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Briefings

Member Briefing:Lyons Review published

Date: 16/10/14

Lyons Review published

The Labour Party has today published the report of the Lyons Review of housing supply. Sir Michael Lyons was tasked last year with presenting to the Party a plan for developing a policy framework to deliver 200,000 homes per year by 2020.

The report calls on the next government to develop a clear national target for housing delivery, moving beyond the 200,000 target for 2020 to look at the next 20 years. In all, the report includes 39 recommendations covering all manner of subjects of interest to the industry. The main points raised in the report are summarised below.     

Our submission to the review process highlighted the need to support small and medium sized house builders most threatened by the cost and complexity of the planning and regulatory system and through regular engagement with Lyons and the review team we have sought to present the realities of the house building industry.

The creation of this review by the Labour Party and the focus on greatly increasing the number of new homes being built is very encouraging and HBF has welcomed the report. We will now fully digest the recommendations and discuss with members before engaging with Opposition frontbenchers and policy advisers to ensure that any eventual Labour policies that arise from these recommendations are positive and workable and that the industry has the appropriate input into their design. 

Main points of the Lyons Review

‘Use it or lose it’

Whilst acknowledging that current land banks of large house builders are greatly reduced compared with the pre-recession figures, the review has devoted considerable attention to strategic land banks and the role of land options in the market.

The report recommends giving councils the power to levy a charge equivalent to council tax if land allocated in a plan with or without planning permission is not brought forward within five years. This should be applied only where land is voluntarily put into the plan and can be demonstrated to be deliverable and should be accompanied by a mechanism for appeal.

Meanwhile, the report suggests streamlining and strengthening CPO powers and reducing the lifespan of a planning permission from three years to two years with higher fees applied when renewing an expired permission. It also says that the definition of commencement of a development should involve more substantive work taking place on site.

To ensure greater transparency in the land market it is suggested that the Land Registry should open up land ownership information and make it a legal requirement to register land option agreements, transactions and prices.



Housing Growth Areas

New Housing Growth Areas are proposed. Local authorities would have the ability to designate such areas and then ‘issue a call to landowners to pool or sell their land or transfer it as an equity stake in a joint venture’. Landowners that did not want to co-operate could be subjected to reformed CPO powers.

Once the land was assembled, the authority would seek a lead partner with joint responsibility for master planning, parcelling up land and outlining the type and timescales for development. The development partnership would offer plots to a range of builders with housing associations, developers and others submitting bids which would be assess on price, quality and deliverability of the scheme.



New Homes Corporations

The review suggests allowing local authorities across a SHMA area to request the creation of locally led New Homes Corporations to operate as delivery agents. The corporations would:

  • Be created under statute and involve all key actors including LEPs
  • Agree 10 year contracts with the Secretary of State on the basis of demonstrating robust governance, firm investment and delivery plans
  • Be directly accountable to local communities
  • Have a particular focus on stalled sites which have been allocated in Local Plans
  • Have priority access to enhanced incentives and support for advanced provision of infrastructure
  • Receive delegated development control powers for large sites



Brownfield First

In spite of an acknowledgement that previous experience of national brownfield policies had led to ‘unintended consequences’, the review says that ‘the principle of brownfield first is right’. As such it is recommended that the NPPF be updated to establish a Brownfield First policy with a sequential test applied to development.



Skills

Lyons suggests that with regard to skills, the sector, led by CITB, coordinates strategic investment in apprenticeships and develop a proactive policy to increase diversity in the industry.

Local skills boards for house building, potentially under the auspices of LEPs, should bring together relevant interests, including training providers and schools, to take a long-term view on local skills needs in the industry.

Further reflecting HBF’s submission to the review, the report discusses the role of the industry in improving the perception of the sector amongst young people and suggests doing this by taking a more proactive role in schools and colleges.



Viability

To reduce scope for different interpretations of viability, the review proposes definitive guidance on the subject be issued. This would include clear identification of the ‘uplift arising from the grant of planning permission’ while allowing the landowner to ‘receive a reasonable return’. In addition, an “open-book” approach to negotiating site specific viability is advocated in the report.



