning policy[11]. In 2015, the Local Plans Expert Group was set a similar task to PAG[12]. In November 2017, Government launched a process of intervention in 15 local authorities[13] and the then Secretary of State said that “my patience has run out”[14]. That intervention – which did not result in any LPAs having their plans taken over by Government – followed a previous deadline set by Brandon Lewis in 2015. Powers of intervention were complemented by the housing delivery test – ostensibly focused on incentivising home building, but whose “stick” of a tilted balance towards sustainable development was designed to encourage local authorities to make local plans and thus shape where development happens (arguably the policy has proved relatively toothless[15]).
This sorry tale does not mean that we should not try to speed up plan making. If we are to have a plan-led system, the ambition of full local plan coverage across the country and for authorities to produce them more quickly is obviously right. The vision set out in the proposed changes – for a simpler, positively shaped, up to date plan led system - is one to be applauded. The proposals set out including national development management policies, setting out gateway assessments to identify blockages early, digitalisation and the aim to simplify some of the shared challenges across authorities holds significant promise, if executed correctly.
 
In this regard, ongoing questions remain. A much tighter timeline for plan making has been suggested but is not regulated for; it remains to be seen whether more authorities meet these timeframes. Bluntly, for authorities facing the most politically difficult decisions, the proposals do not, in of themselves, make these decisions any easier or examination automatically much quicker.

The focus on improving the mechanics of local plan making while important, does not directly address the reality of preparing a local plan that both meets local housing needs and is met with local support in areas where historically there has been conflict between these two objectives.
Perhaps most glaringly absent are proposals around the ‘flexible alignment test’ that is expected to replace the duty to cooperate and address the challenge of what happens when authorities have higher local housing need than they are able to meet within their boundaries and thus need to work with their neighbours. This policy will be key in setting a strategic planning approach. This will be crucial to planning for and subsequently building enough homes, especially in urban areas, notwithstanding the Secretary of State’s long term plan for housing centred on a brownfield-led agenda.
Interestingly, the ‘top down’ approach that the Government is anticipating for Cambridge (not without some local backlash) and in London, is seemingly poised to be delivered through development corporations, and might signal that Government is looking to deal with the challenge in different ways, outside of the plan-led system. Perhaps this is an acknowledgement that, while the proposed reforms might improve the process of plan making, meeting the challenge of providing sufficient the right homes in the right places requires an escalated solution.
 

[1] The LUHC Select Committee Report, available here[2] As explained in the December 2022 Consultation Paper here[3] LURB reforms to national planning policy, available here[4] LURB Policy Statement, available here[5] The White Paper can be found here[6] See blog analysis here[7] Whether a Local Plan policy is ‘up-to-date’ is a matter of fact and judgement as per the 2014 Bloor Homes High Court judgment ([2014] EWHC 754 (Admin)) which defined the question at para 45. However, for the purposes of the analysis, the five-year period is a relevant metric because of the statutory requirement to review a plan every five years and the provisions of NPPF para 74 which state that the relevant housing requirement figure for five-year housing land supply purposes switches from the Local Plan housing requirement to the Standard Method Local Housing Need figure once the strategic policies are more than five years old (unless reviewed and found not to need updating). For the purposes of the analysis, Local Plans are defined as Development Plan Documents with strategic policies.[8] Source: Lichfields’ Local Plan monitoring[9] Which has seen average annual net additions for the past three years at 229,000.[10] Habitats sites, Sites of Special Scientific Interest; land designated as Green Belt, Local Green Space, an Area of Outstanding Natural Beauty, a National Park (or within the Broads Authority) or defined as Heritage Coast; irreplaceable habitats; designated heritage assets and areas at risk of flooding or coastal change[11] As reported in this blog reviewing what happened with PPG3[12] The LPEG Report is available here[13] See ministerial statement here[14] His speech is here[15] Lichfields analysis found that not only was the housing delivery test toothless in delivering more housing in all but one authority, the recent amendments have watered down the ‘stick’ of the tilted even further.

