Only local government can break the developer’s strangle hold on the housing market

Copied from Sunday Telegraph Sunday 16 April 2017

Economic Agenda
The key to opening up the housing market

By Liam Halligan

For decades across much of the UK far too few homes have been built. The average house now costs almost eight times annual earnings – an all-time record. In London and the South East, of course, this ratio is even higher.

Much of “generation rent” is simply unable to buy a home. For millions of youngsters, even those with professional qualifications and good jobs, property ownership is an ever more distant dream. Ten years ago, 64pc of 25 to 34-year-olds, the crucial family-forming age group, owned their own home. In 2015, it was 39pc.

Three fifths of an entire generation of young adults is locked out of the property market. Over half of first-time buyers get assistance from “the bank of Mum and Dad”, rising to two thirds in the South East. The housing market, once a source of social mobility, has become a source of growing resentment.
Part of the solution, as we so often hear from our politicians, is to “get Britain building again”. Yet the March PMI construction index, which monitors the UK’s leading building firms, last week pointed to a housebuilding slowdown. During the final three months of last year, 2pc fewer new homes were completed in England than the same period in 2015.

Over 2016 as a whole, while the construction of 5pc more homes was started than the year before, the number of new-builds actually completed was 1pc lower. Just 168,000 new-builds came to market across the UK as a whole in 2016 – way below the 250,000 needed annually to meet demand. The UK has built, on average, 100,000 too few homes a year since the 2008 financial crisis. For decades before that, housebuilding was also too low. The last time we did build a quarter of a million homes was back in 1980 – and 113,000 of those were council houses. With council-housebuilding now barely a few thousand each year, the UK’s housing needs are largely reliant on the private sector.

Although few homes are built, the UK’s three largest developers still report surging profits. Barratt saw a 40pc rise to £295m during the second half of 2016 – despite completing fewer homes. Taylor Wimpey made £733m last year, up 22pc. Persimmon’s full-year profits were £775m, 23pc higher.

These three developers now build a quarter of all new homes, with the eight largest accounting for over half. Small developers, suppliers of two thirds of new homes in the 1980s now build less than a quarter. It’s hard not to conclude the big housebuilders, who control so much of the land granted planning permission, are deliberately building slowly, to keep prices and profits up. Waiting to build creates a shortage and means their extensive land holdings also rise in value.

The “big developers” have “a stranglehold on supply”, said Communities Secretary Sajid Javid, at last October’s Conservative Party conference. They are “sitting on land banks”, while “delaying build-out”. The House of Lords economic affairs committee has also weighed in, saying the UK housebuilding industry has “all the characteristics of an oligopoly”. These two statements alone, in my view, mean our competition authorities should take a closer look. The UK’s housebuilding giants deny any go-slow, of course.

When the long-anticipated housing White Paper was published in February, some of us were disappointed at the lack of bold measures. While admitting “the UK’s housing market is broken”, there was no mention of a previous pledge to build a million new houses by the end of this Parliament – so, by 2020. That’s probably because, in the words of Paul Cheshire, a professor at the London School of Economics and probably the UK’s top housing academic, there is “more chance of me living on the moon”.

‘It’s hard not to conclude the big builders are deliberately building slowly, to keep prices and profits up’

Since the White Paper was published, though, having followed various behind-the-scenes struggles across Westminster and Whitehall, I’m pleased to report a little-noticed development that may soon help unlock UK housebuilding.

This column has previously called for the creation of powerful Housing Development Corporations (HDCs) – state-initiated bodies that acquire land, grant themselves planning permission, selling on the land in parcels to private developers. The HDCs then use the “planning gain” from the sharp rise in land value to fund new schools, hospitals, roads and so on. If new housing means local public services are significantly enhanced, there would be far fewer objections from existing residents. Variations of this model have been successfully used in countries from Germany and Holland to Singapore and South Korea.
Under existing “New Towns” legislation, national government can set up HDCs – which, crucially, can buy land at “existing use” value. Arable land, for instance, is purchased as arable land, bringing a healthy upside once residential planning is granted – guaranteeing ring-fenced cash for extra local infrastructure. That’s far better than current “Section 106” negotiations, under which powerful housebuilders hold most of the cards and often spend less on local amenities than councils expect.

What’s new and interesting is that an amendment has been made to new housing legislation allowing local government, with central government permission, to set up HDCs. Councils can buy land for a large development, partnering with the private sector if needs be – but, crucially, the planning gain receipts stay at the local level.

Such cash can then be used to build local amenities or even give residents a council tax rebate, which should make housebuilding much more popular.

This could massively empower local government, while finally sparking the housebuilding the UK so desperately needs. “If councils are considering a sizeable development,” says an insider at the Department of Communities and Local Government, “they should give us a call”.

Nick Boles is from Venus, everybody else is from Mars

Below is a perfect example of how those in charge of our planning system, are speaking a totally different language from those raising major concerns about the impact recent changes to the system are having.

