Housing planning news, April 2018

 

A major overhaul of the National Planning Policy Framework (NPPF) has been launched, the intention being to deliver the homes that England needs. Optimising the use of land, creating well-designed places, strengthened protection for the Green Belt and a greater emphasis on converting planning permissions into new homes are all at the heart of the new draft Framework.

Local authorities will have to satisfy a housing delivery test, focused on driving up the number of homes completed in their areas, in addition to using a new standardised methodology for ‘determining the minimum number of homes needed […] unless there are exceptional circumstances that justify an alternative approach’.

To provide increased certainty for the development industry, the new draft national policy also intends that plans should set out the contributions expected in association with particular sites and types of project. Draft planning practice guidance to accompany the new Framework refers to developer accountability and transparency in the context of viability assessments, in order to enable communities ‘to understand the outcomes of viability assessment and see what infrastructure and affordable housing has been delivered through developer contributions’.

 

 

An MHCLG consultation on developer contributions launched alongside the new draft NPPF follows on from announcements at Autumn Budget 2017. The Government is seeking views until 10 May on a series of reforms to the existing system of contributions in the short term; the intention is that the proposed reforms will ‘benefit the local authorities who administer them, developers who pay them and the communities in which development takes place’.

The proposals that are of particular note - all of which would require changes to legislation - are as follows:

• streamlining requirements for setting/reviewing community infrastructure levy (CIL) charging schedules;
• removing s106 pooling restrictions (for authorities that have adopted CIL, or that satisfy other requirements);
• allowing CIL to be based on the existing use of land;
• introducing a ‘Strategic Infrastructure Tariff’, for combined authorities, and joint committees with plan-making powers; and
• indexation being linked to house prices, or CPI/CPI and a factor of house prices for non-residential development.

The consultation makes it clear that the Government:

‘[…] will continue to explore options to create a clearer and more robust developer contribution system that really delivers for prospective homeowners and communities accommodating new development.’

And in the longer term:

‘[…] the Government will continue to explore options for going further. One option could be for contributions to affordable housing and infrastructure to be set nationally, and to be non-negotiable.’

The proposed reforms have been informed by the independent report of the CIL Review Group (February 2017), as previously reported by Lichfields, and a research ‘Report of Study’ that was published alongside the consultation. This latest report provides a number of key findings regarding the operation and value of CIL and s106 obligations across England. For example, despite CIL having been introduced in 2010, 85% of the value of planning obligations and CIL levies in England is from negotiated s106s – only 39% of authorities were charging CIL by the end of 2017.

 

The Government’s Spring Statement was made on 13 March; it included pledges on investment in infrastructure and housing, in the form of steps intended to support the delivery of more homes.

Funding announcements included:

• £100 million to help support – via land acquisition and preparation - the Mayor of the West Midlands’ plan to deliver 215,000 homes by 2030/2031 (the ‘West Midlands Housing Deal’);
• support via the Housing Infrastructure Fund for whichever of the 44 shortlisted Housing Growth Area bids (as subsequently announced on 21 March, alongside the Greater Manchester and West of England housing packages, and the Oxfordshire Growth Deal) are selected;
• confirmation of a £1.67 billion funding package for London to build affordable housing. This would be for 26,000 more affordable homes (including social rent and London Affordable Rent, flexible shared ownership and rent to buy). This would bring total funding for affordable housing in London to £4.8 billion; and
• £60 million investment to boost the Housing Growth Partnership Fund, in support of small and medium-sized housebuilders.

Lichfields has published a series of blogs on the draft NPPF’s themes and proposed policies for housing and different land uses.

In addition, the Lichfields’ Insight Focus on the draft revised NPPF provides detailed commentary on the housing-related policy proposals of the NPPF, including:

• the staged introduction of a standard methodology for identifying local housing need;
• the housing delivery test;
• the Statement of Common Ground (that in effect would document steps taken in the Duty to Cooperate);
• viability and developer contributions at plan-making stage; and
• the allocation of housing sites for achieving a sufficient supply of land for new homes.

Following the launch of the draft NPPF and developer contributions’ consultations, MHCLG published draft Planning Practice Guidance on:

• Viability (also published as a separate draft, on 5 March);
• Housing delivery;
• Local housing need assessment;
• Neighbourhood plans;
• Plan-making; and
• Build to rent.

No formal consultation deadline is given for the submission of comments although it is assumed that responses should be made as for the main consultations i.e. by 10 May.

On 13 March and alongside the Spring Statement, an interim report from the Independent Review of Build Out, led by Sir Oliver Letwin MP, was published.

As reported on the same day by Lichfields, the Update explains how and why Letwin has considered ‘exclusively the question why, once major housebuilders have obtained outline planning permission to build large numbers of homes on large sites, they take as long as they do to build those homes’. He goes on to identify that the ‘absorption rate’ (i.e. the rate at which homes can be sold), is the ‘fundamental driver’ of build out. He acknowledges that the absorption rate is largely determined by the type, (including ‘size, design, context and tenure’) and pricing of new homes, and the limited opportunities for other housebuilders to enter large sites putting large housebuilders ‘in a position to exercise control over these key drivers of sales rates’.

Accordingly, Sir Oliver Letwin raises further questions that he is to investigate in the coming months, relating to:

• how the absorption rate would be affected if large sites were to be ‘packaged’ in ways that foster the delivery of different products;
• what would happen to absorption rates if the reliance on large sites were to be reduced; and
• what implications a different absorption rate would have on the current business models of major housebuilders.

Finally, the Update concludes that he will also ‘investigate what effect faster build out rates would be likely have on the ‘land banks’ held by major builders’.

The results of his analytical work are expected by the end of June in the form of a Draft Analysis; recommendations in a final report will be produced in time for the Autumn Budget.