19 May 2022

We must reform planning, not just planning contributions

Ever since the Government decided that the Liberal Democrats by-election win in Chesham and Amersham was a signal that planning reform via ‘Planning for the Future’ (PFTF), might lose them votes, they have been on a mission to present themselves as pro local voices.

This has meant that the excellent planning reforms put forward by Robert Jenrick MP have been side-lined and for those of us whose job it is to study what that might mean for industry, certain rumours have us very worried. The current rumour which keeps appearing is a pivot not to reform planning as a whole but take the politically palatable bits of the reforms, the bits which don’t enable houses, and implement them.

 

This has of course been done to death, as we have tinkered with a failed system for a decade but while tinkering is typically done to solve a specific issue, for example: encourage more SMEs by having affordable housing exemptions on sites with fewer than ten homes, when it is done to solve a public perception, not a commercial challenge, perverse outcomes are likely. And this is most definitely going to be the case if planning contributions are reformed and planning as a whole is not.

 

PFTP proposed what industry supported many years ago, one single set levy called the ‘Infrastructure Ley’ which was non-negotiable. This means section 106 would go, as would viability assessments. However, it was proposed alongside many other policies which would ensure the problems and cost which come alongside a single fixed levy, namely the obsession with allocating large sites, would be cushioned. This is because under PFTP, landowners would need to compete for allocations within an opportunity area, rather than councils picking specific sites.

 

In a single levy system without planning reform, the planning system will remain one of expensive, bureaucratic risk, rather than certainty and the allocation process will remain focused on small number of large sites.

 

Owners of large sites and builders with option agreements will likely rush to get large sites started and avoid the new levy, while retaining the ability to go down the viability route. These sites would continue to make up the majority of a councils five year land supply, meaning any smaller or windfall sites, will not experience the landowner rush for delivery and instead, due to shrinking land availably, landowners will be able to absorb any levies by selling the sites at a higher price.

 

Higher land prices on smaller sites are already prevalent across the market, as investors and new developers, often on the advice of land promoters, are overpaying for land. Many of these sites are already unviable, which is why builders are not buying them but in a world without viability assessments, they will sit undelivered, thus putting greater pressure on councils to find sites for their five year land supplies.

The obvious solution will be to encourage increased density on allocated large sites, or by allocating new large sites, which were bought or optioned many years ago and with house prices rises, can cushion a new levy.

This leaves the humble locally employing SME, who delivers a higher proportion of affordable housing, builds beautiful within communities and for the local market, waiting impatiently until allocations or permissions expire so they can get back in the flawed ‘call for sites’ cycle.

 

The consequences are obvious. SMEs will leave the industry (some already are), and new entrants will be limited to those with considerable financial backing.

 

The Governments rhetoric is to support SME housebuilders, but SMEs have already told them they were on the right track with PFTF because not only does it breed opportunity but ensures planning certainty through the engagement and criteria setting of local people. Reforming planning contributions into a single levy without wholesale planning reform is a disaster waiting to happen and must not be allowed to happen.