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Briefings

Member Briefing: Productivity plan

Date: 10/07/15

Productivity plan

Fixing the foundations: Creating a more properous nation

The government today (10th July 2015) published its “productivity plan”. The full document can be downloaded here:

Building on the Budget announcements on Wednesday the document is divided into two sections; A: long term investment and B: a vibrant economy. The first covers issues ranging from taxation, transport, skills and infrastructure while Section B covers issues such as welfare and devolution and includes Chapter 9: Planning Freedoms and more houses to buy.

Whilst some of the items have been the subject of previous announcements this document sets out a series of initiatives which demonstrate how determined the Government are to see home building levels increase. Inevitably much of the detail is yet to be finalised and HBF will be fully involved in working with Government on all of these ideas in the months ahead. Many of the initiatives are drawn from HBF submissions to Government over the past year or so and thus we are generally positive about the direction of travel set out in the document.

This briefing focusses on those issues of most interest to house builders most of which are contained within Chapter 9.

Chapter 9: Planning Freedoms and more houses to buy 

The government is concerned that the UK has been incapable of building enough homes to meet demand. An excessively strict planning system can prevent land and other resources from being used efficiently. Government therefore intends to make further changes to the planning system to build on the extensive reforms that the last government made.

Releasing land for the homes people need

The government will take further action to ensure that local authorities put in place local plans by a set deadline to be confirmed before summer recess (21st July 2015). Where plans are not in place the Secretary of State for Communities and Local Government will intervene, to arrange for local plans to be written, in consultation with local people.

The government will bring forward proposals to significantly streamline the length and process of local plans.

The government will strengthen guidance to improve the operation of the duty to cooperate on key housing and planning issues.

The government will consider how policy can support higher density housing around key commuter hubs.

The government will consider how national policy and guidance can ensure that unneeded commercial land can be released for housing.

HBF Comment

The need for local plans in a plan led system is critical to bringing forward land for housing development and formed the backbone of our end to end planning reforms submitted to government in July last year. Government’s frustration with those local authorities who have not yet produced an up to date plan seems to have boiled over. Proposals to streamline the process and further guidance on the duty to cooperate are long overdue but quite how government will intervene to get plans produced remains to be seen.

A zonal system for brownfield land

The government has already committed to legislate for statutory registers of brownfield land suitable for housing in England. The government will go further by legislating to grant automatic permission in principle on brownfield sites on those registers. On brownfield sites this will give England a “zonal” system, reducing unnecessary delay and uncertainty for brownfield development.

The government will consider the case for additional compulsory purchase reforms to further modernise the system, and will bring forward proposals in the autumn.

HBF Comment

The details of both the register of brownfield land and how and the extent to which the principle of development of these sites can be developed is still awaited. The use of Local Development Orders (LDOs) on 90% of brownfield land was a target set down by the last government and we would expect to see a similar approach applied to this commitment.

The proposal does not seem to go quite as far as a “presumption in favour of brownfield development” which is what HBF has been recently calling for but, if the register is flexible and the detailed requirements not too onerous this will give much greater certainty for developers of brownfield sites.

One potential downside of the proposal which HBF will work hard to minimise is the assumption that all brownfield land identified on the register will be capable of contributing towards the five year supply of housing land merely because it is “zoned” for development.

Improving the planning process – ensuring planning decisions are made on time

The government wants to build on the recent improvements in local authority performance in making planning decisions on time.

The government will:

Legislate to allow major infrastructure projects with an element of housing to apply through the NSIP regime;

Tighten the planning performance regime so that LPAs making 50% or fewer decisions on time are at risk of being designated “poorly performing”;

Legislate to extend the performance regime to minor applications

Introduce a fast track certificate process for establishing the principle of development for minor development proposals and significantly tighten the planning guarantee for minor applications;

Continue to reduce net regulation on house builders. The government does not intend to proceed with the zero carbon Allowable Solutions carbon offsetting scheme, or the proposed 2016 increase in on-site energy efficiency standards, but will keep energy efficiency standards under review, recognising that existing measures to increase energy efficiency of new buildings should be allowed time to become established.

Introduce a dispute resolution mechanism for section 106 agreements, to speed up negotiations and allow housing starts to proceed more quickly.

