Wednesday, November 11, 2015

Housing and Planning Bill

At the risk of testing my readers beyond endurance, a relatively short blog is now followed by a very long one.  However, this blog could be of help to those minded to contribute to the debate on the Housing and Planning Bill that will conclude at the beginning of December.  Feel free to cannibalize these submissions in any way that you feel could persuade the Parliament to concentrate on passing legislation that will help in the provision of the right number, of the right type of genuinely affordable homes.

Housing and Planning Bill 2015

I am a land use planner with over 40 years experience of working in public, private and voluntary sectors. I have also provided training in planning to property lawyers and taught planning at Oxford University Department of Continuing Education as well as offering private classes.  I make regular contributions to the trade magazines and newspapers and maintain a blog at  If I have particular expertise it is in the legal basis for planning preparation and implementation. I have also been heavily involved in the current discussions about self-building and co-housing.

1          Introduction

1.01    Government will be aware that the planning system is extremely hierarchical; with powers delegated to LPAs but under supervision by the Communities Secretary/Inspectorate primarily through the examination of development plans and conducting appeals against refusals of permission.  Although those working with the planning system are generally hoping for a period during which there will be no significant (or even minor changes) for them to learn, understand, communicate and implement, the Communities Secretary does have extraordinary power to bring about positive change through what he says and how Inspectors are briefed. Many if not most changes are based on a misunderstanding of how the system could or should work and are often responsible for making things worse rather than better. Government then blames the ‘system’ for these failings and introduces further misjudged changes. Ministers seem incapable of taking or acting on a holistic or systemic view of the existing controls in respect of environmental management.

1.02    The recent successful challenge of West Berks and Reading BC (currently subject to an appeal) to a written ministerial statement which was found to be incompatible with the existing statutory scheme, should be taken as a lesson for Government (and its Ministers) to be sparing with its interventions and ensure that changes are carried out through due process and are compatible with the system as formally established.  This Bill is intended to change the statutory regime and, unlike policy statements, will be harder to correct, will imply legal remedies for failures to carry out duties, and should be the subject of even greater scrutiny to ensure that the changes will bring about the intended improvements to the system and do not just add to the existing confusion and have unfortunate and unintended consequences (see the Judge’s findings in West Berks and Reading BC).

1.03    My first point is that the sections of the Bill addressed below suggest that it has been drafted without adequate understanding of the systemic nature of housing and planning in order to achieve the intended aims and, consequently, it is relatively easy to identify more appropriate ways to improve the existing system(s), mostly based on coherent policies and not legislative change.

1.04    The second fundamental point is that it is extremely unlikely that sufficient housing could be provided of the right quality (inc energy efficiency), of the right size, in the right places and at genuinely affordable prices until the enhanced value of the land being developed is captured for the benefit of both the new and existing residents and businesses that were responsible for creating all the excess above existing use value. That is, the suitability and attractiveness of the location depends substantially on the quality and adequacy of the infrastructure.  The current failure to capture development land value (eg < 200x existing use values) benefits a few hundreds of landowners and disadvantages everybody else. There does not appear to be any electoral disadvantage to capturing development land value (see 2014 report by some Michael Lyons).

1.05    Although a Government that finally understands the necessity of capturing the development land value (see the 1947 Act!) might think that legislation is required (eg a further section to the Bill), again, the Communities Secretary could achieve this through a clear statement about what ‘necessary infrastructure’ implies.  New development should not be permitted which does not provide for all the infrastructure (including the genuinely affordable housing for all the workers which contribute to the local economy and living conditions – teachers, nurses, planners, cleaners, police, road maintenance etc) and put an end to the freeloading that currently characterizes new development.  Describing housing as ‘infrastructure’; is consistent with its recent proposed inclusion in large infrastructure projects. The reasons viability assessments have been required and affordable housing provision has been squeezed are because of inflated land costs. The development industry (those that have not gambled/landbanked at inflated prices), as opposed to landowners, would welcome a substantial reduction in development land values.

