Changes to the current planning system

Changes to the current planning system

The White Paper’s bold reforms won’t be in place for several years, and big questions remain to be resolved. So we will be working with the current planning system for some time. The Government is keen to keep the wheels turning and – in its second Consultation Paper - has put forward other proposals that will have an impact on emerging local plans and development projects.
 
Among the proposals is the changed Standard Method for local housing need, which we explain here. But the document puts forward other significant ideas, which we explore below:

 

       

 Contents  

 
 
       
 
01
 
 
02
 
 
03
 
       

 

Permission in principle on application extended significantly

The Government is consulting on extending permission in principle (PiP) on application to all forms of housing-led development, with the exception of EIA development and development requiring appropriate assessment, with no cap on the amount of commercial floorspace within a given scheme.
 
These proposals would open up establishing the principle of housing-led development to many more sites than at present. PiP is not a planning permission and the subsequent technical details consent may not necessarily be easily achieved (notwithstanding the probable 10-week determination period for major development). So perhaps PiP for large sites is best thought of as buying the opportunity to put forward a site allocation to achieve some certainty and add value.
 
 

Background

It has been possible to seek permission in principle (PiP) on application since June 2018. It remains one of the most significant changes to the way planning permission may be achieved since outline planning applications were introduced 60 years ago. PiP is not a planning permission; it is part one of a two stage process that grants planning permission. The second stage is technical details consent. The granting of technical details consent means that the site has planning permission; this is the key difference between outline planning permission and permission in principle.
 
Take up of PiPs has not been great. To a large extent it is aimed at SMEs trying to de-risk sites in order to obtain funding, rather than being a sleek, cost-effective two stage process. Some developers have perceived that PiP on application only applies to brownfield land and/or land on a Brownfield Land Register (BLR): but this is not the case.
 
 

Proposed Changes

The Government is consulting on extending PiP on application to all forms of housing-led development, with no cap on the amount of commercial floorspace within a given scheme. They state that they do not believe it is necessary to limit the amount of commercial floorspace as it will still be the case that Permission in Principle should only be granted for development that is housing-led. Non-housing development that is compatible and well-integrated into residential development can help to create sustainable neighbourhoods”.
 
Potential Schedule 2 EIA development, including large sites capable of delivering more than 150 dwellings and/or of more than 5 hectares would not be able to apply for PiP unless the application were accompanied by a screening opinion concluding the proposal was not EIA development. Similarly, where there is a probability or risk that the proposal is likely to have a significant effect on a European site, a PiP application would have to be accompanied by an appropriate assessment demonstrating significant impact on the site was unlikely. While the White Paper wants to change these environmental impact procedures, this is some way off and well beyond the timescales for introducing this measure.
 
 

A change to information requirements and introduction of height parameters?

The determination period for a PiP on application is five weeks and includes a 14-day consultation period with public and statutory consultees. The Government is not proposing to change this as it considers these timescales ensure “a speedy decision by the local planning authority”.  However, as a result of extending the scope of PiP to major developments the Government is considering amending the scope of information required and the publicity requirements placed upon the local planning authority. 
 
The relevant matters which should be assessed by a local planning authority in a PiP application are location, land use and the amount of development. The Government is considering adding a height parameter in terms of the number of storeys, as an additional matter to be assessed, given the potentially larger scale developments that PiP could be used for.  This would provide greater clarity to the applicant and local planning authority about the scale of housing development that is acceptable for the site although it would add to the complexity of the determination of the application.  In addition, it would start to bring design issues into the PiP process as well as result in a need to identify zones within a site with differing height parameters, perhaps diluting the original aims and objectives of the PiP process itself.
 
 

Amendments to publicity requirements?

As larger developments are proposed to fall within the scope of PiP on application, the Government is keen to increase the extent of publicity of such applications in order to give the public a greater opportunity to comment, whilst still keeping to the speedier decision-making process. Currently local planning authorities need to advertise PiP applications on their website and by posting a site notice.
 
