Planning matters blog | Lichfields

Planning matters

Our award winning blog gives a fresh perspective on the latest trends in planning and development.

Brownfield Housing: The Post-Industrial Revolution?
I was delighted to have been invited to speak at the North East Shaping the Region event at the end of last year. The event, regularly hosted by Lichfields with other regional partners Turner & Townsend and Muckle LLP, aims to provide insights and stimulate thought across a range of key themes. The most recent event focused on sustainability and regeneration, two topics at the forefront of both regional and national strategy ambitions, reflecting the Net Zero and Levelling Up agendas.
My presentation considered:

  • The regeneration opportunities that can be unlocked through brownfield housing delivery;
  • The role of brownfield housing in supporting housing delivery targets as well as local regeneration and economic ambitions;
  • The challenges facing brownfield development; and
  • The funding opportunities available to accelerate delivery.
The purpose of this blog is to provide insights into the current opportunities that can be unlocked through brownfield housing development and the interventions available for supporting and accelerating brownfield housing delivery.  In the weeks since delivering the presentation, there have been several relevant Government announcements, including:

  • The announcement of the opening of the final application period for the Brownfield Land Release Fund Round 2 (BLRF2)[1];
  • The release of the National Planning Policy Framework (NPPF)[2]; and
  • Homes England research[3] into quantifying the social value associated with brownfield development.

National Housing Context

In the 2019 Conservative Manifesto, the Government pledged to deliver 300,000 homes per year by the mid-2020’s. A review of latest housing supply data[4] shows that housing delivery has consistently fallen short of this target. Emerging Government policy is seeking to focus new housing delivery on urban and brownfield sites.

Figure 1 Trends in net additional dwellings, England, 2001-02 to 2022-23

Source: Net additional housing supply, ONS (2023)

Forecasting, undertaken by the Office for Budget Responsibility (OBR)[5], indicates that this trend is expected to continue, underpinned by delays to Local Plans, rising construction material costs and high interest rates.

Figure 2 OBR housebuilding forecasts March Vs November

Source: ONS, OBR (2023)

In May 2023, a House of Commons Research Briefing[6] was published, exploring how the undersupply of housing could be tackled. The findings suggest that whilst it is not possible to solve the housing undersupply crisis with brownfield housing alone, developing brownfield sites can play a significant role in tackling the issue.
This sentiment is echoed within the revised NPPF (December 2023). Chapter 11 sets out the planning policy position, noting:
‘Strategic policies should set out a clear strategy for accommodating objectively assessed needs, in a way that makes as much use as possible of previously-developed or ‘brownfield’ land.’
The NPPF also suggests that planning policies and decisions should:
‘Give substantial weight to the value of using suitable brownfield land within settlements for homes and other identified needs, and support appropriate opportunities to remediate despoiled, degraded, derelict, contaminated or unstable land.’

 

The National Context

Research undertaken as part of Lichfields' Banking on Brownfield insight[7] (2022), reviewed Local Authority Brownfield Land Registers (BLR). It identified that across the UK there were:
  • 23,500 brownfield sites;
  • Comprising 36,000 hectares of land; and
  • Maximum net capacity of up to 1.4 million homes, equivalent to 31% of housing need over 15-years.
Figure 3 shows the geographical distribution of brownfield capacity by housing market area.

Figure 3 Brownfield land capacity for new homes by Housing Market Area

Source: Lichfields analysis of Brownfield Register, DLUHC (2021)

Figure 3 highlights the spatial distribution and availability of brownfield land as a share of housing need. It can be seen from this that brownfield sites across the North East (and the North generally) have the potential to make a substantial contribution relative to other parts of the Country. This is a function of both the region’s industrial heritage, as well as relatively lower absolute levels of housing need.

Figure 4 Brownfield land as a share of ‘levelled up’ need, summed to Housing Market Areas

Source: Lichfields analysis of DLUHC and Building Back Britain Commission

 

The North East Context

An analysis of updated Brownfield Land Registers across the North East region identifies a total of 875 brownfield sites, totalling 1,690 Ha of land and offering capacity to deliver up to 42,350 net dwellings. Broken down into the individual Combined Authority areas of the North East, this translates to:

Table 1 North East Combined Authority area - Brownfield sites, area and capacity

  Combined Authority
No of
Sites
Total Area
(Ha)
Net Dwelling Capacity
  Tees Valley Combined Authority
174
254.2
10,345
  North East Combined Authority
240
526.3
17,795
  North of Tyne Combined Authority
461
908.2
14,215
  Total
875
1,688.6
42,355