Affordable housing and Section 106

Proposed changes for a minimum threshold of 10 units for affordable housing S106 should be reversed, the report argues and a new arbitration service for S106 negotiations should be introduced.

The report also recommends a return to the PPS3 definition of affordability in place of the definition introduced with the NPPF which included affordable rent products.



Community Infrastructure Levy

The report looks at the restrictions on pooling Section 106 contributions for both strategic and mitigating infrastructure on large sites and concludes that such restrictions should be removed.

The review proposes a comprehensive review of CIL to consider reforms needed to ensure that it is effectively capturing funding for infrastructure. Options would include:

  • Analysis of the impact of cumulative changes to regulations and the process of testing through examination
  • Assess the impact of CIL exemptions for affordable housing, self-build and charities
  • Appropriateness of proportions of CIL devoted to parishes and neighbourhoods



Streamlining the planning process

Lyons uses the report to back the current Government’s proposals to introduce set timescales on planning authorities to sign off planning conditions and the ‘deemed discharge’ of conditions where an authority fails to comply.

Acknowledging previous attempts to deal with developer frustrations at the time, cost and complexity inherent in the planning system, the report recommends the introduction of “redline” applications for sites of fewer than 10 units. This would establish the principle of development and require the builder to provide a plan of the site alongside a short statement justifying the design and addressing likely impacts. This is aimed at reducing the burden and risk of planning applications.

The report advocates greater use of masterplanning and Planning Performance Agreements for large scale developments and recommends that the HBF work with the Local Government Association and others to promote best practice guidance on the effective use and discharge of conditions.



Planning fees

The report includes a recommendation that local planning authorities be given the power to set planning fees locally on a full cost recovery basis in return for guaranteed high levels of service. Authorities would be asked to provide a clear business case and demonstrate efficient and effective services. Charging schedules should also be developed in consultation with the industry. Within this framework, service and satisfaction levels would be regularly assessed and, for example, meeting agreed timescales for procession applications and discharging conditions would be a factor.



Local Plans

Reflecting comments made recently by the Shadow Housing Minister, Emma Reynolds, the report advocates a more consistent approach and stronger guidance for local authorities in developing Strategic Housing Market Assessments to produce more robust Local Plans.

Lyons also recommends introducing a requirement for all planning authorities to submit a Local Plan to PINS by December 2016. Under such a policy, if a plan is not produced or is deemed to be ‘wholly inadequate’ the Secretary of State would have the power to direct PINS to intervene and draw up an acceptable plan in cooperation with local residents, the local authority and other partners.

The length and complexity of plan-making is addressed in the report with a key recommendation to streamline the process. This would involve splitting the process into two stages. First local authorities would work together on the strategic elements, including housing numbers, major urban extensions, new settlements and strategic infrastructure. Once deemed sound by PINS the plan could be afforded weight in decision-making much earlier than at present. Detailed work on other policies in the Plan could then be approved later following a lighter touch second stage examination.

Other proposals include:

  • Removal of any flexibility in the requirement of a 15 year pipeline of land
  • A new emphasis on delivery of housing as well as land allocation within the context of the Local Plan. In cases of persistent under-delivery, the Government should then have the power to direct an increase in the buffer of identified land or create a New Homes Corporation
  • Local authorities should include in annual monitoring statements a report about their Local Plans’ compliance with NPPF and any issues that could trigger a review.



SHMA Plans and the ‘Right to Grow’

To give plans an emphasis more on functional housing market areas rather than administrative boundaries, groups of authorities covering more than one SHMA should be able to prepare a Strategic Housing Market Plan (SHMP) with statutory weight which must then be taken into account in developing and updating Local Plans.

To implement the ‘Right to Grow’ policies that the Labour Party have already proposed, the review proposes giving the Secretary of State the power to require authorities of a particular housing market area to complete a SHMP where existing rules and incentives to co-operate are not succeeding. The request for direction to undertake an SHMP could be prompted by one of the authorities, the local LEP, the planning inspectorate or the Secretary of State.



