Setting up the planning system to fail

Richard Bate, planning professional and long-time CPRE Kent supporter, delivers a withering analysis of government housing policy
How often have you heard it said that if only the planning authorities would release more land for housing, then the builders would build more houses and prices would come down?
This is the fundamental belief across the government at present. To the Treasury this is the simple law of supply and demand. Furthermore, given that the market knows best and the planning system gets in the way of the market, it must be right to pull the teeth of the planning system. This is what the government has been doing.
The inconvenient reality is that housebuilders do not wish to reduce house prices discernibly.
At the site level they anticipate particular sale prices for particular products, subtract construction costs, financing and profit, and bid for the land as a residual cost.
If house prices come down, profits erode and enthusiasm to build deteriorates. That’s what happens in recessions. Strategically, businesses do not deliberately flood their own market with the objective of reducing their own sale price.
Release more land for housing?
Giving builders more land may help them to supply more houses, but only up to a point.
Firstly, there has to be a market at their chosen sale price. The government has generously aided this process through Help to Buy and other mechanisms, enabling purchasers to pay inflated prices.
The Chartered Institute of Housing has shown recently that more government subsidy is being ploughed into home ownership than into ‘affordable’ (sub-market) housing to rent. It’s hardly surprising house prices don’t come down.
Secondly, ‘more land’ has ceased to be the solution, because builders can’t use it fast enough. Data commissioned by the Local Government Association shows that planning permissions each year far outstrip completions, that unimplemented permissions are rising, and the period from permission to completion is lengthening.
Third, the greater the choice of sites available to builders, the more they can cherry-pick the financially attractive ones – often greenfield sites rather than recycling the urban sites the planning system would largely prefer. So planning is already less effective.
How many houses?
Despite plenty of planning permissions, annual completions in all tenures are below the estimated growth of some 230,000 a year in numbers of households in England.
Government policy is for the completion of 300,000 dwellings annually, almost twice the number achieved in 2017. You can guess its preferred means of achieving this aspiration: release more land!
To arm-twist planning authorities, the government changed the rules on housing need and supply in February this year.
Housing need is to be calculated by a new ‘standard method’. This is based on the well-established (but still volatile) household projections prepared by the Office for National Statistics every two years.
The 2016-based projections were generally lower than the 2014-based projections, so the government has decreed that the older set will be used. Never mind not using the most up-to-date information if it is inconvenient to the outcome…
The housing need figure for each authority is then adjusted to take account of affordability (a specific ratio of house prices to incomes). All but about five local authorities in the country have affordability ratios above the threshold at which, under the government’s method, their housing need figures will be raised. (The local housing need figure is capped at 40 per cent above the average annual housing requirement set out in existing Local Plans.)
The policy therefore builds into planning practice the government’s belief that releasing more land will bring down house prices.
Unsurprisingly, there is no mention of the degree to which affordability ratios are expected to fall for a given stimulus of land supply. The number of plots that must be provided will generally be well above the number of dwellings needed to match the household projections, so land must be made available for households that are not projected to exist.
Each authority must supply land for at least five years’ worth of building at the required rate.
The government wants ‘concealed’ households to obtain more readily their own homes and households to form that have allegedly been deterred from forming by the shortage of dwellings.
This is more economic gibberish.
The concealed and unformed households are in that position because they cannot afford to buy or rent on the open market and would be unable to obtain subsidised housing, so their needs will only be met by greatly increasing the provision of sub-market housing, ideally traditional social housing.
That is irrespective of the volume of land release. The extra sub-market housing planned is far short of real needs.
Is it all planning’s fault?
The government’s coup de grâce is on housing delivery. Instead of being assessed for their land supply, local authorities will be assessed on the number of dwellings built in their areas. This is despite local authorities barely building any houses these days: that’s the task of builders.
When housebuilding rates in a local authority fall below 85 per cent of its assessed requirement, the government assumes (again) that this is for want of land. The authority will then be obliged to find a 20 per cent extra ‘buffer’ of additional deliverable housing sites.
On current figures, that affects 86 councils in England: in Kent – Gravesham, Medway, Swale and especially Thanet. The instruction to release more land for housing at repeated stages in the process inevitably threatens more countryside, with builders likely to play the system to achieve that result.
The government is setting up requirements that it must know are wholly undeliverable for many local authorities. When housing supply falls short of the new proposed ‘needs’, the government will berate the authorities and claim it’s all the fault of their planning practices.
That will make it easier to impose yet another round of significant weakening of planning powers – which are obviously getting in the way of housing the nation.
Meanwhile, the original culprit, high house prices, which could be tackled by policies on the ‘demand’ side rather than the ‘supply’ side, will go unchecked. Further, the government has announced its intention to fuel the fire with yet another extension of Help to Buy, beyond 2021.
Wednesday, May 1, 2019
- A number of important documents have yet to emerge. For example, a rigorous transport plan and a finalised air-quality assessment. The latter is critical given that allocations at Teynham will feed extra traffic into AQMAs.
- There seems to be no coherent plan for infrastructure delivery – a key component of the plan given the allocations being proposed near the already crowded Junction 7.
- There seems to have been little or no cooperation with neighbouring boroughs or even parish councils within Swale itself.
The removal of a second consultation might have been understandable if this final version of the plan were similar to that being talked about at the beginning of the consultation process. It is, however, radically different in the following ways:
- There has been a major shift in the balance of housing allocations, away from the west of the borough over to the east, especially around the historic town of Faversham. This is a move that raises many concerns.
- A new large allocation, with accompanying A2 bypass, has appeared around Teynham and Lynsted, to which we are objecting.
- Housing allocations in the AONB around Neames Forstal that were judged “unsuitable” by the council’s own officers have now appeared as part of the housing numbers.
- Most of the housing allocations being proposed are on greenfield sites, many of them on Grade 1 agricultural land – a point to which we are strongly objecting.
Concerns about the rush to submit the plan
The haste with which the plan is being prepared is especially worrying given the concentration of housing in Faversham. If the town is to take a large amount of new housing, it is imperative that the policies concerning the area are carefully worked out to preserve, as far as possible, the unique nature of the town. The rush to submit the plan is likely to prove detrimental.
As Swale does not have a five-year land housing supply, it is open to speculative development proposals, many of which would run counter to the ideas contained in the current plan. Some are already appearing. This is a common situation, and one that, doubtless, is a reason behind Swale’s haste.
Our overriding fear, however, is that this emphasis on haste is ultimately going to prove counterproductive. This is because it is our view that the plan, in its current form, is unlikely to pass independent examination. We are urging Swale to listen to and act upon the comments being made about the plan and to return the plan to the council with appropriate modifications before submitting it to the Secretary of State.
Essentially, this means treating the current consultation not as the final one but as the ‘lost’ second consultation.
The consultation ends on Friday 30 April and we strongly urge residents to make their opinions known if they have not already done so.
Further information