Planning for the right homes in the right places

Responses to the government's consultation 'Planning for the right homes in the right places' have to be in by 9 November. This consultation arises from the White (and green) Paper of Feb 2017

https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/644955/Planning_for_Homes_consultation_document.pdf

There is an assumption that changes to the National Planning Policy Framework are necessary instead of ensuring that the existing (2012) version is applied accurately and consistently.

The Foreword states that the "root cause” of the dysfunctional housing market is “very simple… ",  and justifies changing policies to increase supply. In fact, the root causes will not be fixed unless until Government understands that the true causes are not as stated in the consultation but a combination of;

a) the unequal distribution of the housing resource,

b) the mismatch between the type of houses and the needs of smaller households, and

c) government funded financial incentives and stimuli on the ‘demand’ side (eg Help to Buy, Housing Benefit, equity sharing) and the bank of mum and dad.

The Independent and the Daily Mail came out against the PMs conference pledge to provide £10 billion  more to Help to Buy pointing out that this maintains or inflates house prices disadvantaging all those not on the housing ladder.

The Government is convinced that "…much-needed new homes should be built. In doing so it will help to tackle the lack of affordability of housing in this country.".   refusing to grasp that this will have minimal impact on affordability see Oxford Economics and Redfern Review (http://www.redfernreview.org/wp-content/uploads/2016/11/20161114-Redfern-Review-modelling-paper.pdf).  This is actually a convenient truth given the extreme difficulty in increasing supply sufficiently to impact on price.  Further evidence for a disconnect between supply and price can be found in All That Is Solid: How the Great Housing Disaster Defines Our Times, and What We Can Do About It (Penguin 2014) by Danny Dorling. A report prepared without a better understanding of the housing markets will not be a robust starting point for making important policy decisions. Recognition in later sections of the consultation that housing supply is not just about numbers does not appear to have resulted in the analysis accepting that increasing supply should not be the main objective or the finding the ‘root causes’ of the housing problem.

The belief that Help to Buy is a 'good thing' is shared by the Home Builders Federation  http://www.richboroughestates.co.uk/live/news/177a.pdf a report that pleads for an extension beyond 2021.  In fact the subsidy for home buyers goes into the pockets of landowners as developers continue to pay inflated price for development land in the expectation of being able to sell at inflated prices.  The HBF should be arguing to discontinue Help to Buy as lower prices would actually widen the market.

The consultation is an opportunity to explain why a Government concerned about affordability should privilege the role of Community Land Trusts. It  is irrational for anybody concerned about property prices not to utilise the resource of CLTs which are designed specifically to keep housing at affordable levels.

It has become clear that SHMAs have not been the 'objective assessments of need' required by the NPPF. The Oxfordshire SHMA conflated 'need' with' requirements', and 'demands'.  It made no assessment of the scale of under-occupation.  It projected overall need as what number of dwellings would enable a level of affordable housing to be provided (at 35% of the total) or to accommodate a level of job growth described by the Local Enterprise Partnership.  It had no methodology to deal with the substantial growth of elderly households. Despite these failings it was taken to be the OAN by local plan inspectors and, 5 years later, is only now being accepted by Government as having exaggerated the quantitative need by about a third!  The new methodology described in this consultation will repeat these profound mistakes if it is based on the same or similar wrong assumptions.

There is little prospect of the new methodology representing an improvement if based on the assumption at para13(c) "…The affordability of new homes is the best evidence that supply is not keeping up with demand.".  The best evidence (see Oxford Economics) is that increasing supply has very limited impact on price. (eg the problem with market signals acknowledged in the consultation at para 19).  The fact that supply has little influence over price is not overcome by using 'median affordability ratios'. These might be used to justify an increase in supply, but prices (including or especially  rents) will still not fall.  The consultation repeats the fallacy (eg para 24 "There is considerable economic evidence that demonstrates that growth in house prices (and therefore worsening affordability) is inversely related to the level of house building." – from the Barker Review ) when  a genuine concern about affordability would suggest support for CLTs.

The 'limited grounds' for a, "47…. plan-making body" to adopt a different figure of need based on an, " …evidence base [which] is robust and based on realistic assumptions, and that they have clearly set out how they have demonstrated joint working.", is very likely to include measures of under-occupation which would be likely to justify the building of a very much lower number of dwellings, but of the size to meet the real needs of both new and aging households, taking into account the impact of down/right sizing (and custom splitting).

Problems of achieving cooperation between councils will arise from some LPAs adopting the simplistic approach based on 'median affordability ratios' and neighbouring councils that understand the qualitative aspects driving the different housing markets.  The Government could review the justification for removing the regional planning level and have this reinstated to overcome all the complicated arrangements being described in this consultation.

