After much press speculation and delay, the Secretary of State for Communities and Local Government has today published the Housing White Paper “Fixing our broken housing market” and its accompanying consultation. The consultation will run for 12 weeks until 2 May 2017.
The Housing White Paper was accompanied by a number of other housing and planning related consultation responses and further consultations, including the long-awaited report of the independent review into Community Infrastructure Levy (CIL), a consultation on the Build to Rent sector and the outcome of recent consultations on topics such as upward extensions in London and the implementation of planning changes.
The emphasis of the Housing White Paper is very much on the delivery of new homes and fixing England’s broken housing market. It contains a number of new measures addressing issues such as housing need assessment methodology, greater transparency in respect of land ownership, encouraging higher densities and upwards extensions, agreement on housing land supply on an annual basis, improving information on developer build-out rates and introducing a new housing delivery test, all of which are outlined in more detail below. The Housing White Paper also re-emphasises measures currently being brought forward under the Housing and Planning Act 2016 and the Neighbourhood Planning Bill.
Step 1: planning for the right homes in the right places
The Housing White Paper contains eight proposals to address planning for the right homes in the right places. These comprise the following:
- Making sure every part of the country has an up to date, sufficiently ambitious plan so that local communities decide where development should go Local plans and other local development documents must be the subject of a review at least once every five years and it is expected that they will be updated in whole or in part at each review. A local plan must be updated if the existing housing target can no longer be justified against the objectively assessed housing requirement, unless an authority has agreed an alternative assessment of housing need with the Planning Inspectorate (“PINS”). Changes are proposed to the National Planning Policy Framework (“NPPF”) to improve joint working by adjoining planning authorities on plan making matters. In particular, authorities will need to prepare a Statement of Common Ground explaining how they will work together to meet housing requirements (and address other cross-boundary issues).
- Simplifying plan-making and making it more transparent, so it’s easier for communities to produce plans and easier for developers to follow them Measures in the Neighbourhood Planning Bill will be implemented to ensure that every authority has planning policy in place. This will not require a single local plan, but the Government will set out certain strategic priorities for which each authority must have policies in place. The tests to assess whether a plan is “sound” will be amended and the evidence required to support a plan will be made more proportionate.
- Ensuring that plans start from an honest assessment of the need for new homes, and that local authorities work with their neighbours, so that difficult decisions are not ducked The lack of a standard methodology for identifying housing requirements is acknowledged as is the fact that this leads to extended debate in local plan examinations wasting time and money. The Government wishes to introduce a standardised approach for assessing housing need, which is realistic about future housing demands, in particular for the elderly and disabled. A consultation will follow shortly with a view to making changes to the NPPF to introduce a new methodology from April 2018.
- Clarifying what land is available for new housing through greater transparency over who owns land and the options held on it The Government wishes to improve access to data about land ownership, in particular details of option arrangements and restrictive covenants used to control land.
- Making more land available for homes in the right places, by maximising the contribution from brownfield and surplus public land, regenerating estates, releasing more small and medium-sized sites, allowing rural communities to grow and making it easier to build new settlements The NPPF is to be amended to require authorities to have a clear strategy to maximise the use of land in their area. Identified housing need must be accommodated unless other NPPF policies justify restricting housing development, or if the adverse impacts of meeting housing need significantly outweigh the benefits. The presumption for brownfield land is that it will be suitable for housing. The Government also aims to release surplus public land for 160,000 homes in this Parliament with a £45m Land Release Fund to support local authorities. A separate consultation paper is to consider how authorities can dispose of land with the benefit of planning consent they have granted themselves, and at less than best consideration, and any additional powers authorities may need to assemble development sites. Planning policies should support “windfall” sites and undeveloped small sites in housing settlements. Changes to the NPPF will support sites that create affordable housing for local people and encourage neighbourhood plans to allocate housing sites. Authorities should work with developers to sub-divide large sites and the use of Local Development Orders will be encouraged. The Government will explore New Town Development Corporations as well as garden cities, towns and villages to bring forward new settlements.
- Maintaining existing strong protections for the Green Belt, and clarifying that Green Belt boundaries should only be amended in exceptional circumstances when local authorities can demonstrate that they have fully examined all other reasonable options for meeting their identified housing requirements Where land is removed, compensatory improvements to the quality or accessibility of the remaining Green Belt should be secured.
- Giving communities a stronger voice in the design of new housing to drive up the quality and character of new development, building on the success of neighbourhood planning Neighbourhood planning groups are to have access to both Government funding to pay for support required in preparing plans, and housing requirement figures from their local planning authority. The NPPF will require that local and neighbourhood plans set out clear design expectations.