Other specific consultation requirements apply in certain circumstances. The Government is suggesting that a press notice might also be required to advertise the application and is seeking views on whether there should be an overall general requirement to publicise the application, or even both. This is an interesting proposal; no mention is made of introducing neighbour notification, notwithstanding the very significant increase in the scale of development that can be granted in PiP. This seems to be a nod towards the seeking out of development proposals in an area that will be part of the new approach to consultation set out in the White Paper.
 
 

Revised Application Fees

The Government is keen to revise the cost to applicants of submitting an application for PiP, in order to make the process more attractive to developers, particularly on larger sites and as an alternative to an outline planning application. The consultation notes:
 
“Under the current fee structure, a Permission in Principle application for a 1-hectare development would cost approximately £4000, which is only slightly less than the cost of an outline planning application (£4600). We are keen to promote Permission in Principle by application as a more streamlined and cheaper alternative to outline permission”.
 
The Government says its preferred option is for a “simplified banded fee structure” with a fee per 0.1 hectare in each of three bands of site size: less than 1 hectare, between 1 to 2.5 hectares and more than 2.5 hectares (capped at a maximum).
 
 

Automatic inclusion of PiP granted on application into Part 2 of the local BLR

Brownfield Land Registers are divided into two parts.
 
  1. contains a list of brownfield sites that are considered appropriate for residential development; and

  2. consists of sites which have been taken forward from Part 1 of the register and granted automatic Permission in Principle by the local planning authority (following consultation).
 
The Government is also consulting on whether all Permission in Principle by application “consents” that are on brownfield land should also be automatically recorded in Part 2 of the BLR. This is linked to the publication of a national brownfield map that will show “all” brownfield sites that are suitable for housing. Including permission in principle achieved via application in part 2 will ensure they are captured on the map. In the longer term, under the Planning for the Future proposals, as the new local plans are produced, the Government intends to review the role of BLRs more generally.
 

Why not encourage local planning authorities to add sites in Part 1 to Part 2 of the BLR?

According to the Regulations, sites in Part 1 of the BLR ‘must’ be included in Part 2, if the local planning authority (LPA) has ‘decided to allocate the land for residential development’; no indication is given of any suggested decision-making procedure. The actions of a developer or owner(s) can lead to inclusion of a site in Part 1 of the BLR, but not in Part 2 - and there is no mention of any mechanism, or right of appeal that can ‘force’ an LPA to consider the merits of including a site in Part 2, and thus grant it PiP.
 
It is a little surprising that measures increase PiP by BLR are not part of consultation proposals, but ultimately PiP achieved via Part 2 of the BLR requires the LPA to promote sites. This means devoting resources to the task and prioritising some sites over others. It also reflects the inference that BLRs might feed into the national brownfield map but their ability to grant PiP will be withdrawn.
 
 

Further guidance to support implementation

The Government wants to see an increase in the use of PiP on application and to make such applications a more attractive option than an outline planning application by proposing the changes set out above. As part of this push, the Government proposes to introduce further clarity and guidance on the purpose, process and benefits of PiP.  The consultation states that ‘it seems some local planning authorities continue to make decisions on Permission in Principle based on detailed matters, such as transport access, when these should only be taken into consideration at the technical details consent stage.’  As such, the Government wants new guidance to ensure that local planning authorities only take into account the matters specified by the Regulations. 
 
 

Next Steps

Following this consultation, which runs until 1 October 2020, the Government aims to introduce amendments to existing Regulations this Autumn and to come in to force by the end of 2020. Changes to application fees would require separate changes to the Planning Fees Regulations.
 
For more details on the existing legislation and guidance related to permission in principle please see:
 
  

Affordable housing: First Homes enter the mix

During the spring - and off the back of a lacklustre take-up of Starter Homes (number delivered = zero) - the Government launched a consultation on ‘First Homes’, a form of discounted market housing. 
 
The Government is taking forward both of the options put forward:
 
  1. a new planning requirement in law or policy for the delivery of First Homes (it is policy only for now); and
  2. changing the current national entry-level exception site policy to a First Homes exception policy.
 
