THE HOUSING WHITE PAPER WAS PUBLISHED ON TUESDAY 7 FEBRUARY 2017, TOGETHER WITH ANOTHER CONSULTATION DOCUMENT "PLANNING AND AFFORDABLE HOUSING FOR BUILD TO RENT" (KNOWN SIMPLY AS "BUILD TO RENT"). THE CONSULTATION PERIOD CLOSES FOR THE BUILD TO RENT CONSULTATION ON 1 MAY 2017 AND FOR THE HOUSING WHITE PAPER ON 2 MAY 2017. 

Those in the property industry are assessing whether and how to respond to the Government's proposals. Many summaries of the Housing White Paper and Build to Rent consultations have been produced by the property press and industry bodies for this purpose. This is our analysis of the main issues impacting the clients we serve.  

Although split into four distinct chapters, the White Paper amounts to a web of proposals intended to work together and with other legislation and policy such as the Neighbourhood Planning Bill and the National Planning Policy Framework (the "NPPF"). The amount of detail behind the proposals in the White Paper varies. In some places, clarification is awaited following further consultation, particularly on how the NPPF will be amended and how standardised approaches to assessment will be worked out. We also await the Government's response to the review of the Community Infrastructure Levy ("CIL") and section 106 obligations following its publication of the responses to the 2015 consultation; this is not expected until the Autumn Budget. However, there is greater clarity about other issues, particularly the intention behind them.  

The outcome that the Government seeks from the Housing White Paper and Build to Rent consultation is an increase in the supply of appropriate housing in England to meet demand. It proposes to achieve this by planning for the right homes in the right places, building homes faster and encouraging diversification of the housing market. 

1. Affordable housing

The Housing White Paper and the Build to Rent consultation paper published alongside it together clarify and expand what the Government means by affordable housing and how it should be delivered.

The Government recognises a need to promote the supply of housing for rent. It proposes to expand the definition of affordable housing to include homes offered for Affordable Private Rent, and is encouraging the growth of rental housing developments by institutional investors.  According to the Government's proposals, such developments should include 20% of private homes offered as Affordable Private Rent at a discount of 20%, in perpetuity. The Government is promoting 'family friendly' three-year tenancies, particularly for the Build to Rent market.

Flexibility in what type of affordable housing can be offered is extended to the proposed percentage of Starter Homes in developments. The Government has clarified the definition of Starter Homes, which will be available only to households with an income of less than £80,000 (£90,000 in London), will only be available to first time buyers with a mortgage, and will have a 15 year repayment period to reduce the risk of speculation. The Government is no longer proposing that all housing developments must include 20% Starter Homes, but instead proposes that housing sites should deliver a minimum of 10% affordable home ownership units and that there will be a general duty on councils to promote the supply of Starter Homes as part of a mixed package of affordable housing according to local need. 

2. Brownfield land and the Green Belt

National policy will be amended to encourage the release of more brownfield land for developments with a higher proportion of Starter Homes, including brownfield land within the Green Belt. There will also be a presumption that brownfield land is suitable for housing unless there are clear and specific reasons to the contrary.

Green Belt restrictions are not to be relaxed. The Government wants to retain Green Belt protection but improve transparency. The Green Belt "exceptional circumstances" test will be clarified in the NPPF to make it clear that Green Belt boundaries should only be amended where authorities can demonstrate that they have fully examined all other reasonable options for meeting identified requirements. And, where land is to be removed from the Green Belt, the impact should be offset, such as by compensatory improvements to the environmental quality or accessibility of remaining Green Belt land. When carrying out a Green Belt review, national policy will make clear that local authorities should look first at using any Green Belt land which has been previously developed and/or which surrounds transport hubs. 

3. Speeding up and securing delivery 

Working in partnership with LPAs

The Government is keen to diversify the building market, to encourage small and medium-sized builders, and custom builders, to come forward and develop more sites. There is much focus therefore on small and medium-sized, brownfield sites, and local planning authorities ("LPAs") are being asked to work with developers to look to the sub-division of larger sites.

However, the Government is also considering giving local authorities additional powers to play a more active role in land assembly, potentially including additional powers to tackle ransom strips. The Housing White Paper also includes proposals to relax current restrictions on local authorities' powers to dispose of their land, removing the requirement for local authorities to seek the Secretary of State's consent before disposing of housing land at an undervalue. This, combined with a proposal to enable local authorities to sell their land with the benefit of planning permission that they have granted to themselves, provides opportunities for speedier land assembly and construction start dates where working in partnership with LPAs. 

Transparency of land interests

The Government wants to improve the availability of land and property data, and intends to make land ownership and interests more transparent. HM Land Registry is to be modernised, and the Government is considering how the land register can show who owns, controls or has an interest in land.

Applicant's and site's track records

Local planning authorities may be able to take into account an applicant's track record of delivering previous, similar schemes for large scale site applications where the applicant is the major developer. Policy may also be amended to encourage local authorities to consider a site's implementation history when granting planning permission, to assess the likelihood of whether the development granted will be implemented in full. It is not clear how this would work and what the criteria for such assessment would be, or whether the assessment could take into account any arrangements for transfer or sub-contracting of the site.

Actual and projected build-out rates

Similarly, it is unclear how failure to meet projected build-out rates would be dealt with under proposals to amend the national planning application form to include information on estimated 'start dates' and 'build-out rates' for all proposals for (or including) housing development. Developers will also have a duty to provide local authorities with basic information in terms of actual and projected build-out progress in delivering the permitted number of homes after planning permission has been granted. The purpose of this will be to enable LPAs to more accurately predict housing supply rates against their housing need for the purposes of their five-year planning.

