Since the financial crash of 2008 there has been unrelenting media coverage regarding the housing crisis within the UK, and the continued failure of the market to meet the Country’s housing needs. Despite Local Authorities having increased the number of major residential Planning Permissions which have been granted by 59% in five years, as well as Private Housebuilders having increased the number of homes being built, we are still not reaching the widely accepted 300,000 homes required per annum to meet the identified housing need.
Is land-banking to blame?
The media has often lazily placed the blame for under-delivery on the ‘villainous’ Housebuilder, with claims of land-banking, stalled sites and slow build out rates. The focus has consistently been on how Local Authorities can legally ‘make’ the house builders complete sites and at the rate of delivery requested. The Home Builders Federation (HBF) has consistently made the point that land banking does not occur and that just 4% of land owned by Britain’s larger home builders has an implementable planning permission but is still awaiting a start on site. This raises the question that, if land-banking isn’t to blame, then what is?
It has always been obvious to those of us within the development industry that an allocation or even a planning approval is not a guarantee of delivery, let alone a quick one. NLP’s ‘Start to Finish’ Report published in November 2016 identified that on average it can take 3.9 years for sites to start on site from submission of the first planning application and significantly longer for sites of 2,000+ dwellings. The NLP report followed a Hourigan Connolly national study which had already identified the significant timescales involved with bringing such sites forward. Developing land is complex and there is a plethora of reasons why a site which on paper appears ‘deliverable’ within five years, can take much longer in reality. It is therefore fair to ask, does allocating just enough land to meet a Local Authority’s Objectively Assessed Housing Need (OAN) result in boosting significantly the supply of housing?
Is there a simple solution?
In March 2016, the report by the Local Plans Expert Group (LPEG) to the Communities Secretary and Housing and Planning Minister answered this very question, and identified that there needed to be a clearer and more effective mechanism for maintaining a five-year supply. The following change to the NPPF was subsequently recommended:
“…local plans should make a further allowance; equivalent to 20% of their housing requirement, in developable reserve sites as far as is consistent with the policies set out in this Framework, for a minimum fifteen-year period from the date of plan adoption, including the first five years….”
The gap between permissions granted, and dwellings delivered, which was identified by LPEG Report, was referred to within the Housing White Paper published in February 2017. The White Paper identifies that more than a third of the new homes granted planning permission between 2010/11 and 2015/16 have yet to be built. Though the White Paper supersedes the LPEG Report, and includes several references to ‘making more homes available’, the recommendation for an additional 20% allowance in land allocations within local plans did not materialise.
How big is the gap between permissions granted and completions?
Though the Government may not have listened to LPEG’s recommendations many other organisations are drawing attention to the gap between permissions and completions. The Shelter ‘Phantom Homes’ Research Briefing issued in July of this year considered the shortfall between planning permissions and completions. It can be concluded from their research that not allowing for lapse rates within the local plan process is linked with a shortfall in overall delivery.
Savills have also recently completed a report entitled ‘Planning to solve the housing crisis’ which identified that residential consents reached 293,000 in 2016, but completions were only 210,000. Thus, identifying a lapse of 29% between consents and completions. One view could be that the controversial 20% further allowance recommended by LPEG is not high enough to guarantee delivery, based on this evidence.
The general consensus across these research papers, including the Housing White Paper itself, is that identifying and approving sufficient land to meet a Local Authorities OAN is not resulting in the delivery of enough homes to realise the OAN. This leads me to ask the question whether solving the puzzle of under-delivery could be as simple as allocating more housing?
Where does this leave us?
Identifying a surplus of housing sites may be the common-sense and simple approach to meeting housing need, and the theory is evidently gaining attention within several development circles. However, the concept is yet to transfer to policy and those Local Authorities that wish to avoid the application of a 20% buffer to their allocations can continue to do so.
The Secretary of State for Communities and Local Government published their consultation ‘Planning for the right homes in the right places’ on 14 September 2017. The paper focusses heavily on the Government’s proposed standardised approach to the calculation of OAN, and the issue of the substantial gap between the number of homes granted planning permission and the number of completions is discussed within Paragraph 128. Again, the recommendation put forward by LPEG fails to be included. In the hole where this policy could be, is question 19, which states:
“having regard to the measures we have already identified in the housing White Paper, are there any other actions that could increase build out rates?”
Could the reason why the Government is not listening to its own experts be as simple as the fact that housing development remains unpopular with voters? Only time will tell if politicians are ready to listen to the experts and find a solution which will assist them in the momentous task of meeting housing need, or if this latest consultation is another step further away from the sensible solution identified by LPEG eighteen months ago.
If you would like to discuss housing delivery, housing targets or the promotion of particular sites please contact the office on 0161 300 3476 or email: info@houriganconnolly.com