In light of the Government’s recent review of the London Plan and the consultation on
further changes to the NPPF, the focus has been sharpened on the regions and their contribution towards meeting housing needs. The 20 largest cities and urban centres across England are already subject to an ‘
urban uplift’, i.e. a 35% increase to their standard method housing need figures, but the proposed changes will result in the presumption in favour of sustainable development being triggered in respect of previously developed land where Housing Delivery Test performance drops below 95% in these local authority areas. The consultation also proposes to add
significant weight to the delivery as many homes as possible on brownfield land, whilst taking a flexible approach to internal layout.
In the context of a challenging period for the residential development industry, the Build to Rent (BtR) market continues to go from strength to strength. Savills report that the sector generated £4.5 billion of investment during 2023 – the second highest year on record
[1]. This asset class is often seen delivering homes at scale and regenerating brownfield land in many of our biggest towns and cities, but did it get any airtime as part of the raft of recent Government announcements? No, nothing.
However, in light of the new presumption in favour of previously developed land and the contribution BtR is making where many others are stuttering along, it seems fitting to understand what level of policy support there is for BtR across England, and in particular in those 20 largest cities and urban centres. Of course London takes top spot, and the policy picture for BtR in the Capital has been covered previously by colleagues Georgia Crowley and Adam Donovan (see
here), but have the other 19 largest cities and urban centres caught-on?
There are three national trends beginning to emerge from our analysis:
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From our sample of the 19 largest cities and urban centre authorities outside of London, none have an ‘anti BtR’ policy position. However, the five southern urban uplift authorities are more likely to have an adopted or draft policy that explicitly supports BtR when compared to their seven counterparts in the Midlands and seven in the North of England. A case of following London’s lead with a policy pathway for BtR, or simply a reflection of longstanding BtR developer interest in these areas that has influenced policy formulation? Those five southern authorities have all either adopted local plans or begun work on a new plan in the last 5 years, whereas perhaps unsurprisingly, all six of the authorities with a local plan older than 5 years are either silent or have no explicit reference to BtR in their policy (Coventry, Derby, Hull, Newcastle, Stoke and Wolverhampton).
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There are very few examples of adopted or draft policy that explicitly support BtR in the largest northern authorities, including some of the largest: Liverpool, Manchester, Leeds and Newcastle. This is somewhat at odds with experience on the ground, particularly in Manchester and Leeds, where there has been a buoyant BtR development market for some time.
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Three of the top five largest cities or urban centres, Birmingham, Bristol and Sheffield, do have adopted policy that explicitly supports BtR. These big population centres are clearly open for BtR business, and Birmingham and Sheffield are bucking the policy trend when compared to other authorities in their respective patches.
Of the 19 largest cities (excluding London), only seven local plans provide positive support for BtR and five of these are located in the south of England (Bristol, Southampton, Brighton, Reading and Plymouth). Considering that BtR is well established in cities across the country, particularly in the northern cities of Manchester and Leeds, it is unhelpful that local policy is not keeping pace with the market to avoid mixed messages to BtR developers and investors about whether they are welcome or not. The often glacial local plan preparation and review process clearly doesn’t help matters, but given that the NPPF makes very little reference to BtR and contains no specific policy support, the most recent proposed changes from Government seem like a missed opportunity. As is often the case, the planning policy environment is failing to keep pace.
There is a real opportunity for a new government to get behind the residential development market nationally by specifically recognising and strengthening the role that BtR has in national planning policy – it is one of the few tenures that can be delivered on brownfield land at higher density, and in a viable way given its differing economic profile based on secure long term rental income. A national emphasis on the role that BtR can play in regenerating brownfield sites, and meeting the rental needs of the population who either chose not to purchase or are struggling to get onto the housing ladder, would then put the onus on local authorities to reflect this in their own local plans and ultimately assist in giving developers and investors confidence to bring forward new projects.
As uncovered by our recent
‘Planning for Rent’ insight work on the London policy position, development management policies within Local Plans rarely differentiate or provide flexibility for BtR schemes when compared to traditional open market tenure. This often results in a requirement for BtR planning applications to provide justification for departures from established residential policies which were designed for traditional ‘for sale’ schemes. With a lack of detailed national planning policy or guidance on BtR, save for the NPPF requiring Affordable Private Rent tenure rather than affordable homes for sale, it is left up to individual local authorities and their local plan to set the bar.
If not through the NPPF changes, the new national development management policies (NDMPs) facilitated through the Levelling Up and Regeneration Act 2023 do provide a potential vehicle to deliver a much clearer basis for BtR developments to come forward. The forthcoming NDMPs will override local plan policies where there is any conflict and therefore could provide a consistent picture at national level which in turn will mean greater confidence from the market.
With interest rates stabilising and costs of construction projected to fall, coupled with the exit of many Buy-to-Let landlords from the market (which will further deplete the availability of rental homes), now is the time to prime the national planning policy landscape so that there is a sure footing for the next wave of BtR development and investment. In our opinion, the role of BtR in the NPPF should be strengthened, and the NDMPs used to create a more level playing field for BtR design and development across England.
The NPPF consultation runs until 26 March 2024 and the first draft NDMPs remain subject to future consultation. If you are interested in preparing representations, or would like to discuss Lichfields’ track record in promoting BtR development in London and across the country then please get in touch.
[1] Savills UK | UK Build to Rent Market Update – Q4 2023