 

CONTINUE READING

The Government’s long-term plan for housing – what’s new?
In advance of the Royal Assent of the Levelling Up and Regeneration Bill (LURB) and publication of responses to several consultations, notably on amendments to the NPPF, the Levelling Up Secretary, Rt Hon Michael Gove MP has made a speech setting out the direction of travel for planning for housing. 
The announcements have been made amongst a plethora of concurrent planning reform and tweaking of the existing system. This gives the impression of a Government still testing the water on various policy issues, in various ways, prior to preparing for an election and responding to the scrutiny of recent policy approaches. The delays to the LURB also provide opportunities to slot in potentially popular and/or pragmatic legislation.
The headlines are dominated by the “Heseltinian approach” to urban regeneration, and the promotion of a significant Cambridge expansion. But planners in all sectors will be interested in development management proposals, including: new permitted development rights, funding for ‘upskilling and clearing the backlog’ and a ‘more permissive approach’ to small pockets of brownfield land.
 
Ten new planning proposals in the long-term housing plan
There are ten news items that stand out in a plan mostly comprised of re-commitments.
  1. The amendments to the NPPF consulted on in December will be published “a little later this year” and the LURB is expected to gain Royal Assent subsequently this year. A regeneration focus is “guiding its [The Government’s] consideration of responses to the consultation”, indicating that decisions have not yet been made and will be refined in response to speeches and press releases such as those made on 24th July.

  2. Plans for Cambridge, inner-city London and central Leeds were announced “following the commitment in the Levelling Up White Paper to regenerate 20 places”. The Government plans for Cambridge to be Europe’s science capital within a new quarter, 65,000 homes at Docklands 2.0 in east London and Leeds regeneration and potential mass transit system.
     
  3. Investing in "quality planning": over £24 million of additional investment (although the BBC suggests only half of this is new money not to be taken from current DLUHC budgets). A “planning super squad” will be created using £13.5 million of funding and first deployed to Cambridge. The investment will also support the eight investment zones in England. See below for more on this elements of the proposals.
     
  4. A pragmatic approach to amending planning permissions is needed. Mr Gove said the Government “is clear that […] Local councils should be open and pragmatic in agreeing changes to developments where conditions mean that the original plan may no longer be viable, rather than losing the development wholesale or seeing development mothballed”. This is a very positive acknowledgement of larger schemes in particular. In the context of the LURB, this statement is possibly a nod to the proposed new amendment procedure, section 73B, and potentially Lord Lansley’s proposed clause that would provide for regulations that would set out a procedure for drop-in applications.
     
  5. A new permitted development rights (PDRs) consultation, proposes new and amended PDRs relating to rural diversification and for the reuse and extension of urban and rural properties for housing and other uses. The consultation also covers the application of design codes and “providing more certainty over some types of development”.
     
  6. A future PDRs consultation for householders to come in the Autumn.
     
  7. A more permissive approach to small pockets of brownfield land is proposed. How this is to be achieved has not yet been set out, but it is intended to benefit SME builders.
     
  8. Second stair cores for tall buildings. The Government has confirmed its intention to mandate second staircases in new residential buildings above 18 metres, following support for this threshold from the relevant experts. This clarity was widely expected. It is encouraging that DLUHC is to work with industry and regulators over the summer to ensure transitional arrangements to secure “the viability of projects which are already underway, avoiding delays where there are other more appropriate mitigations”.
     
  9. Intervention in London – Mr Gove is critical of the Mayor of London’s record on housing, but said that he would work with the Mayor (whoever that might be?). However, his final tone indicated what would happen if collaboration broke down: “We are planning to intervene [in London], using all the arms of government, to assemble land, provide infrastructure, set design principles, masterplan over many square miles and bring in the most ambitious players in the private sector, to transform landscapes which are ripe for renewal. Our ambition in London is a Docklands 2.0 – an eastward extension along the Thames of the original Heseltine vision. […] Making sure we unlock all the potential of London’s urban centre – while also preserving the precious low-rise and richly green character of its suburbs. […] Which is why I reserve the right to step in to reshape the London Plan if necessary and consider every tool in our armoury – including development corporations”.