The Government is now consulting on the detailed proposals for First Homes and on associated significant changes to the exception sites policy in the National Planning Policy Framework. Further details of how the product will work are provided in the response to the first consultation.
 
The premise of First Homes is to diminish opposition to new housing developments, on the basis that local people will know that they might be able to afford to live in the development where perhaps historically they would not.
 
In an interview with Talk Radio the Housing Secretary said:
 
“We think this will get more homes built across the country. The big housebuilders support it because they, like us, think that this will build popular support. You see a housing estate going up near you, you will know that this is an opportunity for you, your children or your grandchildren to get on the housing ladder with a discount that on the average home will be £100,000”.
 
First Homes are to be aimed primarily at first time buyers who are young and local (including local key workers living elsewhere), but there will be exceptions, including serving members of the Armed Forces and recent veterans.  Of note, the focus has switched between the first and second consultation from young to first time buyer, which seems a more equitable approach. Where the development is comprised solely of housing aimed at a particular sector there may still be a requirement for First Homes (this is part of the current consultation). The new product will be enforced, and to some extent its conditions designed, by local authorities.
 
The Government appears to be highly committed to this policy and it could be introduced very quickly, but the timings are not clear: the Government has also announced that a 1,500 unit pilot of First Homes will be included in its affordable homes programme.
 
Notwithstanding, given that First Homes policy could be introduced in the next six months, the transitional arrangements will be relevant to some planning applications pending at present and many more at pre-application stage.
 
Local planning authorities will need to consider how they are going to administer their many and significant new responsibilities linked to the product. Furthermore, where payments are accepted in lieu of First Homes, local planning authorities will need consider their approach to purchasing market homes that will become First Homes.
 
Aside from the administration of the product, local planning authorities will also need to think about determining what a tenure mix policy compliant scheme is in their locality, if the First Homes policy would shift the balance set out in the tenure mix policy of a local plan (see below).
 
Given its potential rapid emergence, it is for another day to consider how First Homes might fit with the new system of planning contributions set out in the White Paper, but the following explains how it will work under the current arrangements.
  
 

How will the planning system be changed in order to deliver First Homes?

The English First Homes policy will require at least a quarter of all affordable housing units secured through developer contributions to be First Homes; it will be brought forward via amendments to the National Planning Policy Framework (NPPF) (NPPF v2.2?).
 
This is notwithstanding a concern in the first consultation that prescribing that a given percentage of affordable homes via s106 agreement should be First Homes might discourage some local authorities from using s106 obligations to deliver affordable housing, which would mean fewer First Homes being delivered.
 
The alternative policy option of prescribing that a percentage of all units delivered on housing sites of 10 units or more are to be First Homes was said to be preferred, but the potential impact on viability and consequential reduction in the potential for other developer contributions on certain sites was acknowledged and is likely to be why this approach is not being taken forward.
 
The 25 per cent requirement is lower than the worked examples in the consultation, which estimated that if 40% of affordable homes secured by s106 agreements were First Homes, then 12,000 First Homes would be delivered (it appears to be a per annum figure).  This would increase to 16,000 if 60% of affordable homes were First Homes and 19,000 if 80% of affordable homes were First Homes.
 
On-site delivery of First Homes is anticipated in most cases, but the consultation recognises that there may be off-site contributions towards affordable housing, of which a quarter of the contribution (whether all or partly cash) should be used to deliver First Homes. Local authorities or developers may need to acquire market housing “paying the developer a sum to offset the discount from market price, and securing the tenure through section 106 planning obligations”. While the consultation refers to a developer, it is not clear whether the local authority would have to buy a new home.
 
The Government intends that First Homes will be prioritised over any other affordable home-ownership products referred to in any tenure mix set out in development plans.
 
In this circumstance, to avoid distorting the “value captured” by affordable housing, as assessed in the viability assessment that underpins any local plan’s tenure mix policy, the affordable housing proposed in a policy compliant application should seek to capture the same value of affordable housing that pre-First Homes policies would require.
 
