The new planning framework
Successive governments have introduced repeated and wide ranging reforms to the planning system all with the headline that the revised system will be faster and easier and will result in the much needed delivery of new homes. Despite this, the promised reform to 'fix our broken housing market' still seems some way off.
From 5 March until 10 May 2018 a new draft NPPF was released for consultation with the stated aim to ''transform planning policy' and deliver "the right homes in the right places".
The revised NPPF seeks to focus on outcomes achieved by local authorities in their housing delivery targets. The Government rightly wishes to scrutinise not just the number of housing units consented to within a borough but the number of homes actually delivered. This is to be monitored through the new standardised housing delivery test which is to be measured against a council's housing requirements. If delivery falls beneath 95%, local authorities will be required to prepare an action plan to assess the causes of under delivery and identify actions to increase numbers in future years. If delivery falls beneath 75% then the presumption in favour of sustainable development will be triggered and the planning application can then be judged against the NPPF as opposed to the local plan. This means local policies restricting development will be given significantly less weight in the decision making process and, in theory at least, lead to a greater number of permissions being granted.
Although the greater focus on delivery is to be applauded, housing delivery and the granting of planning permission are inextricably linked. Anyone involved in obtaining planning permission, and particularly in London, will know that one of the biggest delays in having permissions granted is often down to disagreement on site viability and the underdelivery of affordable housing. This has been exacerbated since the introduction of CIL and Mayoral CIL which being non-negotiable seek to squeeze additional blood from the same stone.
Within the draft NPPF, viability receives a cursory mention. Firstly, paragraph 34 declares that as well as local authorities' plans needing to set out the contributions expected in association with particular sites and types of development, plans should also set out circumstances where further viability assessment may be required for determining individual applications. Secondly, paragraph 58 states that no viability assessment should be required for an application where the proposed development complies with all the relevant policies in an up-to-date development plan. Where one is required, it should be publicly available.
While the NPPF may be short on viability detail this is addressed via revised planning policy guidance (PPG) which was released on the same day as the NPPF. The draft PPG represents a radical shift in that it seeks for viability assessments to be incorporated into the plan making stage meaning every site should be assessed for viability in this stage of the process.
In a system which is chronically under resourced and with a number of planning authorities not yet even having published a local plan the suggestion is that using a typology approach to group sites with shared characteristics such as location, use or size, average costs and values can then be used to make assumptions about how the viability of each type of site would be affected by all relevant polices. It seems unrealistic that any other than the most capable and motivated plan makers will have the capability to engage with landowners, developers, infrastructure and affordable housing providers to secure evidence on costs and values to inform viability assessment at the plan making stage. Given that, in the absence of evidence a site should not be allocated, this policy may actually have the effect of reducing the number of sites coming forward.
More notably, the draft PPG suggests that it is important for developers and other parties buying land to have regard to the total cumulative cost of all relevant policies when agreeing a price for the land. The price paid for land is not to be seen as a relevant justification for failing to accord with relevant plan polices. This is particularly relevant given the recent Parkhurst Road Limited decision where a High Court judge has backed a north London council in its refusal of permission for a 96-home scheme because of a lack of affordable housing on the basis that the developer had overpaid for a site. It seems that viability appraisals will no longer be a method by which additional land value can be sought at the expense of affordable housing.
Bringing viability into the plan making stage appears rather fraught given lack of site and development specific information which may lead to broad brush appraisals. Additionally given the substantial amount of time spent negotiating viability appraisals in the current application and appeals stages of the planning process, and the very complex nature of these negotiations which are analyses based on complex valuation principles, this process is likely to be time consuming and costly for local authorities to undertake.
Equally, if site viability is to be defined in the plan making process, and site value to be determined by policy requirements, there is a real risk that sites will simply not come forward if they prove to be financially unviable. Landowners in the past have simply held onto their assets waiting for the system to change. The suggestion of a two year time limit to implement consents is unlikely to assist delivery. With the detailed CIL assessments required to obtain reliefs that need to be undertaken early on in the process and the complexities of discharging reserved matters and pre-commencement conditions, planning permissions are likely to lapse before they can be implemented. Far from streamlining the process, the requirements seem to place an even greater burden on councils and developers.
If a site does not offer a reasonable return then developers and their funders will simply not take the risk. The reliance on the private sector to deliver a public sector duty in the form of social housing is a failing model. Arguably, there needs to be a complete shift in mind set on delivery of housing as opposed to constantly attempting to change the system, placing ever more burdens on local authorities and costs on developers. It will be surprising if these reforms achieve the delivery targets needed without more radical intervention.