  10. Cambridge as a land value capture pilot? The Government notes the significant infrastructure requirements of the proposed new quarter in Cambridge - an initiative which some politicians in Greater Cambridge are resisting - and also the increase in land values that will arise from permissions for the new quarter being granted.
The Government also notes the existing viability guidance on existing use value plus a premium and says: “The government intends to explore recommendations about what a reasonable premium to agricultural landowners should be. Building on this approach, the government intends that a consultation will be undertaken to inform the policy on a reasonable premium for landowners above existing use value, to support the development of plans for the new quarter. To the extent that infrastructure and affordable housing need justifies this position, the government anticipates that policy will be set to capture land value uplift above the premium. This will enable landowners to receive fair compensation for their land while minimising the public sector investment required to bring the development forward”.
  

Capacity and capability improvements

The “Long-term plan for housing” announcements also included the launch of the new Capacity and Capability Programme for planning, designed to train and upskill existing planners, as well as creating new pathways into the profession at a graduate level. The application process began on 24th July and the intention is to allocate funds during October 2023.
A planning super-squad
At the core of the announcement is a Capacity and Capability programme, supported by a pot of £24 million to “scale up local planning capacity” through the Planning Skills Delivery Fund, and an additional £13.5 million to stand up a new “super-squad” of experts to unblock major housing and infrastructure developments. This team, once assembled, will first be placed in Cambridge to deliver the government’s ambitious housing and industry plans here. After this, the “super squad” will move to England’s eight Investment Zones announced so far, with the aim of delivering on their core objectives.
Clearing the application backlog with a £24m Planning Skills Delivery Fund
The Planning Skills Delivery Fund (PSDF) will provide £24 million over two years to local authorities to help clear the backlog of planning applications and support them with the implementation of the proposed reforms in the Levelling Up and Regeneration Bill.

In short, local authorities can apply for funding of up to £100,000 per local authority, to support them in either clearing the backlog or filling skills gaps - with priority given to applications to clear the backlog.
Local authorities seeking backlog funding must set out the causes, nature and scale of their backlog and identify ways in which it can be cleared, as well as demonstrating how receipt of the funding would reach the root cause of the problem. This acknowledgement that “money is not enough” follows from the fees consultation and further strengthens our understanding the government’s view on this matter.
Local authorities that are applying for skills funding must demonstrate areas in which they are lacking resource and put forward a case for how the introduction of a specialist resource in their department would deliver on a set of identified objectives.
Finally, the guidance states “the intention of the year one application process is to focus on projects and change that could be delivered within 6 months” and that that Secretary of State retains the right to withdraw the funding.
The funding is not to be used to support a local authorities’ role in the determination of Nationally Significant Infrastructure Projects (NSIPs). Financial support with the determination of NSIPs will be provided through the second round of the Innovation and Capacity Fund [launched on the 25th July] to “support and enhance the ability of local authorities to engage in the Development Consent Order process for NSIPs”. 
The envisaged timeline for round one of the funding is that the after applications close on 11 September they will be assessed during September and the successful authorities announced in October 2023.
Upskilling Measures
There is a recommitment to support for the RTPI’s planning bursary for 50 post-graduate students, the LGA’s Planning Graduate Programme, designed initially for 30 people and a two-year extension of funding to the Planning Advisory Service (PAS), to include a skills audit within local authorities to identify skills gaps and opportunities for future development. DLUHC says PAS needs to allow for the continuation up-skilling within Local Authorities, as well as providing “targeted technical training, to address both the current skills gaps and to build readiness for change that will be required to meet the needs of the future planning system”.
Application fees
These funding and upskilling programmes, along with the draft fees regulations having been laid in Parliament, are an indication that while we still await a formal response to the Government’s consultation on increasing application fees in the interest of better performance, the ‘increasing fees’ element of planning reform imminent. Indeed, the Government confirmed they will be “Increasing the amount developers pay in planning fees, following our recent consultation, to ensure all planning departments are better resourced.”
Sean Farrissey’s blog provides useful insight into the implications of that consultation and the draft fee regulations, in particular exploring how a simple cash boost may not be enough to get to the root of many problems that are embedded in the system.
 