4. Local plans

The Neighbourhood Planning Bill currently going through Parliament, which requires all areas to have up-to-date plans, will strengthen the Government's ability to intervene where plans are not up to date, including directing a local planning authority to review existing plans, to prepare a plan or prepare a timetable for doing so. The Government consulted on this in February 2016 and has confirmed in the Housing White Paper that it intends to use powers of intervention where necessary. Local planning authorities will be required to review their plans at least once every five years, but they will also need to update their plans if their housing target cannot be justified against their objectively assessed housing requirements. There is to be a standardised approach to assessing housing requirements which will apply as the baseline for assessing five-year housing supply and housing delivery, although details of this are not yet available.

Local authorities are to be allowed to move away from a single local plan model. Instead they need to plan for "key strategic priorities". These will be set out in policy and will build on the NPPF to include an additional requirement to plan for allocations needed to deliver the area's housing requirement.

Local authorities are encouraged again to work together to produce Statements of Common Ground to meet their housing requirements. This is particularly relevant to Green Belt land, where local planning authorities are directed to amend Green Belt boundaries only where all other options have been explored and one such option includes asking other local authorities to help with meeting the identified requirement. Recent examples have shown limited success in this area, so it will be interesting to see consultation responses on this.

Finally, the Government has reaffirmed the Written Statement of 12 December 2016, which provides that where communities plan for housing through a neighbourhood plan, such plans should not be deemed out-of-date unless there is a significant lack of land supply for housing in the wider local authority area. This will be taken forward in the revised NPPF. Revised policy will ask neighbourhoods to demonstrate that their site allocations and housing supply policies will meet their share of housing need. However, to ensure that delivery rates across the area as a whole are satisfactory, this will not apply where the local planning authority as a whole is not delivering enough housing to meet its housing need. From November 2018, if delivery of housing falls below 25% of the authority's annual housing requirement, the presumption in favour of sustainable development in the NPPF will apply automatically (by virtue of the relevant planning policies being deemed out of date). This percentage will increase to 45% from November 2019 and 65% from November 2020. Thus it will become increasingly likely that local authorities are forced to accept development proposals if they do not reach their housing targets. 

5. Planning obligations and CIL

The report from the 2015 independent CIL review was submitted to the Government in October 2016, but was only published alongside the Housing White Paper. The White Paper does not include the Government's response to the report; it merely confirms that the Government will examine the options for reforming the system, including ensuring direct benefit for communities, and will respond to the independent review and make an announcement at the Autumn Budget. However, the White Paper notes that the review found that the current system of CIL and planning obligations is not as fast, simple, certain or transparent as originally intended.

The independent review recommends the replacement of CIL and the adoption of a new two-tiered approach to developer contributions constituting: 

  • a hybrid system of: (i) a broad and low level Local Infrastructure Tariff ("LIT"); and (ii) for larger or strategic development, section 106 agreements in addition to the LIT; and   
  • Strategic Infrastructure Tariff ("SIT") for Combined Authorities.

The report makes several recommendations, including that: LIT should be calculated using a national formula; there should be no exemptions; pooling restrictions for section 106 agreements should be removed; LPAs should be able to off-set LIT against section 106 and other requirements for their larger/strategic developments; and developers should be able to make infrastructure provision in kind. It also recommends that there should be close integration between local plan-making and planning for LIT/section 106 contributions.

The Government may make short term changes to section 106 agreements to address practical operational issues and may also consider longer term reform of dispute resolution.

6. Other areas to note

  • There will be a potential rise in planning fees of up to 40%, as local planning authorities will be able to increase fees by 20% from July 2017 if they commit to invest the additional fee income in their planning department, and authorities delivering the homes their communities need may also be allowed an additional 20% increase.

  • National planning policy may be amended to encourage local planning authorities to reduce the implementation period for planning permissions for housing development. The default period of three years may be reduced to two years, except where a shorter timescale would hinder viability or deliverability.

  • The Government is encouraging the use and development of innovative building techniques (such as off-site construction, modular and factory built homes), is looking at revising space standards, is keen to promote high quality design and is looking towards higher density development. It is also therefore looking at how daylight considerations can be addressed so as not to inhibit dense, high quality development.

  • The Government proposes to amend the NPPF to clarify that land should be used efficiently and to promote higher-density housing in urban locations well served by public transport, provide scope to replace or build over low-density use, and promote upwards extensions using the airspace above buildings.

  • The Government is looking to release surplus public sector land during the course of this Parliament for the purpose of home building, including through its new Accelerated Construction Programme which aims to build homes quickly through Government partnership with small and medium sized builders, contractors and others.

  • The White Paper refers to the £3 billion Home Building Fund launched on 3 October 2016, providing £1 billion short-term loan finance to small and medium-sized firms, custom-builders and innovators, and £2 billion long-term loan funding for infrastructure and large sites. There is an emphasis on supporting developments on brownfield land.

  • The Government is encouraging LPAs to consider how they can use their compulsory purchase powers, which are being reformed through the Housing and Planning Act 2016 and the Neighbourhood Planning Bill 2016-17, to promote development, particularly on stalled sites for housing. There will be further consultation and guidance on this.

  • The Government aims to speed up and simplify the completion notice process.

  • Small sites registers under the Housing and Planning Act 2016 will not be introduced at this time.

A White Paper generally sets out proposals for further legislation, so once the consultation responses have been received a Bill may be published for consultation in due course. The White Paper also discusses various other measures that will follow, including proposed amendments to the NPPF which we expect to see published in June.