- Making better use of land for housing by encouraging higher densities, where appropriate, such as in urban locations where there is high housing demand, and by reviewing space standards Changes to the NPPF will require local plans and planning applications to avoid building at low densities where there is a shortage of land to meet identified housing need. Sites particularly suited for higher density in urban areas are those close to public transport, or which will replace low-density uses or where buildings can be extended upwards. The use of minimum space standards will be reviewed to ensure that new approaches to meeting demand and compact living models are not restricted.
Step 2: building homes faster
The Government is concerned that the pace of housebuilding in Britain is too slow, with a large gaps between local authority plans being developed, permissions for new homes being granted and those homes being built. A range of proposals to tackle delays in home building are set out in step 2, focused on greater certainty for local plans, provision of infrastructure and support for developers to build out more quickly:
- amending the National Planning Policy Framework to give local authorities the opportunity to have their housing land supply agreed on an annual basis and fixed for a one-year period Local authorities that have been unable to demonstrate a five-year housing land supply have faced a higher rate of appeals and increased costs and time dealing with arguments over whether a five-year land supply is in place. The proposal will allow local authorities and developers to agree each year whether a five-year supply exists (with further guidance to set out more detail on how five year land supply should be calculated).
- increasing nationally set planning fees and consulting on the introduction of a fee for making a planning appeal From July 2017 local authorities will be able to increase fees by 20% if they commit to invest the additional fee income to boost the capacity and capability of their planning department (with the possibility of a further 20% increase being considered by the Government for those authorities delivering the homes needed in their area). The Housing White Paper also suggests further consultation on the introduction of a fee for planning appeals, to deter unnecessary appeals but without discouraging legitimate appeals. • ensuring infrastructure is provided in the right place at the right time There are a range of measures to improve the delivery of new infrastructure with new housing in order to reduce delays, including: targeting the £2.3bn Housing Infrastructure Fund, which is open to bids later this year at areas of greatest housing need; requiring local authorities to identify development opportunities when strategic infrastructure investment is committed; and requiring local authorities to set out plans for the delivery of high quality digital infrastructure.
- improving information on build out rates provided by local authorities and developers The Housing White Paper proposes further consultation on requiring large housebuilders to publish aggregate information on build out rates as well as on a site by site basis; requiring local authorities to take the track record of major developers in delivering housing schemes into account when determining planning applications for housing development; shortening the timescales for implementing a planning permission for housing development from three to two years; and encouraging local authorities to use their compulsory purchase powers to support the build out of stalled sites.
- introducing a new housing delivery test to highlight whether the number of homes being built is below target From November 2017, a local authority will be required to publish an action plan if delivery of housing falls below 95% of the annual housing requirement and if delivery falls below 85%, local authorities must also plan for a 20% buffer on their five-year land supply; from November 2018, if delivery is below 25% the presumption in favour of sustainable development would automatically apply; from November 2019, the presumption will apply if delivery falls below 45% and from November 2020, it will apply if delivery falls below 65%. The majority of the planning related measures that the Government proposes to take are set out within Step 1 and Step 2 of the Housing White Paper. However, the Housing White Paper also includes a raft of wider measures aimed at securing the delivery of new homes, and the following is a summary of those measures.
Step 3: diversifying the market
The Government considers that the existing operation of the house building market is constraining supply due to the lack of competition and innovation. Its answer is to diversify the market to increase numbers of houses, quality and choice.
It will achieve this by supporting Housing Associations and Local Authorities to start building again: the Government has already announced funding worth £7.1bn via the Affordable Homes Programme. It has also promised clarity over future rent levels and, in return for this support, it expects Housing Associations and Local Authorities to build significantly more affordable homes in the immediate future.
The Government will encourage institutional investors, lenders and Capital Markets Participants to the private rental sector. It is offering a clear long term framework to support and encourage investment, particularly in the Build to Rent market. In return, the Government wants these participants to support development schemes to build new homes for the private rental sector ensuring that family friendly tenancies of 3 years or more are available. This is addressed in more detail below in the context of the consultation paper on Planning and Affordable Housing for Build to Rent.
The Government also aims to open up the market by supporting the growth of small to medium size builders including through the Home Building Fund and by using the Accelerated Construction Programme to introduce new contractors who can construct new homes more quickly. In addition, the Government is aiming to increase productivity by adopting innovative and efficient methods of construction to modernise the house building sector.
Step 4: helping people now
Steps 1 to 3 of the Housing White Paper will inevitably take time, so the Government recognises it needs to help people now.
The Government will look to do this by continuing to support people to buy their own home via the Help to Buy and Starter Homes initiatives, and it will invest in affordable housing via the Affordable Housing Programme.
In a planning context, the Government has committed itself to starter homes. Starter homes will be targeted at first time buyers who would otherwise be priced out of the market, and the Government intends to make clear through the NPPF that starter homes, like shared ownership homes, should be available to households that need them most, with an income of less than £80,000 (£90,000 for London). Eligible first time buyers will also be required to have a mortgage in order to buy starter homes to stop cash buyers, and there will be a 15 year repayment period for a starter home.