Source: Lichfields analysis of individual Local Authority Brownfield Land Registers (2023)

NB: Tees Valley Combined Authority – Darlington, Hartlepool, Middlesbrough, Redcar & Cleveland, and Stockton
North East Combined Authority – County Durham, Gateshead, South Tyneside, and Sunderland
North of Tyne Combined Authority – Newcastle upon Tyne, North Tyneside, and Northumberland

 

Figure 5 Brownfield land capacity – North East region

Source: Lichfields analysis of individual Local Authority Brownfield Land Registers (2023)

As part of this exercise, local housing needs as set out within Local Plan evidence were also assessed to identify the relative capacity of brownfield land across the North East to meet housing need. The assessment identified that across the North East a maximum net capacity within brownfield sites equivalent to c.37% of regional housing need exists. This exceeds the national capacity of 31%, demonstrating the scale of the opportunity that exists regionally.
Across the individual combined authority areas this breaks down to:
  • 27.9% within the Tees Valley;
  • 41.0% within the North East Combined Authority; and
  • 41.0% within the North of Tyne Combined Authority;

Figure 6 Capacity of Brownfield Land to Housing Need

Source: Lichfields analysis of Brownfield Land Registers and Local Housing Need as set out within Local Plan evidence

 

Key Challenges – Viability

One of the key challenges associated with brownfield development is viability risk. This is due to the high abnormal costs often associated with remediation activity (including engineering and decontamination works) to ensure that sites are suitable for development.
Research as part of the Banking on Brownfield insight developed a viability risk index using ONS and BCIS data. This is summarised in the figure below. The North East falls within the highest risk quintile indicating the highest level of viability risk, as a function of:

  • High ‘clean-up’ costs; and
  • Relatively lower house prices in the region.
This results in potentially smaller margins for developer return, particularly for schemes delivering affordable housing. This can present deliverability risks meaning that without intervention some sites are at risk of remaining unattractive, undeveloped, and derelict.

Figure 7 Viability risk of brownfield and development (5 most at risk)

Source: Lichfields analysis of ONS, BCIS data

 

The Funding Need

Considering the viability challenges outlined above, the figure below demonstrates the logic chain which underpins funding support for brownfield housing delivery.

Figure 8 Funding Framework

 

Source: Lichfields (2023)

 

The Funding Solutions – The National Landscape

In recent years the Government has launched a number of funding interventions to support brownfield housing delivery and regeneration. These total almost £2bn nationally.

  • Brownfield Land Release Fund (BLRF) – Originally launched in 2021, £68.6m of Round 1 (BLRF1) funding allocated to deliver over 7,000 homes. In July 2022, BLRF Round 2 was launched, committing a further £180m of funding to deliver a further 17,000 homes;

  • Brownfield Housing Fund (BHF) – £400m issued to individual Combined Authorities to support brownfield housing delivery; and

  • Brownfield, Infrastructure and Land Fund – August 2023, £1bn through Homes England to unlock housing-led development.
On the 12th December 2023, the final application stage for the Brownfield Land Release Fund Round 2 opened to all English councils. The deadline for applications is February 14th 2024.

The Funding Solutions – The North East Case Study

The North East has been successful in accessing £66.1m of funding to deliver brownfield housing. This includes, £5.6m of BRLF funding issued to four schemes and £60.5m of Brownfield Housing Fund, including:

  • £23.9m issued to the North of Tyne Combined Authority;
  • £19.3m issued to the Tees Valley Combined Authority; and
  • £17.4m issued to the North East Combined Authority through the recent devolution deal.

Figure 9 Brownfield housing funding allocations within the North East – Broken into Combined Authority area

 

Source: Lichfields analysis of BLRF and individual Combined Authority BHF allocations monitoring data (2023)

 

The Opportunities – The North East Case Study

Housing Delivery and Economic Contribution
An assessment of allocations data across the funds indicates that the committed funding is expected to support the delivery of 5,600 new homes including 650 affordable homes. This funding will:
  • Positively contribute towards achieving local housing delivery targets;
  • Bring forward schemes that may have otherwise remained undeveloped and derelict;
  • Support policy-compliant affordable housing ambitions, ensuring housing is accessible; and
  • Generate significant economic benefits (See below)