In addition, and where affordable homes for sale currently make up less than 25 per cent of the housing mix sought by policies, the percentage of affordable homes for rent will be reduced too. 
 
An example included in the consultation is that where a policy requires 20% shared ownership, 40% affordable rent and 40% social rent, a policy compliant scheme would provide 25% First Homes; 37.5% affordable rent and 37.5% social rent. The Government prefers the approach in the example above where housing mix beyond First Homes reflects the approach taken to housing mix in the development plan, but is consulting on whether the mix of the other to be 75% negotiable.
 
Where a scheme is not policy compliant in terms of the percentage of housing that will be affordable housing, the affordable rent element of the proposal would not be squeezed further, because First Homes policy will be a percentage of the affordable housing to be delivered.
 

Amending the Community Infrastructure Levy regulations

The CIL Regulations would be amended to provide a CIL exemption for First Homes.  The first consultation also said that CIL Regulations may also be amended to ensure that CIL charging rates “are not set at a level that would prevent current levels of affordable housing delivered through s106 obligations from being delivered in future”. It seems likely that the CIL Regulations will be amended before they are abolished.
 
 

Should First Homes excluded from Build to Rent developments?

The document also asks whether Build to Rent developments (which it refers to as a form of affordable housing) should be exempt from the requirement to provide First Homes, in the way that they are exempt from other home ownerships products. The answer to this question is likely to be a resounding ‘yes’ from the sector and from local planning authorities that might have to acquire housing that would become a First Home if a cash contribution is provided by a Built to Rent developer.
 
 

What are the transitional arrangements?

Current planning applications or pre-applications that have been subject to detailed discussions on tenure mix will be able to proceed as agreed, but LPAs “should consider whether First Homes could be easily substituted for another tenure, either at 25% or a lower proportion”.
 
 

Delivery through amending the exception sites policy

Presented as the alternative to requiring First Homes via s106 agreements in the first consultation, the Government also intends to amend the exception sites policy at para 71 of the National Planning Policy Framework (NPPF) – i.e. there will be two routes to First Homes. The policy will be amended to:
 
  • specify that the affordable homes delivered should be First Homes for local, first-time buyers;

  • allow a small proportion of affordable homes to be delivered on these sites where there is a significant local identified need;

  • allow a small proportion of market homes on a site where essential to ensure the development will be viable and deliverable; and

  • remove the threshold on site size set out in footnote 33 of the National Planning Policy Framework but retain that they should be proportionate in size to the existing settlement”.
  
The current exception site policy does not permit a proportion of market housing.
 
In its first consultation the Government estimated that this approach would lead to 4,000 First Homes per year being delivered. 
 
 

Will the development plan require review to reflect First Homes?

The Government considers that replacing home-ownership tenures by First Homes in national policy will reduce the need for LPAs to carry out a local plan review, but LPAs might decide to review the local plan to update the tenure mix they are seeking. Local plans and neighbourhood plans that are submitted for Examination within 6 months of this new policy being enacted will not need to reflect the First Homes policy requirements. This is arguably a moot point given the wider changes proposed in the White Paper, which will require new plans in any event.
 
LPAs intending to require a First Homes discount greater than 30% might also choose to undertake a local plan review.
 
 

Does the Government comment on the potential impact on other affordable housing tenures?

The Equality Impacts section of the first consultation acknowledges that delivery of First Homes via s106 agreements could impact the numbers of homes delivered for other affordable housing tenures. In response, the Government claims the prospect of additionality:
 
“However, increasing contributions through entry-level exception sites will lead to the development of additional First Homes as this land would not otherwise have been used to build housing in the short or medium term. This will increase the development of First Homes while mitigating the impact on provision of other types of affordable housing tenures”.
 
The current consultation adds:
 
“[…] our analysis suggests that the reduction in the number of homes delivered in these tenures is likely to be relatively small, compared to the number of First Homes delivered”.
 
