Planning reforms

The government has stated that in order to promote growth, it wishes to increase housebuilding in this country. It has now issued its response to the consultation on the proposed amendments to the National Planning Policy Framework and made some changes.

Measures for Councils and local plans

Mandatory housing targets will be reinstated using a standard method, replacing previous flexibility given to councils. The 5 year housing land supply will also be reinstated, and under-performing councils will be required to have 20% buffer. This is a more consistent and predictable method of ensuring higher housing numbers.

Previously, urban areas were required to build 35% more houses which is being removed, so that the housing need is more broadly distributed. This means pressure on high-demand urban areas where there is more infrastructure is reduced. Here in Cambridge this is unlikely to make a big difference.

Previously, councils could argue that the local character of a place meant that high density developments should be refused. This will no longer be possible and means that cities are likely to become more densely populated. Upward extensions are also supported. This will support building more homes in cities and help protect the greenbelt.  Councils will still be able to produce their own design costs and thus have some say in how places will look.

Where the local plan is out of date, or silent and the council cannot demonstrate a 5-year supply of deliverable housing sites, then there is a presumption in favour of development. The Cambridge local plan is not out-of-date but there was a temporary shortfall in the  5-year supply of houses. This requirement is now being retained and remains a lever against councils to force through housebuilding where not enough is happening.

The requirement to cooperate across boundaries is maintained which is important for housing delivery and helps put houses in the right places e.g. near transport nodes.

Where homes should be built

There is stronger encouragement for brownfield sites. This is not helpful in Cambridge where there are no undeveloped sites left.  Grey belt is now defined as previously developed land or any other land that does not strongly contribute to a) unrestricted sprawl of large built-up areas, b) the prevention of neighbouring towns from merging into one another and c) preserve the setting a special character of historic towns. Cambridge may well have grey belt land so this might increase the number of sites around the edges of the city.

Reforms affecting developers

For developers, tighter rules around viability assessments and reporting requirements will help councils in their negotiations with them. Compulsory purchase orders will help councils gather land for housing.

Planning authorities require developers to include affordable housing or fund infrastructure such as schools or roads via section 106 agreements. However, developers can argue that including these obligations would reduce their profit below a reasonable level usually around 15-20% and they submit a financial viability assessment to demonstrate this. If this is accepted, the developer is allowed to provide fewer affordable homes, reduce infrastructure funding or have other concessions. This process is not transparent and hard to challenge with planning officers not best placed to challenge the assumptions made by developers. The government is planning to restrict such viability challenges.

The viability calculation offsets the purchase price of the land against the value of the land with planning permission leaving a profit. The government plans to set benchmark land values for greenbelt land which will have the effect of capping landowner expectations and prevent overpayment for land by developers, thus maximising their profit. This will leave more value to provide affordable housing or infrastructure. It will increase the leverage of councils with developers.

Developers of any site that has planning permission are now required to a) formally notify the council when they begin development b) submit annual reports detailing the number of homes started and completed and expected timelines for future building. Councils will thus be able to see when developers are stalling and penalise them by refusing future planning applications from those with a track record of non-delivery.

Councils will find it easier to use compulsory purchase orders to assemble land for housing. They can now exclude the hope value of land based on speculative future planning permission and so owners can no longer hold out for inflated prices. Public bodies can thus buy land closer to the existing use value. Land banking and speculation is thus discouraged.

Requirements for social housing

The new rules promote the provision of more social and affordable housing.

On greenbelt land there is a requirement for 15% more affordable housing – so for Cambridge this is 46%. This will improve delivery of affordable homes and ensures public value for the release of green belt. Together with the viability restriction rules this will increase the amount of affordable housing but might deter some low margin development.

Councils are also required to consider social housing needs when setting affordable housing policies and local plans can now determine the mix of tenures in their local plan. Social rent is defined separately from other affordable housing types clarifying policy expectations. This emphasis on social rent should support the provision of much needed social housing.

Overall Verdict:

The majority of reforms are directionally supportive of increasing housing supply. The most consequential changes will be the change to viability assessments and the reporting requirements for developers, although difficulties will remain. In Cambridge, it remains to be seen what will count as greybelt land.

I do not think that these are particularly major reforms and cannot see that there will be a major increase in the rate of housing building in the country as a result, nor that there will be a major effect on growth.