Figure 10 Economic Impacts associated with North East funding commitments and anticipated delivery

 

Source: Lichfields analysis

 

Wider Impacts

Schemes that Lichfields have been involved in developing business cases for have identified significant wider potential impacts:
 
  • Supporting wider regeneration ambition through public realm improvements, estate renewal, and delivering public amenity and community infrastructure;
     
  • Contributing towards the net zero agenda and environmental sustainability ambitions through developing houses which utilise energy reducing technologies such as Air Source Heat Pumps and Solar PV;
     
  • Support reduced instances of crime and anti-social behaviour;
     
  • Support improved public health outcomes through delivery of open space and infrastructure, promoting increased participation in physical activity; and
     
  • Provide wider benefits through positive impacts on the value of surrounding housing stock associated with placemaking and reducing the negative externality disbenefit associated with derelict sites.
 

Summary

There are clear benefits of brownfield housing development, both in terms of contributing towards achieving housing delivery targets but also economic and regeneration outcomes. A key barrier for delivery is presented by the viability risk associated with site remediation meaning that some schemes can stall and remain undeveloped. In response to this, the Government has committed significant funding to support with overcoming viability issues to prioritise the delivery of housing on brownfield land.
Lichfields has an excellent track record of developing business case and funding application submissions, helping clients to access gap funding to deliver much needed housing on brownfield sites. If you require any support in identifying and applying for potential funding opportunities, please get in touch with James on james.robertson@lichfields.uk

 

About the author

James Robertson – James joined Lichfields in 2022 and has over six years’ experience as an economist. James offers applied experience in quantitative and qualitative research methods across a range of economic and social research services on behalf of private and public sector clients.
James’s experience covers business case development, economic impact assessment, evaluation of social policy interventions, delivering ex-ante appraisals and cost-benefit analysis, in line with HM Treasury Green Book Guidance.
James has led on the preparation of several full business cases for Brownfield Housing Fund applications, helping to unlock over £6.0 million of funding. James is currently advising a number of public and private clients in support of grant funding applications to Government grant funding opportunities to bring forward brownfield housing development.
 

[1]One Public Estate: Brownfield Land Release Fund (BLRF2) Round 3 – December 2023, Local Government Association (2023)

[2]National Planning Policy Framework (publishing.service.gov.uk), DLUHC (2023)

[3]Brownfield Development Values - GOV.UK (www.gov.uk), Homes England (2023)

[4]Housing supply: net additional dwellings, England: 2022 to 2023, DLUHC (2023)

[5]Economic and fiscal outlook – November 2023, OBR (2023)

[6]Tackling the under-supply of housing in England, House of Commons Library (2023)

[7]Banking on Brownfield, Lichfields (2022)