SMEs and ‘Help to Build’

The review endorses the Labour Party’s proposal for a Help to Build scheme to support SMEs in accessing lower cost bank lending supported by an Exchequer guarantee. As a further means of supporting SMEs, the report highlights the Delivery Partner Panel model used by the HCA and the GLA in London as a means of potentially offering smaller house builders access to public land.

Simplified, consistent standards would also help reduce costs for SMEs.



Standards and design

The review highlights the success of the Building for Life 12 standard and states that it should be referenced and encouraged by all Local Plans.

Space standards across all tenures should be implemented. Further work is required to establish what these standards should be and whether there is scope to provide local flexibility. The review reached this conclusions, it says, to ensure that ‘an increase in house building does not result in pressure to decrease the size of homes built’.

Standards for energy, water and security should be streamlined into a single set which is implemented through Building Regulations.

It is recommended that HBF works with the LGA, RIBA and TCPA to establish ‘a new kite mark for quality places reflecting the views of both original and new residents’.



Zero Carbon

The current government’s proposals to exempt small developments from the full zero carbon standards should be reversed, the report states.



Housing for Older People

The review says there is a distinct and growing need for a better supply of homes for older people. To this end, recommendations include:

  • Exploration of options for incentivising private sector investment in provision of homes with extra care
  • Encouragement and incentives for older people downsizing



Shared Ownership

The government, the review says, should promote a new offer for shared ownership which involves:

  • A single brand across the country with broad eligibility
  • A clear set of options including choice of home and staircasing
  • Flexibility to make it easier for households to move from one part-buy property to another
  • Garden Cities and Garden Suburbs 

The review promotes ‘a new generation of garden cities, garden suburbs and remodelled towns and cities’ which should be delivered by new Garden City Development Corporations. To unlock development, Treasury Guarantees should be considered.



Better use of public land

Lyons recommends giving clear guidance to local government and central government departments to promote investment of land as equity to secure long-term returns. A new target of the release of sites for 200,000 homes over the 2015-2020 period is also floated.



Local access to new homes

Ensuring that people can access homes locally is important in building support for new developments so the report states that councils should ensure that Local Plans reflect the right mix of tenures, with particular focus on increasing opportunities for shared ownership and homes affordable to typical first-time buyers.

In areas with ‘a public stake in new housing development such as Housing Growth Areas’, the report argues that local authorities should be empowered to ensure that a proportion of new homes are released and marketed locally before further afield.



Demand-side interventions

The report says Government should provide clarity over future demand-side interventions. This should involve giving the industry confidence that counter-cyclical demand side measures will be implemented when needed with future mortgage support targeted at first-time buyers purchasing at prices close to average house prices.



‘National spatial dimension’

A ‘national spatial dimension’ to the NPPF is proposed which would identify opportunities for substantial housing growth resulting from national infrastructure investment. This guidance would inform Local Plans and ensure that major national infrastructure decisions are linked to housing development.



Reforming the role of the HCA

Building on the HCA’s recent assumption of powers over public land, Lyons recommends ‘re-tasking the HCA as a national delivery agency’ to include acting as the sole agency for disposal of land with a focus on investing land as equity through local partnerships. The HCA’s investment arm, meanwhile, should be given a greater role in aggregating private investment in infrastructure and housing schemes.



Offsite construction

The review recommends the government take a more active role in promoting offsite manufacturing and should ask the Technology Strategy Board to explore how this can be accelerated.



London

In reference to the particular severity of the housing shortage in the capital, the report calls on the government to give a clear indication as to the extent to which London’s housing needs should be met within the capital or the surrounding local authority areas.



Consolidate housing funding as part of economic development funds

Expressing frustration at the myriad of funding streams with a housing focus, the report recommends inclusion of housing funds in a consolidated economic development fund and devolved to city and county regions.



Council house building

The review explores the pros and cons of raising the individual borrowing caps applied to local authorities for the purposes of investment in new housing. Its conclusion is that there should be provisions to raise individual caps depending on the business cases presented.



Other recommendations

Creation of a new dedicated cross-Whitehall taskforce to influence housing policy with the Housing Minister established as an attendee of Cabinet meetings

Establish a national Housing Observatory as a repository for key data, forecasts and analysis to assist policy making and evaluation