 

Concluding remarks - A long-term vision?

The emphasis on long-term vision within the latest announcements relates to there being limited immediate change proposed. As always, it is tempting to judge policy announcements as much by what is absent than what is present: the focus is indeed on the medium to long-term, with an eye to to discrediting Labour’s approach to planning reform at the next local elections in May 2024 and general election due by January 2025.

In simple terms, the Conservative government is reiterating its commitment to beauty, backed with infrastructure and delivering homes through density, presumably with the intention of positioning the opposition as opposed to these principles.

We must wait a little longer to learn how the responses to the NPPF consultation and indeed the LURB itself progresses, to see how policy will match the vision.
The more immediate improvements to planning skills and resourcing are good news.

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Losing the plots: the misdirected exhumation of housebuilder land 'hoarding'
The media’s silly season has started early. On 23rd June, the i published an article[1] alleging land hoarding by UK house builders. This is well-trodden ground, but with the added dimension that the Secretary of State directly endorsed the charge:
"Gove slams housebuilders hoarding almost a million plots of land as ‘completely unacceptable’
The top ten housebuilders alone have 700,000 building plots lying idle as the housing shortages continues to worsen
Housing secretary Michael Gove has slammed developers for sitting on land rather than building new homes after an investigation by i found they are hoarding more than a million building plots.
Known as land banking, the practice has led to calls from politicians and experts to force developers to increase construction numbers, be taxed on unused land, or face compulsory purchase orders in an effort to increase construction and ease the UK’s worsening housing crisis.
The calls come as new home completions have hit a 15-year low."
The Secretary of State’s shadow also implicitly accepted the i’s premise:
“Shadow Levelling Up Secretary Lisa Nandy went further and told i that Labour would allow the compulsory purchase of sites within the vast land banks held by developers in order to build social housing.
‘The Tories have sat by for 13 years as hard-working people have their aspiration held back, while speculators frustrate building and squeeze the supply of affordable homes working people need in expectation of big unearned profits,’ said Nandy.”
Where to begin…

 

The landbanks of UK housebuilders
The i’s report included the following nugget:
"Exclusive analysis by i shows that the top 10 housebuilders listed on the London Stock Exchange are sitting on 700,000 plots, many of which have planning permission.” (my emphasis)
The word ‘many’ is doing a lot of heavy lifting here.
Feeding the Pipeline - our 2021 report for the HBF and LPDF – analysed the land banks of the top 10 housebuilders. It identified that the immediate/implementable land bank (with planning permissions) amounted to just 340k plots, and excluding Berkeley as a clear outlier[2], those businesses hold a pipeline equivalent to 3.3 years, and the three largest – Barratt, Persimmon, Taylor Wimpey - held implementable pipelines of 3.0, 2.8 and 2.6 years. Although this report is based on corporate reporting from summer 2021, the basic findings remain extant. 

Our analysis identified a further 210k plots that were “proceeding to planning” at “outline” or “not implementable”. This is the land bank that will be converted into immediate/implementable plots in subsequent years. Some builders – not all - then report a strategic land pipeline that has no planning status at all (and thus is incapable of being developed unless a LPA chooses to allocate it in a Local Plan), and it is this that gets the i to its 700k headline.
In combination, and again excluding Berkeley as an outlier, the top ten builders had an ‘immediate/implementable’ plus ‘proceeding to planning/not implementable’ pipeline equivalent to 5.3 years of their output.
The NPPF requires local authorities to maintain a five-year land supply of deliverable[3] land (plus a buffer). So, we can see that the large housebuilders have land banks that are largely at the very minimum of what national planning policy would expect them to have.