CONTINUE READING

Revised NPPF: a new beginning at the end of a long and winding road?
The final version of the revised National Planning Policy Framework (NPPF) was published on 24 July 2018, on the very last day before summer Recess and avoiding Parliamentary debate. In contrast, the draft version (published in March for consultation) had been announced by the Prime Minister Theresa May at a dedicated launch event.
Much has changed in the make-up of Government in the four months since the consultation started (not least, the Housing Secretary and Housing Minister); however, and notwithstanding the huge amount of responses received (almost 30,000), changes made to the final version of the revised NPPF focus on clarifications and re-wording, with very few more significant amendments.
Naturally, wider implications and potential impacts of the new policies will become clearer over time; for now, we have identified eleven points where changes have been made following the draft NPPF’s consultation and which are worth bearing in mind.
1. Using design policies as a key to boosting house building
The revised NPPF gives a new centrality to design policies, as they are considered instrumental in delivering new homes. In his Written Ministerial Statement announcing the launch of the revised Framework, Housing Secretary James Brokenshire said:
‘[…] Critically, progress must not be at the expense of quality or design. Houses must be right for communities. So the planning reforms in the new Framework should result in homes that are locally led, well-designed, and of a consistent and high quality standard.’
Chapter 12 ‘Achieving well-designed places’ is where this renewed rhetoric is translated into policy. Paragraph 124 specifies that ‘being clear about design expectations, and how these will be tested, is essential’ for achieving sustainable development. Effective engagement e.g. with local communities (including through workshops), the use of ‘local design standards or style guides’, and the refusal of permissions for developments of poor design are some of the ways the revised NPPF aims to achieve this objective.
Crucially, para 130 requires local planning authorities (LPAs) to make sure that the quality of approved developments does not materially diminish ‘between permission and completion, as a result of changes being made to the permitted schemes’.
2. Planning application viability assessments as exception to be justified
The front-loading of viability assessment at plan-making stage (rather than when determining applications) was already anticipated by the draft revised NPPF, as the expectation was to be for plans to set out the levels and types of affordable housing and other infrastructure that would be required from proposed developments.
However, changes included in the final version are quite significant when compared to both the original NPPF and the draft revision, particularly around paragraphs 34 and 57.
The revised NPPF’s paragraph 34 on development contributions removes the possibility for plans to set out circumstances when further viability assessment may be required in determining individual planning applications. The reasoning is in para 57: the revised NPPF puts the burden on applicants ‘to demonstrate whether particular circumstances justify the need for a viability assessment at the application stage’.
Furthermore, para 57 goes on to state that it will be for the decision maker to decide about the weight to be given to the viability assessment ‘having regard to all the circumstances in the case’ (including whether the plan/evidence is up to date, and potential changes to site circumstances).
3. Standardised methodology and Housing Delivery Test confirmed (for now)
The new standardised methodology to assess housing needs and the Housing Delivery Test are two of the most anticipated changes to housing policy that the Government is bringing forward, and they are reflected in the revised NPPF (and accompany documents).
Unsurprisingly, neither has been significantly amended when compared to previous consultation versions, probably reflecting the inherent complexities behind their ‘construction’. However, of interest in relation to the standardised methodology is the Government response to the draft revised NPPF consultation which highlights:
‘[…] it is noted that the revised projections are likely to result in the minimum need numbers generated by the method being subject to a significant reduction, once the relevant household projection figures are released in September 2018. In the housing White Paper the Government was clear that reforms set out (which included the introduction of a standard method for assessing housing need) should lead to more homes being built. In order to ensure that the outputs associated with the method are consistent with this, we will consider adjusting the method after the household projections are released in September 2018. We will consult on the specific details of any change at that time.’
In short, the methodology is confirmed for now, but everything may change, following the release of household projections in September 2018 (see this Lichfields blog for further details).
4. Lower requirement for small (and medium) sized sites
The draft revised NPPF’s requirement for at least 20% of the sites identified by LPAs in their plans to be half a hectare or less has been changed and potentially made more achievable.
The final version of the revised NPPF now expects LPAs to accommodate at least 10% of their housing requirement on ‘small and medium sized sites’ (up to one hectare) through their development plans and brownfield land registers. Furthermore, it is recognised that the 10% target may not be achievable in all circumstances; in such cases, the preparation of the relevant plan policies should detail the ‘strong reasons’ that make the target unachievable.
5. More clarity on strategic and non-strategic policies
The draft NPPF’s reference to ‘strategic’ and ‘local’ policies - which caused confusion in relation to spatial development strategies, and appeared to undermine the need for local plans - has been clarified.
The final revised NPPF now distinguishes between strategic policies (which should look over a minimum of a 15-year period) and non-strategic policies (included in local plans, when these are not considered strategic policies, and in neighbourhood plans). Both ‘strategic’ and ‘non-strategic’ policies are defined in more detail in Annex 2: Glossary.
6. Town centre diversification promoted
The rapid changes that are affecting the retail sector and, as a consequence, England’s town centres are acknowledged and reflected in the final version of the revised NPPF. It recognises that diversification is key to the long-term vitality and viability of town centres, to ‘respond to rapid changes in the retail and leisure industries’. Accordingly, planning policies should clarify ‘the range of uses permitted in such locations, as part of a positive strategy for the future of each centre’.
