Budget 2017 – Chancellor unveils planning measures to tackle housing crisis
Reforms to encourage housing development were a key part of yesterday’s Budget. Important planning reforms were announced, aimed to ensure that land is adequately used to deliver the construction of 300,000 houses per year. It also contained infrastructure announcements, intended to support the Government’s growth agenda.
As expected, the Chancellor confirmed that such reforms will focus on the urban areas rather than on the Green Belt, a decision that would have been controversial among MPs.
As an overall, urgent, measure, the Chancellor announced a review to look at the gap between planning permissions and houses built. The review will be chaired by Sir Oliver Letwin MP and is expected to deliver an interim report in time for the Spring Statement 2018:
“If it finds that vitally needed land is being withheld from the market for commercial, rather than technical, reasons, we will intervene to change the incentives to ensure such land is brought forward for development, using direct intervention compulsory purchase powers as necessary.”
The review will be accompanied by a number of consultations for which there is no exact timeline yet.
1. Consultation on the use of brownfield and underused urban land:
• Minimum densities for housing development in city centres and around transport hubs, with greater support for the use of compulsory purchase powers for site assembly.
• Policy changes to support the conversion of empty space above high street shops.
• Policy changes to make it easier to convert retail and employment land into housing.
• A permitted development right to allow commercial buildings to be demolished and replaced with homes.
2. Consultation on deallocating sites from plans, aimed to strengthen policy to ensure that allocated land should be taken out of a plan if there is no prospect of a planning application being made.
3. Consultation on first-time buyer led developments, a new policy whereby local authorities will be expected to grant permission on land outside their plan (i.e. a new form of ‘exception sites’) on the condition that a high proportion of the homes are offered for discounted sale for first-time buyers, or for affordable rent, with the exclusion of the Green Belt.
4. Consultation aimed to ensure that land released for housing is put to the best use:
• Strengthening the Housing Delivery Test with tougher consequences where planned homes are not being built, by setting the threshold at which the presumption in favour of development applies at 75% of housing delivery by 2020.
• Expecting local authorities to bring forward 20% of their housing supply as small sites, in a move that intends to speed up the building of new homes and boost competition
• Speeding up the development process by removing the exemptions from the deemed discharge rules.
5. Consultation on land value uplift:
• Removing restriction of Section 106 pooling towards a single piece of infrastructure where the local authority has adopted CIL, in certain circumstances such as where the authority is in a low viability area or where significant development is planned on several large strategic sites.
• Speeding up the process of setting and revising CIL to make it easier to respond to changes to the market.
• Allowing authorities to set rates which better reflect the uplift in land values between a proposed and existing use. Rather than setting a flat rate for all development of the same type (residential, commercial, etc.), local authorities will have the option of a different rate for different changes in land use (agricultural to residential, commercial to residential, industrial to residential). All the protections for viability from CIL, such as the Examination in Public, will be retained.
• Changing indexation of CIL rates to house price inflation, rather than build costs, aimed to reduce the need for authorities to revise charging schedules.
• Giving Combined Authorities and planning joint committees with statutory plan-making functions the option to levy a Strategic Infrastructure Tariff (SIT) in future, in the same way that the London Mayoral CIL is providing funding towards Crossrail. The consultation will focus on whether CIL should be used to fund both strategic and local infrastructure.
Government’s intervention to accelerate local plan production
In line with the Secretary of State’s Statement on 16 November 2017, the Government will directly intervene in 15 areas where the local authority has failed to put an up-to-date plan in place to produce joint statutory plans and undertake an assessment of where they should be used.
The Statement set a deadline of 31 January 2018 for the affected local authorities to justify their failure to produce a plan, with Ministerial action to follow in the light of the responses received.
The Government will also develop a central register of residential planning permissions from local authorities to improve information on where permissions are held and progress towards them being built out.
Support to private sector and local authorities
In order to adequately support the private sector and local authorities, the Government will:
• Strengthen the ability of the Homes and Communities Agency, renamed Homes England, to use investment and planning powers to intervene more actively in the land market.
• Provide £1.1 billion for a new Land Assembly Fund, funded from the NPIF. The new fund will enable Homes England to work alongside private developers to develop strategic sites, including new settlements and urban regeneration schemes.
• Bring together public and private capital to build five new garden towns
• Invest a further £2.7 billion to the Housing Infrastructure Fund (HIF) in England.
• Support more strategic and zonal planning approaches through housing deals in the South East, where housing need is at its most acute. As a first step, the government has agreed a housing deal with Oxfordshire, part of its wider strategic investment in the Cambridge-Milton Keynes-Oxford corridor.
• Provide a further £630 million through the NPIF to accelerate the building of homes on small, stalled sites, by funding on-site infrastructure and land remediation.
The Budget statement also contains a raft of infrastructure announcements, intended to support the Government’s growth agenda, including:
• Significant investments for the Northern Powerhouse, including redevelopment of the Redcar Steelworks, and devolution deals for North of Tyne and (potentially) Liverpool City Region and Tees Valley.
• Support for the Midlands Engine, including a devolution deal for the West Midlands and a new Manufacturing Zone pilot in the East Midlands.
• The Cambridge-Milton Keynes-Oxford corridor is expected to provide 100,000 new homes in Oxfordshire by 2031, and a new station at Cowley, together with an ambitious plan to deliver the Oxford-Cambridge Expressway by 2030. The Government will also consider “significant new settlements” delivered by development corporations and private finance within the corridor.
• Local growth initiatives are also supported in the Thames Estuary, Cornwall will benefit from a new A30 link road to the A391 at St Austell (to support housing development), and Great Yarmouth’s Third River Crossing is to receive £98m for its delivery.
Michael Bedford QC commented: “There is much to welcome in these proposals but it is disappointing that the Government (once again) ducked the difficult challenge of addressing the Green Belt as part of the drive to achieve 300,000 new homes a year. Notably, many of the 15 local authorities in the South East on the ‘hit list’ for local plan intervention are heavily constrained by the Green Belt (including Basildon, Brentwood, Castle Point, St Albans, and Runnymede).
If the Government (or its consultants) has to produce local plans for these areas, there will be the opportunity to set out how the ‘exceptional circumstances’ tests, which were finessed in the Housing White Paper, are to be applied in circumstances where only the release of Green Belt land will enable the OAN to be met.
The CIL reforms will be controversial, especially the attempt to capture land value uplift where green field sites go from agriculture to residential, and there will be Article 1 First Protocol challenges in putting such a regime in place in areas that are already ‘ripe for development’. It is disappointing that the pooling restriction is not being removed in areas without CIL in place.
The Government has jumped on to the band wagon of ‘use it or lose it’ in terms of unimplemented planning permissions but it is unclear how such sites can be delivered, in the light of the compensation liabilities that will arise if there is a compulsory change of ownership.”
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