 

Why would you need a five-year pipeline?
It takes time to bring land through the planning system. We have a plan-led system (no laughing at the back) where there is a statutory assumption that plans are reviewed every five years. Sites are allocated in local plans and then have to secure planning permission, typically in outline and then in detail. Once permission is granted, conditions have to be discharged and there needs to be site preparation, ground works and then homes are built.
Even in a smoothly-operating system, this would take time. And of course, we have a system that is anything but. Just to give some examples:
  • A developer with a site in Welwyn Hatfield would have seen a draft local plan[4] consulted upon in Jan 2015; Eight and a half years later, the plan is still being examined as Inspector and LPA tussle over soundness of the strategy.
  • In Spelthorne, the local plan process began in 2014; examination hearings in began on 23rd May 2023, but two weeks later, the Council asked the Inspector[5] to pause the process to “allow time for the new council to understand and review the policies and implications of the Local Plan”
  • In Tandridge, the Local Plan was initially consulted on in 2015[6], submitted for examination in 2019 and is still ongoing. To respond to the delay, the Council adopted an interim policy that indicated it would look favourably on planning applications on draft allocations. CALA submitted an application for just that. The Council refused it[7].
At its simplest level, any house builder with an immediate land bank of less than three years would run out of plots and have to stop building because they would not be able to replenish it with new sites taken through the planning process. A halt to building would prevent them from achieving sustained level of production and labour demand, and lead to peaks and troughs in capital outlay that would make their business impossible.
This is the opposite of what the housebuilders advise their shareholders they want. Of the top 10, all but one had specific aspirations in their corporate reporting from 2021 to grow output volume and/or outlets.
Research by ChamberlainWalker Economics for Barratt Developments[8] explored the role of housebuilder pipelines, estimating that housebuilders would need to hold pipelines of at least 5.7 years to secure annual growth in completions whilst ensuring business security – if a housebuilder increased output without increasing its pipeline, it would speed towards the cliff edge, exhausting its supply of implementable sites.
Would housebuilders have a financial incentive to land bank?
The allegation of ‘hoarding’ assumes that there is a financial benefit to limiting supply and holding onto land without building on it.
But housebuilders make a profit by selling homes they have built on land they have acquired from the landowner for that purpose. Sitting on acquired land without building on it is harmful as it ties up resources, limits the return on capital employed, and means they have less resource to invest in new projects.
When the market demand supports it, housebuilders have typically boosted build out and sales rates. A recent report by Savills for Richborough Estates and the LPDF[9] found:
"The average sales rate per outlet across our sample of major housebuilders was around 0.62 to 0.68 between 2003 and 2007, before it fell sharply during the GFC to hit a low of 0.40 in 2008. Since then, the average sales rate has gradually increased, reaching a fairly stable level of approximately 0.73 again between 2015 and 2019. Sales rates then fell during the first Covid lockdown, before rising to an average of nearly 0.87 during 2021 and 2022."
My blog from 2021 – Use it or Lose it: the taxing problem of undelivered homes – considered the issue of unimplemented permissions and revealed how a succession of reviews have considered and rejected the idea that housebuilders hoard land.
But it turns out it is not just housebuilders who stand accused. In its article - 'Michael Gove's housing agency accused of land banking' - the Telegraph reported that: 
"Michael Gove's department is sitting on enough land to build more than 250,000 homes, analysis suggests, after the Housing Secretary criticised developers for hoarding hundreds of thousands of plots.
Homes England, an agency, tasked with supporting the development of new affordable homes, controls a portfolio with enough space for 279,000 houses"
Naturally, Homes England pushed back strongly on the allegation that it was hoarding, claiming: "as soon as the land is ready and outline permission is received, we engage housebuilders to build out as quickly as possible. Land banking suggests we do nothing, but this couldn't be further from the truth." 
That the charge against house builders could be similarly made against the public body that is charged with speeding up housebuilding shows the real answer lies in the application of Occam's razor - the simplest explanation is actually true: any organisation involved in housebuilding needs a pipeline of sites at different stages of the planning process to manage the inherent risks and timescales associated with residential development. Counting a stock of land (whether it is the housebuilders' 700k, or the 279k controlled by Home England) without thinking about the width of the planning pipe (and its tendency for blockages) or the rate of flow through it, will draw entirely misconceived conclusions.    
What does the recent housing permissions data tells us?
So, how do we boost supply?
All the evidence is that that rather than berating housebuilders for having a pipeline that is the minimum needed to sustain a sensible residential development business, there needs to be an increased number of outlets with planning permission. Feeding the Pipeline suggested that achieving 300k per annum would require each District in England to grant permission for an extra 4-5 medium-sized sites per year on top of the rate of approvals that have sustained recent rates of delivery. (Of course, it would also be helpful if these sites were in the parts of the country where there is the greatest need for new homes.)
Unfortunately, the recent published data on planning permissions[10] suggests things are heading in the wrong direction. The Q1 2023 rolling annual total of homes granted permission (at 269k) is down 11% from the same period last year, the lowest since Q1 2015, and five of the past six years have seen a reduction.
The chart below shows the figures broken down by region.

