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Speeding up delivery: a quick take on the Housing White Paper

Daniel Bentley, 7 February 2017

Much pre-briefing in recent days about the government cracking down on developers culminated in a story in The Sun this morning saying that land would be seized if homes weren’t built quickly enough. The story was then tweeted from the official DCLG account, complete with its ‘fat cat developers’ headline, giving the impression that ministers really were on the warpath.

In the end, however, today’s Housing White Paper did not contain much that will trouble the major developers. It does highlight concerns (raised by us at Civitas, and others) about the growing gap between permissions approved and new homes built.

It points out that more than a third of permitted homes from the past five years have yet to be built, and it suggests that ‘it may be in the interest of speculators and developers to snap up land for housing and then sit back for a while as prices continue to rise’. This will raise hackles in the industry.

But in fact the proposals for speeding up development will not seriously interfere with much that the developers do. There are two main ‘sticks’ outlined:

  1. To require building work to start within two years rather than, as at present, three. This is described very tentatively (‘We are considering the implications of…’, and ‘except where [it] would hinder the viability or deliverability of a scheme’), such that it would be pretty easy to drop later. But even if the government does go ahead with this, it will not stop developers then drawing out development over many years, drip-feeding new homes at a rate that keeps the market buoyant, which is the real issue now. It isn’t starts they need to focus on, but completions.
  2. But they also want to speed up completions, and it is in this area that they will be encouraging local authorities to use compulsory purchase powers (as indicated in The Sun). This is good and encouraging but, as set out in the White Paper, this is to be used on sites that have ‘stalled’. Again, this is not really the problem, which is sites that are being developed, but too slowly to get ahead of demand and make any difference to the affordability of housing. What it might do, on the other hand, is make it more perilous for developers to go into a market downturn with land that they then cannot afford to build out. The government is looking at compensating the owners of CPO’d land with the cash raised from its auction – in a buoyant market this might not be a problem for them, as they get back the market price. But in a slump, as in the years after 2008, they stand to lose a lot of money – although I suspect this is not the scenario ministers have in mind for its use.

There is also a push for greater transparency about the ‘end-to-end’ process of development, which is welcome and may provide a degree of impetus for a few tardy stragglers. And local authorities are to be encouraged to consider the likelihood of a site being developed before they grant approval; this to discourage applications from landowners with no intention to build. But, as things stand, there is not much here that will be causing the major developers to have sleepless nights.

Intriguingly though, the White Paper seems to hold the door wide open to further consideration of compulsory purchase reform, saying ‘we… welcome any representations for how it can be reformed further to support development’.

On the other side of the ledger, there are also proposals to encourage councils to do their bit towards delivery. As the White Paper points, more than 40 per cent of councils don’t have a plan to meet projected household growth in their area. There is to be a new ‘standardised’ approach to setting projected housing requirements in each area, to stop local authorities watering down their commitments – which sounds very much like targets are going to be centrally set, one way or another. There are also measures to prevent ‘unnecessary’ delays in planning permissions holding up construction, although these are already before parliament in the Neighbourhood Planning Bill.

There is also to be a new delivery test on councils, so that they are measured not just against how many homes they plan for but how many are built. Those that fail to meet their requirements by significant margins will  have – the favourite punishment device of recent years – the ‘presumption in favour of sustainable development’ imposed on them. This is not a bad idea: there needs to be a sense that somebody is ultimately responsible for delivery. The trouble is, without the ability to get on and build these homes themselves (on this there was nothing*), and without the power to ensure developers build homes as required, councils might be the wrong people to carry the can.

* Later update: This might be unfair. The White Paper does state: ‘We want to make sure that [local authorities] have the tools they need to get homes built where the market isn’t coming forward with enough… We will work with local authorities to understand all the options for increasing the supply of affordable housing.’ So maybe there is a door ajar there. But councils would say that the crucial thing is to lift borrowing caps, which must be well-known in DCLG, yet there is no reference to that in the document.

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