The draft revised NPPF’s reference to town centres in decline has been removed, possibly because of its unclear wording and most probably in wider recognition of the effects that changed shopping habits are already having on town centres.   
7. Land assembly and compulsory purchase
Reflecting wider debates about the role of LPAs in bringing forward enough land for housing developments to meet their identified needs (and the Government’s 300,000 homes/year target), paragraph 119 now details some of the powers that proactive LPAs should use.
These include specific reference to facilitating land assembly, where possible, and using compulsory powers where this is considered beneficial to ‘meeting development needs and/or secure better development outcomes’.
8. Green Belt: of course it’s here to stay
Unsurprisingly, Green Belt policies have not changed significantly from the draft version published for consultation; however, two minor changes in wording are of interest.
Paragraph 136 on exceptional circumstances to amend Green Belt boundaries now refers to these being ‘fully evidenced and justified’, an addition since the draft revised version. While this might appear to be a more stringent requirement, new para 137 specifies that, to justify the existence of exceptional circumstances, an LPA ‘should be able to demonstrate that it has examined [it was ‘should have examined’] fully all other reasonable options for meeting its identified need for development’; this might seem like a minor change, but it could give more flexibility and a clearer path for LPAs considering releasing Green Belt in exceptional circumstances.
9. Heritage policies retained and restored
Heritage and historic environment policies are generally in line with those proposed in the draft revised NPPF. Importantly, LPAs are now expected to maintain ‘or have access to’ a historic environment record (paragraph 187). One of its purposes is to be used to ‘predict the likelihood that currently unidentified heritage assets […] will be discovered in the future’.
Changes to the way the impact of proposed development on the significance of designated heritage asset is assessed, which were already anticipated in the draft revised NPPF, are now confirmed and further clarified; paragraph 193 states that ‘great weight should be given to the asset’s conservation […] irrespective of whether any potential harm amounts to substantial harm, total loss or less than substantial harm to its significance’.
Finally, where a development proposal will lead to less than substantial harm to the significance of a designated heritage asset, ‘this harm should be weighed against the public benefits of the proposal including, where appropriate, securing its optimum viable use’. The term ‘optimum viable use’ was included in the original NPPF but not in the draft revised NPPF.
10. A change to transition
The policies in the revised NPPF are material considerations to be taken into account in determining planning applications ‘from the day of its publication’ (i.e. from 24 July 2018).
Importantly, the policies in the 2012 NPPF still apply to examining plans submitted on or before 24 January 2019.
Interestingly, footnote 69 is amended to clarify that for spatial development strategies, ‘submission […] means the point at which the Mayor sends to the Panel copies of all representation made’; this is an amendment specifically made to reflect the stage reached by the draft London Plan, particularly when compared to the draft revised NPPF wording (which referred to ‘submission’ being a later stage, specifically the point in which copies of the strategies intended for publication are sent to the Secretary of State).
Accordingly, the new draft London Plan will be examined against the original NPPF policies – a relief to the Mayor no doubt.
11. ‘Social rent’ back in and starter homes loosen up
The revised version of the glossary at Annex 2 includes reference to social rent again, as an ‘affordable housing for rent’ product rather than in its own right; any reference to social rent housing was previously deleted from the draft revised NPPF’s definition of affordable housing.
Further amendments have been made to the definition of ‘affordable housing’, particularly in relation to starter homes. Interestingly, previous reference to the maximum annual household income of eligible buyers (£80,000, or £90,000 in London) has now been removed and left as a matter for secondary legislation; this is to reflect the fact that the Housing and Planning Act 2016 does not explicitly refer to those income thresholds.
Might this signal the ‘resurgence’ of starter homes? Unlikely.
Overall, the impression is that the process of updating and reviewing the 2012 NPPF has been more complicated than many expected it to be, and the continuous changes in the Department and then Ministry surely have not helped (five Housing Ministers and three Secretaries of State since the NPPF review was first announced).
Perhaps as a result of it having taken a good while, the revised NPPF seems to better reflect the new approach taken by the Ministry, the renewed centrality that housing policies have within the Government’s agenda and all of the case law that has come about from testing the 2012 Framework in the courts. The new NPPF even reflects Sir Oliver Letwin’s emerging findings on housing delivery, by effectively recognising that the quality and design of housing development is crucial to ensuring greater community support.
Some reforms do seem ambitious, particularly around viability assessments and given the English plan-led system, and the practical impacts of these reforms ought to be tested and monitored over a longer period of time to understand whether Government has struck the right balance.
As acknowledged in James Brokenshire’s Written Ministerial Statement, the revised NPPF alone will not be enough solve the housing crisis; other reforms, the support of central Government, cooperation with/between stakeholders, local authorities and communities are all crucial elements in addressing the housing challenges the country is facing.
As usual in these cases, whether the revised NPPF represents a new beginning or rather a false start is too soon to be said, as its final judgement will be solely based on its achievements and/or failures.
See the ‘Revised National Planning Policy Framework’ suite of documents here
Lichfields will publish further analysis of the consultation on the draft revised NPPF and its implications. Click here to subscribe for updates.

CONTINUE READING