1.06    The Government should commission research on the extent to which demand-side initiatives (Help to Buy, Funding for Lending, other discounted purchase schemes inc equity sharing added to Housing Benefit) have contributed to excessive house prices. Such research is essential to understanding whether further such initiatives would be desirable, necessary or counter-productive in the endeavour to provide genuinely affordable housing.

2.         Part 1: New Homes in England  
o Starter Homes
2.01    A systemic view of planning and housing would suggest that this new category (ie 20% discount, <£250k or £450k, for under 40s and refunds up to 5 years) would create a number of false and unhelpful thresholds each of which causes difficulty, distortions and, in implementation, many ‘hard cases’. If the perceived problem is a shortage of small dwellings for sale to young people at prices they can afford there are a number of policies that should be introduced by the Communities Secretary to be included in all development plans (local plans and neighbourhood plans) as supervised by the inspectorate.  Small dwellings are urgently required to balance the size of households and houses throughout the country. There is a particular need to provide attractive options for the 8 million households looking to downsize (see APPG on Housing and the Elderly) and release larger dwellings into the market or back to the registered provider. This would be and obvious systemic approach to meeting the National scarcity of appropriate housing. The current level of under occupation, including empty dwellings, amounts to about 25m spare bedrooms which represent the equivalent of over 10m new small houses. This would be the equivalent of 40 year’s supply – added to the large number of new small dwellings that are needed to trigger this virtuous circle.
-           New developments should be predominantly 2 bedroomed,
-          All larger dwellings should be designed to be easily and cheaply subdivided which no further permission should be required (this permitted development right that should apply to large existing dwellings would require secondary legislation).
-           Permission should be required for all extensions in order to maintain the housing mix of homes in ‘lifetime neighbourhoods’ (the appropriate model rather than lifetime homes), and to maintain the energy efficiency achieved by the original. The Communities Secretary needs to encourage the inclusion of these policies in development plans.
2.02    If “starter homes" are to be provided on discrete sites or part of larger developments there is no good reason why these should substitute for houses at genuinely affordable rent. Neither is it reasonable to expect all other new and existing developments to pay for the necessary infrastructure.
o Self-build and custom house-building
2.03    It has become obvious that the housing market is dysfunctional in a number of ways that are not apparent abroad. One of the unfavourable comparisons is the relatively small scale of self/custom-building which is taking place in this country. It is encouraging to see that this is a matter which is being addressed, but it is incomprehensible that this is through legislation and not changes or additions to Government policy (ie a Ministerial statement to explain para 50 of the NPPF).
2.04.   A consensus seems to have built around the prospect of the larger building companies providing no more new houses than 150,000 per year.  Even this scale building will depend on the number of people being able to afford to buy housing at the inflated prices largely caused by unjustified land values and adjusted to the artificially high (i.e. the price unrelated to the actual cost of building) house prices in the local area.  A similar consensus seems to have identified a need for nearly double that number. Whilst the Government is hoping to see a revival of small building companies, the extra 100,000 dwellings will need a step-change in the process of housing delivery.
2.05    Whilst the proposed Registers of self and group-builders would be important components of the required growth in this sector, the expectation that councils would find adequate and suitable serviced sites is completely unrealistic.  The Bill should make it clear that councils will be expecting a proportion of all sites above 5 dwellings to reserve at least 20% of the plots on all sites (and provide services) for potential self/group-building. Some relatively constrained urban areas will need to be able to commission serviced plots on developments in neighbouring authorities to meet demand expressed through their registers.
2.06    This country also compares unfavourably with most of those in Europe (and the US) in the dearth of opportunities to co-house.  The Bill should clarify that the ‘associations of individuals’ to be helped in finding serviced plots should also be assisted in the provision of the facilities associated with co-housing, including common house, guest accommodation and workspaces.  Planning authorities should be required to keep registers of potential co-housers.