 

Local evidence of why a different affordable housing mix is needed

The Government says that it may still consider using legislation to ensure First Homes are brought in “consistently” across the country. This is in the context of the Government acknowledging the trade-off between First Homes and other affordable housing tenures and that site viability means that affordable housing requirements are not always met – i.e. there is a recognition that some local authorities will seek to swiftly devise policy to reduce its squeeze on traditional social housing.
 
A reminder of the difficulties that arise when Government introduces a swift change to national policy on affordable housing provision is the judgment in Secretary of State for Communities and Local Government (SoS) v (1) West Berkshire District Council (2) Reading Borough Council (2016) (our overview is here).
 
In that case the SoS appealed against the Councils’ successful challenge(in 2015) of national policy introduced in 2014 for a ‘vacant building credit’ and which outlined the circumstances in which contributions for affordable housing and tariff-style planning obligations should not be sought from small scale and self-build development. The judgement led, effectively, to both sides claiming a victory: the Government won the case, but the case makes it clear that there is no ‘blanket approach’ to the application of government policy to decision-taking (see above), or plan-making.
 
In that policy example, which is to be temporarily expanded to larger sites in urban areas, the Government said that very few local planning authorities varied the small sites policy by their local plan:
 
“Only 8% of authorities have policies in up-to-date plans (less than five years old) that do not comply with national policy and are currently seeking affordable housing contributions for small sites”.
 
It will be interesting to see whether significantly more authorities have the time, budget or inclination to devise local plan policy that justifies variations of the national First Homes policy, particularly in the context of the need to prepare new plans under a post-White Paper planning system.
 
 

What would the discount off a new home be?

A minimum 30 per cent discount off market value, set by an independent valuer. As in the earlier consultation, local authorities will have the discretion to apply higher discounts.  But where the previous consultation said there would be no maximum discount is proposed, a cap of a 40% or 50% discount is proposed where need is evidenced via the local plan. The level of discount will not lead to a variation in the percentage of First Homes to be provided – e.g. a 50% First Homes discount would not mean 15% of the affordable homes could be First Homes, instead of 25%. An evidence-based requirement for even higher discounts across an area would presumably be possible through a local plan or supplementary guidance as First Homes are being introduced via policy rather than law, but the document does not indicate this.
 
 

Does only the first owner benefit from the discount?

The full discount would be retained in perpetuity by placing restrictive covenants on the homes.  However, if the owner defaulted on their mortgage the lender would receive the home without the covenant and the discount would be lost.
 
 

Can any new property be bought with the discount?

To avoid the purchase of “exceptionally expensive” property being subsidised, caps on the market value of a property that could benefit from the First Home discount will be put in place; £450,000 in London and £250,000 elsewhere in England. Thus LPAs in high value areas just outside London will see a steep drop off in the maximum cost of First Homes compared to nearby streets within London. In order to fit market conditions, where the cap is considered too high, LPAs will be able to set lower price caps for the first three months of sale of First Homes provided they evidence both local need and the impact on the viability of building new First Homes through the local plan-making process. The first consultation contemplated regional caps, but raised concerns that this may not sufficiently reflect local markets, and caps set at a sub-regional level were considered potentially inflexible; neither is to be taken forward.
 
 

Who will be eligible for a First Home? And how will demand be managed?

Young, local, first time buyers predominantly and also serving members and veterans of the Armed Forces who have left in the last 5 years (and bereaved partners of those who died in service – not clear why they have to have died in service).  The definition of local will be determined locally, but restrictions must be clearly evidenced, available for scrutiny, necessary and viable.  There is no further detail on the first consultation's acknowledgement that older people’s housing would not be suitable for first time buyers and suggestion that this is an example of a circumstance where non first time buyers might be eligible – it did not suggest that First Homes would not be required in such a development. 
 
There will be an income cap on eligibility, as with purchase price caps; Local Planning Authorities will have the ability to set lower income caps for the first three months of sale, provided they can evidence both need and viability through their local plan making process.
 
