Housing planning news, November 2018

• In the short-term, the 2014-household projections provide the demographic baseline for local housing need assessment; and
• the 2016-based household projections do not qualify as an exceptional circumstance to depart from the standard methodology.

A series of planning-related announcements, publications and consultations mentioned in the Autumn Budget have followed up on commitments made earlier in October at the Conservative party conference. 

Of particular note are the following, which are covered in more detail in other news stories below:

• the Government’s publication of its response to submissions on the developer contributions consultation;
• the publication of Sir Oliver Letwin’s ‘Independent review of build out: final report’; and
• a new consultation regarding a number of matters (including proposals for new permitted development rights and possible changes to the Use Classes Order) under the banner, ‘Planning reform: supporting the high street and increasing the delivery of new homes’.

The Government has also published the findings from an external examination of the Help to Buy equity loan scheme, and a new consultation on ‘Innovation in affordable home ownership: a call for proposals for private shared ownership’.

Plans to end the council borrowing cap, new local authority (LA) plan-making partnerships being formed to win infrastructure funding - and more resources for planning departments – were all announced or first mooted at the Tory party conference at the beginning of October.

It was Prime Minister Theresa May who on 3 October announced the proposed removal of the limit to the amount that councils can borrow to build new housing.  And in the Budget, it was confirmed that the Housing Revenue Account cap that limits local authority borrowing for housebuilding was being abolished with immediate effect.  It is estimated that up to 10,000 additional homes a year should now be capable of being brought forward.

Although the cap was raised in the 2017 budget, allowing councils in high demand areas an extra £1bn to bid for, LAs could only borrow a certain amount against their Housing Revenue Account.

Housing Minister Kit Malthouse spoke at several Conference fringe events, stating at each one how the Government wants to repeat the Oxfordshire Housing Deal elsewhere i.e. it is encouraging more councils to prepare strategic plans jointly, with Government funding from the Housing Infrastructure Fund (HIF) resulting.  As then announced in the Budget, the Government will now provide additional funds to support housing delivery – specifically:

• an extra £500m for the HIF (now totalling £5.5bn) to support the delivery of up to 650,000 homes;
• the allocation of £291m of the HIF to unlock 18,000 homes in East London; and
• £8.5m to support up to 500 neighbourhood planning areas to allocate or permission land for discounted homes.

The Government also announced that Homes England was to publish a new five-year strategic business plan, which was then published the following day.

The Minister also acknowledged at a 2 October Conference fringe event that the planning system is under-resourced, with too few experienced LA planning officers. He referred to the well-known, widely held view that the development industry would be prepared to pay more in fees, if this were to speed application determination and when a start could be made on-site. This was a reference to the housing White Paper, which mooted a possible further 20% fee increase ‘for those authorities who are delivering the homes their communities need’. There has not yet been a consultation on the detail and the matter is still clearly under consideration.

MHCLG, Planning reform: supporting the high street and increasing the delivery of new homes

(a) provide incentives to diversify existing such sites, by making government funding conditional on a s106 reflecting the new planning policy; and

(b) allocate ‘a small amount of funding’ to a ‘large sites’ viability fund’, to withstand non-viability arising from the new diversity provisions – a recognition of the potential problems of transition;

(i) a Local Development Company (LDC) that would establish a master plan and design code, and then bring in private capital through a non-recourse special purpose vehicle, before ‘parcelling up’ the site and selling parcels to builders/providers offering housing of different types and tenures; or

(ii) the LA establishing a Local Authority Master Planner (LAMP) to develop a master plan and full design code for the site, and then enable a privately financed Infrastructure Development Company (IDC) to purchase the land, develop the infrastructure, and promote the same variety of housing as in the LDC model.

The Government’s response to consultation responses on supporting housing delivery through developer contributions was published on Budget Day. The consultation itself ended in May this year.

In terms of next steps, the Government proposes changes to the Community Infrastructure Levy (CIL) Regulations 2010 (as amended); it is stated that these changes could also be used to incentivise the build out of developments. The Government intends to consult on draft amendment regulations ‘in due course’.

In direct response to consultation responses, the following measures are proposed:

1. using existing powers, combined authorities will be able to take forward a Strategic Infrastructure Tariff (groups of charging authorities will also be encouraged to pool CIL receipts);

2. the s106 pooling restriction will be lifted in all areas, while the uptake and continued use of the levy will be incentivised;

3. the required reporting of developer contributions from CIL and s106 planning obligations, through an Infrastructure Funding Statement, on a statutory basis (to also help prevent ‘double-dipping’);

4. it will be possible for s106 planning obligations to collect contributions towards infrastructure also included on a charging authority’s Regulation 123 list (with the new reporting measure above, preventing double-dipping);

5. it will be made clear that LAs can seek a fee in a s106 from applicants, towards monitoring obligations;

6. for development originally permitted before CIL came into force, levy liabilities will be capable of being balanced between different phases, and abatement for such phased planning permissions will be introduced;

7. the indexation applied to development that is both originally permitted and then amended while CIL is in force will be amended, to align with the approach taken in the recently amended Reg. 128A, for s73 permissions;

8. new PPG, to assist LAs in preparing CIL charging schedules, particularly in relation to infrastructure requirements, viability assessments and levy data collection; and

9. charging authorities will still have to consult on draft charging schedules but the statutory requirement for two separate rounds of consultation in every circumstance will be removed.

A further consultation is proposed on changing the index used for levy rates for residential development to the House Price Index (using local-level data on an annual basis), and for using the Consumer Price Index for indexing CIL for non-residential development.

It should be noted that some other consultation proposals are not being taken forward; there will be no amendments to CIL rules to allow LAs to ‘better to capture increases in land value where this was justified by infrastructure needs’ and there are no changes proposed to current exemptions (although penalties will be modified).

In the longer term, the Government states that it will bring forward proposals for allowing joint planning committees to charge a Strategic Infrastructure Tariff, and will review options for giving other groups the power to levy one as well.

The Government otherwise states rather vaguely that ongoing technical and operational issues with CIL will be considered and addressed.

In a House of Commons debate on housing and home ownership on 16 October, Housing Minister Kit Malthouse referred to how the Government will be responding ‘shortly’ to the Select Committee’s recent land value capture report. He has been reported as saying elsewhere that the Government's response may be published before Christmas and some of its details could be announced in the Autumn Budget. Indeed, although the Select Committee’s report was not expressly referred to in the Budget, the Government’s response to the consultation responses on supporting housing delivery through developer contributions considers that the reforms set out in the document ‘could provide a springboard for going further, and 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’. During the 16 October debate, Malthouse added a mention of the National Planning Policy Framework (NPPF), commenting on how:

‘[…] it encourages LAs ‘to make more proactive use of their extensive land assembly powers. We will keep the operation of the system under review.’