HBF Comment

Delays in the planning process have always been at the top of the HBF list of things that delay housebuilding starts on site. Proposals such as the fast track certificate scheme establishing the principle of development should take us back to a process more akin to the “red line” applications of the past which will give greater certainty to enable development finance to be secured. HBF will continue to work on the details of the proposal with government and other bodies.

The last government’s de-regularisation target was for one in – two out and, although not specifically mentioned here we will seek to ensure that this mantra remains the case.

The announcement dropping the allowable solutions carbon offsetting scheme and not increasing on site energy efficiency requirements in 2016 is a positive reflection of the work HBF and the industry has done moving towards zero carbon homes. HBF will continue to will discuss with government how best to achieve its ambitions to increase the energy efficiency of buildings and ensure that the zero carbon agenda remains realistic and achievable.

Our end to end planning discussion paper drew attention to the problems associated with agreeing, producing and signing section 106 agreements. We supported this proposal in the recent consultation paper and will work closely with government and others to ensure a useable and effective process is established.

More devolved planning powers

The government proposes to devolve more planning powers to the Mayor of London, allowing him to call in planning applications of 50 dwellings or more.

The government will also work with the Mayor to introduce proposals to remove the need for planning permission for upwards extensions for a limited number of stories up to the height of adjoining buildings.

The government will also devolve new powers to the future Mayor of Greater Manchester and will bring forward proposals to allow the mayor to produce development corporations and promote compulsory purchase orders.

HBF comment

Devolution to city regions is one of the government’s flagship policies and the transfer of planning powers will need to be carefully managed in order to avoid duplicating national schemes and procedures.

Starter Homes and the Right to Buy

The government wants to deliver 200,000 starter homes by 2020 at a 20% discount for young first time buyers.

The government is bringing forward proposals to help deliver this commitment, which include:

  • requiring local authorities to plan proactively for the delivery of Starter Homes
  • extending the current exception site policy, and strengthening the presumption in favour of Starter Home developments, starting with unviable or underused brownfield land for retail, leisure and institutional uses
  • enabling communities to allocate land for Starter Home developments, including through neighbourhood plans
  • bringing forward proposals to ensure every reasonably sized housing site includes a proportion of Starter Homes
  • implementing regulations to exempt these developments from the Community Infrastructure Levy, and re-affirming through planning policy that section 106 contributions for other affordable housing, and tariff-style general infrastructure funds, will not be sought for them
  • putting in place new arrangements to monitor their delivery

The government will extend the right to buy to tenants of housing associations through the Housing Bill, to be introduced in this session of Parliament.

The government will refocus DCLG budgets on supporting low cost home ownership for first time buyers.

HBF Comment

The government’s Starter Homes initiative has been supported by HBF through the establishment of the register of interest. It should be noted that many of the essential details of the scheme are still missing from this announcement – for example, what is deemed to be a “reasonably sized site” which will have to include a proportion of starter homes. However, confirmation that such developments will not need to contribute towards affordable housing provision or tariff based infrastructure funds (such as CIL) is welcome.

There is a lot of detail to work out to make sure the scheme works for house builders and is targeted at achieving the government’s objectives. HBF will continue to engage with government over the proposed scheme in order to ensure that the scheme is practicable and effective.

Buy to Let

The government will restrict the relief on finance costs that landlords of residential property can get to the basic rate of tax. The restriction will be phased in over 4 years starting from April 2017.

Other measures

There are, of course, many other policies and proposals set out in the Plan, some of which may have tangential impacts on the industry. Issues such as establishing a national living wage for the over 25s, rollout of superfast broadband and investment decisions on transport infrastructure will all assist in supporting housing markets.

Perhaps the most significant is contained within Chapter 15: Resurgent cities, a rebalanced economy and a thriving Northern Powerhouse which sets out a number of proposals to devolve power and decision making to other parts of the Country, in particular the northern cities of Manchester, Sheffield, Liverpool and Leeds.

Conclusion

As ever with government announcements, much of the devil is within the detail and we will be working hard over the summer and the forthcoming months to establish the details necessary to ensure that the government’s proposals are implemented in a way that truly assists in the delivery of more housing.

Overall, the Productivity Plan is a significant step in the right direction but there is much left to be done.