2.07    Whilst it might be unreasonable to exempt self-building and co-housing from making contributions to necessary infrastructure, as such exemptions to apply to social housing, it would be eminently sensible to include self-building and co-housing within the category of “affordable housing"  (already exempt contributions) given that this form of housing can be provided at substantial discounts.  Whether the promotion of self-building and co-housing is carried out through policy pronouncements (preferable) or through this Bill, it will be important to have very clear definitions of each so that any preferential treatment and discounts are properly justified.  Self-building is a more secure means of securing supply as it does not depend on the developer model of drip feeding into a market so as to avoid depressing process.
3.  Rented Housing
o Private rented sector
3.01    This is the growth sector of the housing market principally due to the growth of buy to let.  This sector includes a significant number of the 40% of dwellings which were sold to occupiers under previous 'right to buy’ provisions. As this sector is very likely to continue to make a very significant contribution to housing supply, the conditions applicable to private renters deserve to be given very close attention.  As drafted, the Bill is a missed opportunity to balance out the advantages of renting with those of buying.  The prospect of “fair rents" or “rent controls" is always met with objections based on the possibility that properties will be removed from the private rental market. Whilst this might have happened in the past, there is no reason why this should be the case in the current set of circumstances. Much would depend on the level of rents and the nature of the controls. The former should be based on average income levels and the latter to some appropriate form of index linking. If landlords  decided to take their properties out of the rental market and put them up for sale then this might be a desirable outcome, especially if this increased supply at reduced local prices. These properties could also be bought by Registered Providers.
4.   Social housing in England
o Right to acquire – extending Right to Buy discount levels to housing association tenants
4.01    Given that 40% of dwellings previously sold at a discount now in the private rental sector the Government should be required provide the evidence  which shows that the overall increase in owner occupation implied by this new provision can be maintained. In fact, it is likely that the economic situation/employment conditions would never support more than about 60% level of owner occupation. The precarious nature of current employment would also suggest that this level might even fall further and attempts to raise this back towards 70% are likely to be futile and do nothing more than add to the housing bubble.
4.02    The Government appears to have very limited understanding of the social rental sector. Seeking to control the rents and interfering with their sales can have significant impacts on the financial models of Registered Providers on which their  operations and flourishing depend.  It is quite possible that some Registered Providers are abusing their position and should be the subject of some in-depth investigation backed up by some enforcement powers. However, these are most likely to be required to address some relatively minor matters such as executive pay and not those which compromise the valuable contribution that they are making in the provision of affordable housing.  Registered Providers could also be encouraged (within the Bill if necessary) to contribute to the provision of opportunities for self/group-building and co-housing.
4.03    Whilst this provision should preferably be excluded from the legislation, Registered Providers could be encouraged to sell properties where this is appropriate to the adjustment or restructuring of their stock. A discount on market prices could be reasonable if it reflected the benefit that might accrue to the Registered Provider.
o Vacant high value local authority housing – requiring local authorities to manage their housing assets more efficiently, with the most expensive vacant properties sold and replaced with new affordable housing in the area
4.04    The attempt to link the sale of houses by Registered Providers to be replaced by funds accrued from the sale of high-value local authority housing is both clumsy and counter-productive.  If Registered Providers are required to sell at a discount, they should simply be compensated out of public funds to replace their stock.  Local authorities should not be required to sell properties where a relatively desirable location happens to have contributed to inflated prices. Local authority housing has a utility value in such locations that should be fully respected and protected.
o High income social tenants – requiring tenants in social housing on higher incomes (over £40,000 in London and over £30,000 outside London) to pay market rate, or near market rate, rents
4.05    Whilst there may be some relatively fortunate tenants who are finding their housing costs to be relatively affordable, these are very few in number and of little consequence compared to the extremely large number of owner occupiers in a similar situation, often without any mortgage liability or payments. The proposed regulation would require close and intrusive monitoring of earnings that would be extremely difficult to operate to relatively little advantage. In contrast, a regulation that encouraged downsizing by owner occupiers associated with a deliberate increase in appropriate housing choice, would have a very great social benefit in terms of the efficient use of the housing stock. In fact, such measures could increase the supply of housing at a far greater rate than the building of houses (often on greenfield if not Green belt land).