The first consultation said that where demand still exceeds supply local authorities might review an applicant’s income and assets in more detail, in a bid to seek out those most “in need”.  This has been significantly moderated to reflect local planning authority resources, which is a key concern in respect of the First Homes policy in general:
 
“We recognise the challenges Local Planning Authorities may face in routinely inspecting First Homes applicants’ income and assets as part of each transaction. We also understand the difficulties involved in identifying individuals’ asset holdings and have listened to stakeholders’ concerns that those with relatively high levels of savings but low incomes may be discriminated against. We will therefore empower Local Planning Authorities to be able to take incomes into consideration in instances where First Homes are oversubscribed. They will not take individuals’ assets into consideration”.
 
First Homes would have to be bought with a mortgage or home purchase plan that covers at least 50 per cent of the purchase value (i.e. they must borrow at least 50% of the value).
 
In the first consultation, the Government said “it will be important to ensure that decisions about who is prioritised are made in a fair and transparent way, which avoids price inflation and counter-offers”. It suggested selecting those to benefit from the scheme on a first-come, first-served basis, or use of local eligibility criteria perhaps reflecting income and assets.  Unsurprisingly then, it encouraged ideas on how to prioritise demand – but there is no detail on how to achieve this at present and detailed guidance seems likely.
 
 

What if there is no local demand?

Prioritisation of those with local connections and first time buyers (and presumably others who are eligible for First Homes) will be time-limited, falling away after three months.
 
 

Can First Homes be offered for rent?

Not as a buy-to-let. However, the Government proposes that owners of First Homes may let their property for up to two years without seeking the local authority’s permission and for longer periods at local authority discretion.  There is a closed list of circumstances where there would be a presumption in favour of approving such a request, albeit that going into long residential care, the example given in the first consultation for when longer term letting might be authorised, is not listed.  It is not clear how letting periods would be monitored or enforced both from a cost perspective and given that it may require the eviction of a tenant.
 
 

Are First Homes eligible for Help to Buy?

No, Help to Buy is a different programme and the first consultation said that this product would not benefit from it.
 
 

Will local authorities be provided with additional resources to support the scheme?

The Government now acknowledges that there will be costs associated with administering the scheme and will produce standardised covenants and s106 clauses and provide new burdens funding, if required. It is considering whether LPAs can charge developers and purchasers fees that reflect administration costs.
 
There would be a model First Homes agreement, which would reduce the need for lenders to understand local models. 
 
 

Affordable housing: temporary extensions to the small sites policy in urban areas                  

The Government is proposing to extend the threshold of “small sites policy”, which says that affordable housing contributions should not be sought for minor housing developments. The extension of the policy is an element of providing support for small and medium enterprise (SME) builders and would be for 18 months from its publication.
 
The threshold would be increased from 10 units to 40 or 50 units and from 0.5 hectares to an as-yet-undecided site size.
 
In terms of how this would impact the delivery of affordable housing, the consultation says:
 
“For example, for a threshold of up to 40 units we would expect to see a reduction of between 7% and 14% of section 106 affordable housing delivery over a single year, assuming overall housing delivery remained constant. For a threshold of up to 50 units, this would be between 10% and 20%”.
 
According to the Government, only 8% of authorities have policies in up-to-date plans (less than five years old) that do not comply with national policy and are currently seeking affordable housing contributions for small sites. While up-to-date, these policies would not be affected by the temporary change.
 
The consultation also notes that “rural local authorities secure greater proportions of their housing supply as affordable on average when compared to urban local authorities”. For this reason, the threshold for rural areas will not change and the lower threshold of five units or fewer may be required by local plans in these areas.
 
Planning guidance will advise local authorities on how to secure affordable housing where large sites are being brought forward in phases of up to 40 or 50 homes.
 
The Government is consulting on all elements of the above proposals and inviting views on other ways to support SME builders. The consultation refers to changes policy and legislation but the latter is probably a typographical error; the consultation says that if it is taken forward, this could be through the introduction of a Written Ministerial Statement in the Autumn.
 

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