Over the past year, the biggest percentage falls in permissioned homes were in the North East (-38%) with Yorkshire and the Humber, West Midlands and London seeing falls of 18-19%. The South East and South East saw a static flow of permissions. However, the key issue is that in London, West Midlands, East of England and the South East, the flow of permissions falls well below the number of homes demanded by the Standard Method (at 65-80% of the SM figure).
Because permissions granted each year will include a proportion (perhaps 10-15%) that will be superseding/amending an old permission (a figure of c.30% might be expected in London based on a case studies of London permissions), and circa 3-5% (and perhaps more in London) that will lapse or stall[11]; a flow of permissions well in excess of the Standard Method in every region would be needed to align with the 300k annual ambition. That it falls well below this level suggests we are heading on a downward trajectory of housing delivery.
Conclusion
That there are c.700k plots in the land banks of large volume house builders “many with permission” is evidence not of cynical land hoarding but of what a sensible residential development business would need to maintain house building in an environment where it takes at minimum 3-5 years for a site to move from acquisition, securing an implementable planning permission, opening it up and then building homes. Analysis in 2021 showed the immediate/implementable land banks were just over three years, with a further two years of land not yet implementable but progressing through planning.
The current slow down will impact on sales rates and push some of these numbers out, but equally, we can see the flow of permissions is also reducing (it having decreased in five of the last six years) making it less likely that the pipelines will be replenished at the same rate.
Looking beyond the unfortunate failure of the i to correctly interpret the figures it produced, the bigger disappointment is the political exhumation of the allegation that house builders are hoarding land. It seems like a distraction from the real challenge to housing delivery: the collapse in local plan making, the fall in permissions for housing, and the sustained under-shooting of housing delivery in areas where homes are most needed. Remedies on these fronts are what is most needed right now. 

 

[1] The original i article is here

[2] The report states: “Berkeley Group - an outlier among the ten - they report ‘plots’ (homes) on all land holdings where a ‘backstop planning position’ exists, itself not necessarily consistent with the ‘immediate’ pipeline definition used by others. Their pipeline also includes long-term complex regeneration developments, many already under construction but where activity is expected to continue over many years and decades, such as at their Woodberry Down (5,500 homes) or Kidbrooke Village (5,000 homes) regeneration projects in London. Berkeley’s average site size was 659 homes, more than triple the median of 216 homes we recorded across the other nine housebuilders’ site sizes”

[3] Deliverable is defined by the NPPF as: “To be considered deliverable, sites for housing should be available now, offer a suitable location for development now, and be achievable with a realistic prospect that housing will be delivered on the site within 5 years.”. Having an allocation or outline permission is not automatically assumed to mean that the site will be capable delivering housing within five years.

[4] Regulation 18 Local Plan Consultation

[5] Letter from Spelthorne to the Inspector is here

[6] A Reg 18 Issues and Approaches Consultation

[7] CALA was successful at the subsequent appeal, at which Lichfields gave the planning evidence.

[8] The CWE report is here

[9] The Savills report is here

[10] The DLUHC Planning Applications Statistic Release for January to March 2023 is here

[11] These percentages are drawn from Tracking Progress: Monitoring the build out of housing planning permissions in five local planning authority areas

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