It’s not even a case of one speaking English and the other French, at least there’s half a chance of getting some understanding when you’re both from the same planet. Unfortunately, when it comes to the planning system, government ministers are from Mars and the objectors are from Venus. Indeed, some objectors might wish to suggest that ministers are (talking) from Uranus.

Anna Soubry, a Conservative health minister, wrote to Eric Pickles saying:

“planning inspectors are forcing local councils to accept more housing and build on Green Belt.”

“Notwithstanding the localism agenda, the National Planning Policy Framework, the abolition of the RSS [regional spatial strategies] and the repeated assurances of your good self and the Prime Minister”…………….. “local authorities like Rushcliffe and my own are unable to determine their own housing needs, set their own targets and protect their Green Belt land from development, ” she wrote to Mr Pickles.

Nick Boles, Eric Pickles junior minister for Planning replied:

Local councils are in control of their Green Belt boundaries, through local plans, which this Government put at the heart of the planning system to allow communities to deliver the right development for their local area.”

The key phrases here are “…unable to determine their own housing need…”, from Anna Soubry, compared to, “…to deliver the right development..”, from Nick Boles.

The clear lack of comprehension, let alone understanding, is that one wishes to reduce or even prevent development, whilst the other is saying, you can control where and what, but not if, or when. PINS understand this, but are currently being made the villains of the piece. All I can say is, don’t shoot the messenger.

Letter to Local Government First magazine – Localism and planning

Dear sir,
 
I was both interested and concerned to see First, Issue 542, peppered with complaints regarding the relationship between the planning system and Localism, some even calling for the abolition of PINS because, apparently, they don’t get it.
 
The Localism Act has introduced much confusion for the public when it comes to influencing the planning process.  Comments made by members of the public on recent contentious planning applications in my own area, clearly indicate a belief that the Localism Act increases the public’s ability to prevent development from going ahead if enough of them shout loudly enough.
 
This mis-interpretation of the Localism Act’s intentions is, in turn, increasing pressure on councillors to be more outspoken and forceful when speaking at committee.  This pressure is increased further by the Localism Act’s guidance to councillors that advises that they can somehow express an opinion and even campaign on a planning issue, without being accused of pre-determination!  I wonder if any high powered planning barrister would be prepared to defend a decision made by a committee populated by such campaigning members?
 
Whilst I very much sympathise with the councillors who made these comments and understand their wish to represent fully their electorates’ views, I’m afraid it is they, not PINS who don’t get it.  
 
There is a clear need for the government to restate its intentions when it comes to how the Localism Act can be used to influence the planning system – through the process that makes the policy, not the one that determines individual applications. 

 

My best regards, 
 
Councillor Roger Gambba-Jones, 
Planning Committee Chairman, 
South Holland DC, Lincolnshire

Grant Shapps – I wished you hadn’t said that!

Housing Minister Grant Shapps today warned aspiring Dick Whittingtons from across the continent not to come to London before making firm plans, with figures showing that more than half the capital’s rough sleepers come from overseas. GREAT!, SPOT-ON!, just what taxpayers want to hear a leading politician telling the large numbers of often drunken foreigners blighting our streets, open spaces, alleyways, park benches and just about any other space they can find.

He goes on to say:

“Non UK residents now account for over half the rough sleepers in our capital, so anyone heading here with tales of Dick Whittington in their head needs to realise that the streets of…..our …..cities aren’t paved with gold. Those arriving from beyond our shores to try and carve out a future in England should come with a thought-through plan to avoid the risk of sleeping on the streets.”

What a pity he didn’t also include the hundreds of towns, such as Spalding, also suffering from this blight

UNFORTUNATELY, Mr Shapps then added:

“This country has some of the best homelessness services for those who become destitute in the world,….”

What was he thinking? saying, STOP!, don’t come here if you’ve got no money, no job and nowhere to live, but if you do, don’t worry because we’re the best in the world at looking after you!

A timely warning to all of us

Here’s an interesting piece (for those of us interested in planning issues that is) from a planning website where local government planners pose questions to colleagues. It should serve as a timely warning to any council concerned about how to deal with neighbourhood plans. For those who don’t wish to read the whole thing, it’s all about neighbourhood plans being used by some parties as a way of promoting their own vested interests.

