The Housing White Paper – key themes
The Housing White Paper identified a range of challenges and objectives to drive forward additional development, attract more institutional investment into the market and assist individuals with accessing owner-occupier and rented housing.
Over 40% of local planning authorities do not have a local plan which meets the projected growth in households in their area. Local planning authorities are required to identify sufficient sites to meet their "objectively assessed need" (OAN) over the coming five years. Failure to demonstrate an adequate number of sites renders authorities' planning documents out of date and the National Planning Policy Framework's (NPPF) presumption in favour of development' arises. This has led to a rise in planning by appeal resulting in piecemeal and unsuitable development and crucially, a lack of clarity for developers.
The White Paper promises to "simplify and speed up the plan making process". The Government proposes powers of intervention to ensure local authorities are meeting their plan - making responsibilities. While this is not a new idea, it is a step in the right direction although it remains to be seen whether local authorities have the ability and resources to deliver.
The Government intends to provide further guidance on OAN to serve as a measure of future housing demand. As OAN underpins the calculation of five year land supply, this is crucial if they are to end the practice of setting artificially low housing targets. At present, local authorities can put forward their own methodology for calculating OAN but this will be replaced by a standard approach. Local authorities will be free to opt out from the standard method although the Government promises "incentives" for those local authorities choosing to adopt it.
A "housing delivery test" will highlight which local authorities are failing to meet their new homes targets. This will be implemented by a tiered mechanism and, depending on the extent of failings, will trigger a series of policy responses. For example, if delivery falls below 25% of housing requirement, the presumption in favour of sustainable development will apply automatically.
Concerningly the Government has stated its intention to shorten the default planning period to two years from three, to promote quicker turnaround times on authorised developments. It seems that the misconception that developers are sitting on sites remains and completely overlooks the lengthy delays caused in discharging pre- commencement conditions.
Many were disappointed by the Government's unaltered stance on Green Belt status. Local authorities will be told to exhaust "all other reasonable options" before considering Green Belt development. Where land is removed, the impact must be offset by "compensatory improvements" to the remaining Green Belt land. It is clear that, with the exception of the garden villages, the extra capacity for new homes is to be found on currently appropriate or brownfield sites.
In other positive news, the Government has suggested a return to garden towns and villages developed away from existing urban centres which have the potential to "deliver more than 200,000 new homes in the next 20 years". We hope that sites such as the planned development at Ebbsfleet could be a genuine opportunity to begin to deliver quality new homes on the required scale.
Starter Homes were introduced by the coalition Government as a small scale, publicly funded initiative to encourage development on brownfield sites. The policy ballooned to a manifesto promise that Starter Homes would deliver 200,000 new homes by 2020 and would be a mandatory requirement for the majority of new-build developments. Little progress on the wider delivery of Starter Homes has been seen but the White Paper has provided some clarity as well as signalling an overall change in approach. The most significant change is the move away from the mandatory 20% requirement of Starter Homes on newbuild sites. This has been replaced with a milder general duty on local authorities to promote Starter Homes. The relaxation of the mandatory requirement, combined with the amendment of the NPPF to allow brownfield land to be released for development when a higher proportion of Starter Homes is included, indicates that the product is being returned to its original purpose.
Starter Homes will be restricted to those with a household income below £80,000 outside London and £90,000 in London. This mirrors the eligibility requirements for shared ownership housing and places Starter Homes in the category of an affordable homeownership product. The previous product parameters, including the price cap appear to continue to apply, alongside the restriction to first time buyers aged under 40.
The other notable clarification is the 15 year repayment period to ensure that some, or all, of the discount shall be repaid on sale. This will be welcome to lenders who expressed concern about a shorter discount period impacting on the accuracy of valuations. Clarity is still needed on how and to whom the discounts will be repaid.
Build to rent
Having spent several years being eclipsed by home ownership, it was great to see build to rent encouraged and embraced in the White Paper. Three main points form part of the separate build to rent consultation:
- further emphasis on build to rent via planning policy;
- the possibility of a new affordable tenure - Affordable Private Rent;
- strengthening the expectation to offer 3 year minimum family friendly tenancies.
The new affordable tenure is the most controversial. Build to rent developers in some parts of the country will embrace the offer and it makes sense for institutional investors who dislike losing control of part of an asset. It makes little sense in areas where it was already recognised that planning viability calculations for build to rent could not support any affordable units.
The market will support another affordable tenure at the 80% mark. Our concern is the extent to which eligibility criteria will be applied on subsequent lettings outside any regulated environment with already overstretched planning teams.