The advice at para 89 to meet different housing needs is welcome but no change to the NPPF would be desirable or necessary in light of the existing and adequate advice at para 50 of the 2012 NPPF.  LPAs (and inspectors considering development plans and deciding appeals) should simply be reminded by the SoS that assessments of different needs must be carried out and be relied on as the number of houses would be significantly affected (ie reduced) by balancing the size of households and the size of houses. It is possible (but untried) to influence the price of a relatively discrete sector (eg small houses) were supply to be concentrated and significantly increased (see para 88).  However, the Government must be prepared to meet resistance from housebuilders to any measure that would cause a reduction in price.   Their business models rely on house price inflation that directly conflict with the need for affordable housing.

There is a mass of evidence from the APPG on the Housing and Care of the Elderly, HAPPI, and Housing LIN on the housing needs of the elderly that have been downplayed or ignored.  The needs of this sector probably exceed the capacity of the whole housebuilding industry to provide housing.  But, if addressed (including custom splitting) would meet all other housing needs.  No (re)definition for 'old people' is required in light of the understanding that most if not all new housing should simply be focused on small households – regardless of age.

It is important that housing allocations or policies provided within NDPs are within a range consistent with local plans – but also of the type required. The SoS needs to clarify the point about 'positive planning' that has been taken to mean that NDPs cannot be proscriptive.  What should be made clear is that so long as the NDP is consistent with the strategic policies of the local plan and likely to be ‘net positive’ it can seek to prevent development. 

Most of the made NDPs and those being prepared are in rural areas.  80% of people living in villages express a wish to move within the village compared to about 20% in towns/cities.   In these circumstances the SoS should make it clearer (than it already is) that phasing policies are appropriate.  Currently, allocations in villages are being developed in the early years of the NDPs so that more development would be required to meet local needs arising in the later years of the plan.

The problems arising from the issue of 'viability' could be sorted by relying on 'existing use value' as the starting point.  There should be very little disagreement about that, unlike the uncertainty caused by what was actually paid – which should be immaterial. Reasonable levels of profits for landowners and developers could be specified.  There should be limited scope for disagreement about what is 'necessary' infrastructure’  (including genuinely affordable housing at levels specified in development plans) to be provided in order for new development to fully mitigate its potential environmental and social impacts.   There is an urgent need to improve the energy efficiency of all new buildings which could have limited cost implications.  These are assumptions that can be relied upon in the public interest without the need to increase transparency and expose the particular circumstances (and financial models) of the parties.  The pressure placed on infrastructure is not linear, in the sense that it increases with each individual additional house or job.  There will be thresholds that new development will have to negotiate by making higher contributions to avoid an area becoming less sustainable for both new and existing residents and businesses. There was and remains no justification to remove the liability for infrastructure payments from smaller developments. Housing markets vary across the country but the objective should be for all necessary costs to be covered (or planning permission refused) which might not result in financial windfalls from s106.  Windfalls from inflated land values would only arise from inflated house prices.

Bearing in mind that a substantial proportion of the planning application fees are actually being paid to benefit the council tax payer and other agencies to participate in commenting and often objecting to the proposals, rather than the developer, who has invested in the preparation of plans most likely to meet the examination under s38(6), the SoS should exercise caution before allowing any increase. Developers already pay separately for pre-application consultations that assist in shaping proposals in the way preferred by the LPA.

The root of the problem of delayed  'build out' has been that housebuilders over pay for land/sites and rely on house price inflation to enhance profits. The Government has expressed a desire to see the rates of self and custom building to rise from about 7% of 150,000 to 20% of over 200,000.  This system of delivery through self building conflates supply and demand so that all permissions are closely followed by implementation (even if some projects take some time to reach the final completion).  Self and custom building can also provide affordable housing (ie less than 80% of the market price for an equivalent property). As long as this sector is free of CIL and other payments (ie 106) it should fall within the definition of affordable housing that is also exempt so that the LPA does not suffer a double loss.  Custom splitting would be an even quicker to increase the supply of houses of the right type and in the right place. LPAs should be expected to have Local Development Orders setting out the terms on which custom splitting would be permitted development (eg energy efficiency refit).

LPAs should be told to reserve land from both allocations and permitted sites for custom building by individuals and associations of individuals and community led housing.  LPAs that do not reserve land from larger sites or vigorously promote custom splitting (eg through policies and LDOs) have little or no chance of meeting their legal obligation to provide serviced plots to those on the registers (a rural district has offered 6 plots to the 256 households on its badly advertised register and a London borough has not been able to offer any plots to the 400 on its register).  The SoS should take this opportunity to avoid the likely failure of LPAs to meet the registered demand that would result in appeals or even mandatory injunctions.   It is foreseeable that without encouragement (ie for custom splitting and reserved sites) the Government might have to repeal the legislation and accept the abysmally low rates of self and custom building.

Custom splitting provides the ‘right homes in the right places’ that is the purpose of this consultation.  The resultant homes and gardens would fit the space requirements  of the two (or more) households involved. The homes would be where there are existing services and facilities.  If the permission to subdivide (express or deemed through LDO) is subject to an energy efficiency upgrade then the chances of fuel poverty is reduced.  The works can also upgrade accessibility for the disabled and elderly.  The financial arrangements can include sale, rent or rent to buy (as a form of equity release).