5.         Planning
Part 6: Planning in England
o Neighbourhood planning – simplifying and speeding up the neighbourhood planning process to support communities that seek to meet local housing and other development needs through neighbourhood planning
5.01    This is another example of tinkering that almost always does more harm than good.  Neighbourhood plans have the status of “development plans" and must, therefore, go through proper scrutiny and due process to avoid injustices (avoid legal challenges) and secure their community benefits.
o Local planning – giving the Secretary of State further powers to intervene if Local Plans are not effectively delivered
5.02    Local planning authorities might appear to be their own worst enemies in the extraordinary delays that have occurred in the production development plans. However, central government should have much greater awareness of the delays that have been caused by their tinkering with the development plan system. It is inconceivable that local plans could be properly and fairly prepared through central intervention.
o Local registers of land and permission in principle – creating a duty for local authorities to hold a register of various types of land, with the intention of creating a register of brownfield land to facilitate unlocking land to build new homes; and giving housing sites identified in the brownfield register, local and neighbourhood plans planning permission in principle, and providing an opportunity for applicants to obtain permission in principle for small scale housing sites
5.03    The system of controlling development through the grant of outline and full permissions with provisions for the submission of reserved matters is entirely satisfactory, sensible and functional. The system also has the advantage of having been fully and rigorously tested through the supervision of the courts. It is also a system with which both public and private sectors are reasonably familiar. There is absolutely no reason to believe that the changes now being proposed would have any advantages in releasing suitable housing land any faster than the existing system operating with the appropriate encouragement of the Communities Secretary.
5.04    Very substantial and compelling evidence should be required before a change of this nature is introduced. In the absence of significant beneficial effects it is unjustifiable to impose such changes on already under resourced planning departments and overworked courts.
o Planning permission etc – levelling up the power which enables conditions to be attached to development orders for physical works so that they are consistent with those for change of use; extending the planning performance regime to apply to smaller applications; and putting the economic benefits of proposals for development before local authority planning committees
5.05  Economic benefits of development are already material considerations taken into account in deciding planning applications. The performance of planning authorities should not be a matter for legislation. Generally, this form of tinkering is almost invariably counter-productive.
o Nationally significant infrastructure projects – allowing developers who wish to include housing within major infrastructure projects to apply for consent under the nationally significant infrastructure planning regime
5.06    It is possible to argue that housing affordable to local people and key workers is part of necessary infrastructure. However, this could be achieved through a ministerial statement rather than a change to the law in respect of the infrastructure planning regime.
6.         Summary

6.01    Most if not all of the provisions of the Bill discussed above are examples of a government's failure to understand the systemic nature of the planning and housing system and the very effective role that can be played by the relevant Ministers.  It is likely that the Communities Secretary and Planning and Housing Minister have a greater knowledge of these systems than the Treasury which seems to be the main driver of change.

6.02    The very contentious and legalistic nature of the planning system requires long periods of stability to operate in a fair and effective manner. Perceived failures to achieve government objectives should be addressed by the Ministers in ways consistent with the existing statutory regime and the National Planning Policy framework.

6.03    Priority should be given to supply-side policies that would provide a better balance between the size of housing and households that is a much fairer and more efficient way of meeting housing needs. 

6.04    Although it would be a relatively simple matter for the relevant ministers to expedite the desirable growth in self/group-building and co-housing (see NPPF para 50), if there must be legislation, it should include detailed definitions (eg incorporating this kind of housing into quotas of “affordable housing") and place obligations on planning authorities and developers to reserve appropriate land on allocated and permitted sites.

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