The Government is also committed to promoting transparency and fairness for the growing number of leasehold owners. It is keen to make it easier to rent a safe and secure property by preventing landlords abusing the system when letting dangerous and over-crowded properties, as well as making the private rental sector more family friendly by promoting longer term tenancies in schemes delivered by institutional investors and Housing Associations.
The Government will also be taking steps to assist the vulnerable who require support with housing and seeking to prevent homelessness by providing support to those at risk at an early stage.
As noted above, in addition to the Housing White Paper there have been a number of key developments for the planning industry. Three of these developments are discussed below.
A New Approach to Developer Contributions – A Report by the CIL Review Team (and associated DCLG Report)
The Government has published the report of the independent review of CIL, together with its response. The review into CIL, and its relationship with section 106 planning obligations, found that the current system is not as fast, simple, certain or transparent as originally intended.
The independent review stopped short of recommending the abolition of CIL, but it also rejected the do nothing option and minor reform. Instead, it has proposed a more extensive reform whereby there would be a twin track system to securing developer contributions. Under this system:
- all development would be liable for a Local Infrastructure Tariff (LIT), a low level tariff aimed at meeting an area’s wider cumulative infrastructure needs; and
- larger development, which requires direct mitigation to make it acceptable in planning terms or very specific major infrastructure on or close by the development including infrastructure delivered up-front, would be required to deliver site specific mitigation secured by a section 106 agreement.
In addition to the above, the review has recommended legislating to enable combined authorities to establish an additional Strategic Infrastructure Tariff (SIT) to contribute to major infrastructure. This would operate in a similar manner to the Mayoral CIL which has been applied in London.
As a result of the review, the Government has confirmed that it is exploring an improved and simplified approach to developer contributions, including ensuring direct benefit for communities, and the Government will make an announcement on any reform in the 2017 Autumn Budget.
In addition to the above, the Government believes there is scope to make changes to section 106 agreements in the short term to address practical issues in the operation of agreements. This will include consulting on standardised open book section 106 agreements, to reduce disputes and delays, and on how data on planning obligations could be monitored and reported on to increase transparency.
The Housing and Planning Act 2016 already includes provision for a section 106 dispute resolution process and the Government will be considering dispute resolution further, in the context of longer term reform.
Planning and Affordable Housing for Build to Rent – A Consultation Paper
One of the stated objectives in the Housing White Paper is to diversify the housing market and to encourage more institutional investors into the housing market. This is in response to the emergence of the housing market as an acceptable investment to the institutions. The Government’s aim is to attract major institutional investment in new large-scale Build to Rent housing.
As part of the wider measures announced by the Government today, a consultation paper on Planning and Affordable Housing for Build to Rent has been issued. This seeks to provide policy clarity for the sector.
The Government intends to re-align national policy to ensure that Build to Rent is considered by local authorities when assessing their housing needs, approaching their plans and making their development management decisions. The consultation paper also identifies the Government’s preferred approach to securing the rental status of Build to Rent schemes and addressing affordable housing in such schemes.
Rental Status: in practice, planning covenants have been used on Build to Rent schemes to ensure that the housing units delivered as private rent remain within the rental sector for a minimum period of time: the period that has emerged as a widely accepted standard is 15 years. However, the Government is not proposing to impose a standard covenant and instead favours the use of clawback mechanisms, secured by section 106 agreements, whereby arrangements for future payments etc. are secured in the event that the Build to Rent scheme is sold otherwise than as a rental scheme; and
Affordable Housing: the Government has also recognised the role that Affordable Private Rent housing has to play in the Build to Rent world, where the economics and management regime are different from build to sell. The consultation proposes that a minimum of 20 per cent of the homes in the scheme would be discounted and that the discount would be set at minimum of 20 per cent (relative to the local market). The Government would also require that the Affordable Private Rent housing is provided in perpetuity (subject to clawback) and that tenancies of three or more years should be offered.
To give effect to these proposals, the Housing White Paper confirms that the definition of affordable housing within the NPPF will be amended to specifically refer to Affordable Private Rent housing as appropriate for Build to Rent schemes.
Upward Extensions in London – Summary of Responses to the Technical Consultation
The Government, together with the Mayor of London, previously consulted on proposals to deliver more homes in London by allowing a limited number of additional storeys on existing buildings. Options that were consulted on to support such upward extension included a permitted development right or the use of either local development orders or development plan policies to support such development.
The Government has published its response to this consultation which confirms that there is support for the principle of upward extension, that there is the potential to deliver more homes by increasing density on brownfield land and that the policy option will be taken forward in relation to the whole country, and not just London.
The Housing White Paper confirms that the policy option will be secured by amendments to the NPPF to make it clear that plans and individual development proposals should address the particular scope for higher-density housing in urban locations, for example by upward extension.