Having found no interest in these at all, suddenly here in (location deleted for obvious reasons) we’ve got 3 suggestions coming forward and need to act fast if we are to bid for CLG grant – assuming they could be runners.
What worries us is that they all propose housing developments that run counter to our recently adopted LDF (Core Strategy, Development Policies and Allocations DPDs) and therefore could fail at the first hurdle of not being in general conformity with the strategic policies of the local plan.
Being a large rural area we have a sustainable settlement hierarchy in our core strategy to promote development in the towns and larger villages with a good range of services, etc and we severely restrict new housing development elsewhere, including small villages. We now have a small village of 20 houses with a supportive parish council (covering a wider area) wanting to promote 2 dwellings for the families of well respected local business people, whose planning applications have previously been refused.
So only 2 dwellings – hardly a general conformity issue you might think? but it could be repeated and it undemines our strategy of delivering sustainable development, yet is probably in line with national policy.
What do you think? Anybody else proceeding with a neighbourhood plan for 2 dwellings? The other 2 proposed neighbourhood plans relate to secondary service villages with no housing allocations and tightly defined development limits and developers wanting to promote relatively large sites.
One sites was even rejected for allocation by the LDF Inspector last year. It’s not certain they would get 50% community support, but with a referendum not until the end of the process it’s an unknown and potentially a waste of money.
In one village several members of the parish council have direct interests in the site promoted, so presumably couldn’t vote. Is anybody else struggling over how to proceed with neighbourhood plans that don’t comply with the LDF and have PC members with vested interests?

Why can’t central trust local on NPPF goals?

Is it possible that government will ever trust local government, or are we to be condemned to a constant tirade of abuse from Eric Pickles, combined with the sham politics that is called Localism?

The NPPF is a major worry to many organisations concerned about caring for the green areas of this country (and not just the Green Belt I hope). Yet, despite all the detailed concerned being put forward by the experts, I think there are a few reasonable changes that could be made to overcome the vast majority of the public’s concerns at least.

The first of these would be to delete the statement that, where a local plan is silent, indeterminate or out of date, planning permission should be given. This requirement puts too much pressure on councils and will either see local plans being rushed through, or great resent being generated in the communities the government claims to want to empower, when development is imposed on them.

The second thing government should do, is delay the implementation of the NPPF, in order to give councils a sensible time period to deliver their local plans.

Third, government should make it a requirement for councils to produce an evidence based assessment of their local housing need. This in itself would not be any easy exercise, as a significant amount of local information and forecasting would be needed to achieve the required evidence base. However, once done, as well as placing a requirement on a council to deliver that housing, it would put that council in control and not the developers.

Of course such changes would suggest that government was willing to trust local government to deliver and with people like Eric Pickles in the government it’s difficult to see that happening.

Actions required not just fine words Mr Clark

Greg Clark gets more than his fair share of column inches in today’s Daily Telegraph, continuing to promote his already much criticised National Planning Policy Framework.

The minister demonstrates his myopic view of this issue with comments like, ‘I can’t think of a single place I’ve been to where they don’t want housing’. What he doesn’t tell us is where he is getting these rose coloured views from. My suspicion is, that it was either the Party faithful, who would never dare to question the minister who has honoured them with a visit. Alternatively, it was through orchestrated meetings with local landowners and developers, who already see him as the second coming and think the NPPF is his version of the Holy Bible.

Mr Clark is obviously a very clever man, but his naivety with regards with the public’s attitude to large scale development is writ large by the statements he makes on the subject. Although he has been elected and must therefore have a regular postbag with at least some of this correspondence relating to development proposals, it’s clear from his CV that he has never been a local councillor and therefore has never been at the sharpest end of the planning process. Also, his CV shows little in the way of proper jobs, with all of his ‘working life’ being spent in the rarified world of politics. A spell with the BBC as some sort of policy wonk hardly qualifies.

If Mr Clark had spent any time as a local councillor, he would of come face to face with ordinary local people, those who don’t own land or build houses, expressing real concerns, something he dismisses as NIMBYism, about the impact a development could have on their community. I don’t believe there’s anything unique about my experience of the less than enthusiastic public response when a new housing development is proposed. That response is magnified six-fold when that development is for affordable or social housing, just the thing Clark is claiming will be promoted by his policies and our communities are supposedly so desperate to see happen.

Having passionately promoted the merits of localism and how important it is for communities to take back control of how their area develops, Mr Clark goes on to reveal the actual limits of localism when it comes to the development process. Apparently, where a local council, having listened to the local people and written a local plan to reflect these views, attempt to avoid large scale housing development, they will be ‘directed’ to think again, as per the Eric Pickles’s version of ‘guided Localism’ no doubt.

There are however a couple of comments attributed to Clark that, if true, would offer me some hope, if only they were clearly refelcted in the NPPF. He talks of better design, greater individuality and, most significantly, a drive to eliminate the shoe box sized houses foisted on the British public, by our greedy development industry, since the second world war.

Unfortunately, his fine words do not appear to be supported by anything substantive in the NPPF. If my own local planning authority were to produce a policy requiring room sizes to return to their pre-war dimensions, would it gain the support of the planning inspectorate the first time this was challenged by a developer?

Mr Clark, If you want the public, not just the landowners and the developers, to turn your naive words into reality, you need to confirm to us that the quality of new housing is just as important to you as the quantity.