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Legal landscape: Will the housing white paper deliver?

With public sector resources scant, private sector cooperation is critical to unlocking new funding for housing, say Tim Willis (pictured) and Matthew Stimson of Shoosmiths LLP

Following extensive pre-publication publicity, press launches and media leaks worthy of a Hollywood blockbuster, the government finally unveiled the much anticipated and somewhat delayed draft housing white paper (HWP), on 7 February 2017.

The HWP is a clear statement of intent by the government to fix what it now accepts is a “broken housing market.'

As such the government has reiterated its commitment to build at least one million homes by 2020 (or circa 200,000 per annum since 2015). The difficulty here, however, is that even this ambitious target will struggle to keep pace with current housing demand, which requires circa 250-275,000 new homes to be built per annum. To put this in context, only 190,000 homes were built in 2015/16 and the average build rate since the 1970's is 160,000, so the target remains an extremely challenging one.

This aspirational figure also now sits rather uncomfortably in the shadow of Brexit and the potential additional uncertainty over funding and financial and other resources that could arise from a long drawn-out exit from the EU.

So how does the draft HWP stand up to the challenges of housing delivery in this brave new world?

Well despite the big build up it sadly appears to fall short in terms of the detail and is struggling for new ideas or innovative thinking. Instead it follows a rather disappointing and obvious mix of 'carrots and sticks' first mooted in the 2016 Autumn Statement.

Predictably, it seeks to encourage partnership working and collaboration between central and local government and developers where possible whilst enabling government intervention where necessary. To a greater or lesser extent, however, those particular weapons are in the public sector armoury already.

"There is simply not enough money available to fund enough public sector housing to pick up the shortfall left by private house builders"

In fact the problem is a more basic one. There is simply not enough money available to fund enough public sector housing to pick up the shortfall left by private house builders. In addition, any new  public sector housing built for rent is at risk of being lost to the market in a very short timescale as a result of heavily discounted purchase prices being offered to tenants under the “right to buy/acquire” schemes.

Added to this is the obvious pressure on the public purse at present resulting in rolling cuts to key services and local planning authority budgets and staff numbers. The government itself also has wider demands on resources as it pushes on with HS2 and responds to the pressures and challenges arising from a struggling NHS.

It follows that public sector engagement with and the cooperation from the private sector is not just desirable but critical if it is to unlock new sources of funding to finance all types of housing development.

To be attractive to private sector developers and investors though, schemes that they fund will not only need to be viable but profitable. That in turn means that the government and local planning authorities will need to make tough choices (and be realistic), when it comes to the extent to which Section 106 obligations and CIL requirements can be imposed.

It is therefore of little surprise that the HWP includes the government’s proposals to review Section 106 obligations and CIL later this year. Hopefully, this will introduce more flexibility to a system which can stall, delay or in some cases prevent housing schemes coming forward.

Limitations of proposals

In terms of other matters, the HWP identifies a number of central themes and objectives which the government wants to address, including:

  1. Concerns raised by developers, linked to the perceived delays and inefficiencies of the current planning process
  2. Issues arising from delays and uncertainties with the local plan process
  3. How to drive forward and deliver consented development schemes
  4. How to deliver more public/private homes at an affordable rent
  5. Measures to boost the reuse and redevelopment of brownfield land and increase density of development in urban areas.

"What the HWP does is provide the government with the opportunity to produce positive sound bites in response to the housing crisis"

However, while the HWP then seeks to put forward a number of proposals for addressing these issues, there is little which was not previously in the public domain and what is unveiled is not of any great substance in terms of moving matters forward.

What the HWP does do of course is provide the government with the opportunity to produce positive sound bites in response to the housing crisis and how the government intends to tackle this as indicated above. This was evidenced by minister for housing and planning, Gavin Barwell, stating in one radio interview that “…you cannot live in a planning permission…”.

There are though still an unfortunate number of elephants in this particular room when it comes to the physical “delivery” of housing ready for occupation.

In essence these are not purely 'planning' related and cannot easily be dealt with by changes to planning policy and process. These are legal and physical impediments to securing final built development which cannot be resolved by securing an early planning permission or introducing measures which compel developers to implement and/or complete development by a certain date.

They include:

  • impediments to delivery as a result of third party land interests or complex title arrangements including land in multiple ownership issues or land held in trust, etc.
  • issues over financial viability and delays as a result of unrealistic requests for financial and other planning obligations (including CIL)   
  • linked to this is the developer’s ability to access sufficient funds for construction of the development
  • the availability of suitably qualified contractors to build the homes required
  • accessibility to construction materials (in fact Persimmon Homes has invested in its own factory to avoid delays in delivery of bricks)
  • the developers own commercial assessment of 'the market' and demand within that market
  • a potential purchaser’s ability to access finance/mortgages for the potential purchase of their home
  • legal challenge to proposals and or delays in securing planning permission on appeal. 

The trouble with green belt

The overall availability of developable sites is also not assisted by a lack of desire on the part of the government to engage in any public debate on the future of green belt land. To the contrary, the government’s stated intention in the draft HWP is to continue to protect the green belt from development unless there are “exceptional circumstances”.

Inevitably, that decision is a lost opportunity to have a sensible conversation about updating green belt policy. Critically, is that policy still fit for purpose in its current form for a 21st century planning system which advocates a 'golden thread' of sustainable communities and development?

"There is clearly a need for a further conversation about exactly how central government can intervene financially to unlock and or kick start 'difficult' brownfield or green field sites"

That tension between green belt protection and the drive for sustainable development is brought into sharp focus by the fact that the most sustainable land in planning terms (for example, access to trains and other transport links), is often located in the green belt.

In addition, it may also not satisfy or bear any resemblance to the reasons for its original green belt designation; yet developers are forced to 'leapfrog' green belt land and build in less sustainable areas further away from existing facilities or their place of work.

Building on more brownfield sites is not the answer to this issue either, as there are potentially clear physical, legal or commercial impediments to such development, including land contamination or the site being located in an area of low demand.

In the absence of any relaxation to green belt planning policy, therefore, there is clearly a need for a further conversation about exactly how central government can intervene financially to unlock and or kick start 'difficult' brownfield or green field sites, as the case may be.

Importantly, and for the reasons given earlier, that is not something that can be done easily or at all at a local level. It is highly unlikely that, without additional direct government funding or help from other private finance initiatives, local councils will be able to raise the significant new funding required (or re-allocate adequate existing funding needed), year on year to address any funding deficit.

"Delivery is key here and that will rely heavily on co-operation between landowners, local authorities, professions and other institutions"

These are just some of the fundamental legal, financial and commercial issues which can contribute to a reduction in the supply of housing land coming forward for development. Ultimately, these are external factors that cannot be addressed adequately or at all by the issue of government statements or a change in planning policy or the planning process itself.

The fact that the target time taken for permissions to be issued can be reduced, or the time for implementing planning permission shortened, will clearly not achieve 'delivery' of physical housing on the ground even if it increases the number of permissions granted overall. To end where we began, that would be 'La La Land'.

Delivery is key here and, as the government rightly accepts, that will rely heavily on co-operation between landowners, local authorities, professions and other institutions. To that extent it is vitally important for key stakeholders to engage in the current consultation process on the draft HWP which will close on 2 May 2017.

Tim Willis and Matthew Stimson are members of the planning team at Shoosmiths LLP

Photo | Shutterstock


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