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February 9, 2017
Housing White Paper: A Snapshot
On Tuesday the Department for Communities and Local Government unveiled its housing white paper on “Fixing our broken housing market”. Prime Minister Theresa May writes in her foreword that “our broken housing market is one of the greatest barriers to progress in Britain today”, and the 106-page document outlines Government plans to correct this. The paper was presented to the House of Commons by Secretary of State Sajid Javid. It notes that the ratio of average house prices to average incomes had more than doubled from 3.5 1997 to just over 7.5 in 2015, and that, since 1970, house price inflation in Britain has far outstripped the rest of the OECD.
The report blames this on a failure of house building to keep pace with demands created by a growing population, creating “a market that fails to work for far too many people”. Since the 1970s, on average 160,000 new homes have been built per year, but it is suggested that the aim should be 225,000-275,000. The report outlines three essential failures: not enough local authorities are planning for the homes they need; house building is too slow; and the construction industry is too reliant on a small number of big players. To counteract this, it suggests that the government needs to plan for the right homes in the right places, build homes faster, and diversify the market. Additionally, since this will take time, it includes additional provisions for helping people now.
Planning for the right homes in the right places
The paper notes that not enough local authorities are planning for the homes they need, with over 40% of local planning authorities not having a plan that meets the projected growth in households in their area. In order to achieve this;
- The Neighbourhood planning bill will require all areas to be covered by a local plan, and give central government powers to intervene to ensure plans are put in place. These plans will be required to be updated at least once every five years.
- At least 10% of sites allocated for residential development in local plans should be half a hectare of less, and authorities should work with developers to encourage the sub-division of large sites, in order to support small and medium sized sites and rural communities
- The Government will consult on options for introducing a standardised approach to assessing housing requirements, applying this new methodology as the baseline for assessing five-year housing land supply and housing delivery from April 2018.
- Amend the NPPF to make clear that developments should make efficient use of land and avoid building at low-densities, and addressing the particular scope for high-density housing in urban locations. Also to indicate that the presumption should be that brownfield land is suitable for housing unless there are “clear and specific reasons to the contrary”
- Make clear that authorities should amend Green Belt boundaries only when they can demonstrate that they have examined all other reasonable options including brownfield sites, underused land, increased density and collaboration with other authorities.
- Local authorities will be allowed to increase planning fees by 20% from July 2017 if they are committed to investing the additional fee income in their planning department.
- HM Land Registry will include data on all publicly-held land in the areas of greatest housing need by 2020 with the rest to follow by 2025 and the government will consult on improving the transparency of contractual arrangements used to control land introducing legislation as soon as possible.
- The government will also attempt to increase transparency by releasing its commercial and corporate ownership data set and the overseas ownership dataset and publishing a draft bill to implement proposals for the reform of restrictive covenants.
Building homes faster
The report claims that the pace of development is too slow, with more than a third of new homes granted planning from 2010/11 to 2015/16 yet to be built. To fix this problem, the government proposes;
- To sharpen local authority tools to speed up the building of homes: by considering amending national planning policy to reduce the default expiry of planning permission from three to two years; and encouraging local authorities to make more active use of compulsory purchase powers to support the build out of stalled sites.
- The Homes and Communities Agency will also take a more proactive role in using compulsory purchase to support the development and regeneration of land and housing.
- From November 2018, if delivery of housing falls below 25% of the housing requirement, then developers will be granted automatic planning permission on sustainable schemes.
- This presumption will apply if delivery falls below 45% from November 2019 and 65% from November 2020.
- The government will review what more could be done to ensure utilities planning keeps pace with house building and closely monitor performance to ensure house building is not being delayed
- The government will also review the Construction Industry Training Board’s purpose, functions and operations in order to change the way training in the construction industry is supported to address the skill challenge.
- There will be more requirements for information about the timing and pace of delivery of new housing, to improve transparency on built out on a site by site basis. There will also be consultations on requiring large house-builders to publish aggregate information on built out rates
Diversifying the market
It is noted that the structure of the housing market makes it harder to increase supply, with Britain’s 10 largest house-building firms building around 60% of the country’s new private homes. It notes that this provides little incentive for innovation, with construction productivity only having grown 11% over the past 25 years – compared to 41% overall. In order to do this, policies include:
- Changing the NPPF so authorities plan proactively for Built-to-Rent and make it easier for developers to offer affordable private rental homes. Schemes that benefit from these changes will be expected to ensure that family-friendly tenancies of three years or more are offered to tenants that want them.
- The £3bn Home Building Fund will continue to provide £1bn of shot-term loan finance targeted at small and medium enterprises, custom-builders and innovators to deliver up to 25,000 homes with a further £2bn of long-term funding for infrastructure and large sites, unlocking up to 200,000 homes.
- There is an emphasis on supporting developments on brownfield land, such as the £291,000 loan to Westward (UK) Ltd to prepare 18 plots specifically for custom build in French Fields, a derelict industrial site close to St Helens.
- Targeting the £2.3bn Housing infrastructure Fund at the areas of greatest housing need, opening this capital grant programme to bids in 2017, with money available over the next four years – this is aimed at improving the co-ordination of public investment in infrastructure with housing development.
- Promote the National Custom and Self Build Association’s portal for right to build, and ensure the exemption from the Community Infrastructure Levy for self build remains in place while supporting custom build through the Acceleration Construction programme and working with lenders to ensure they increase their lending in line with consumer demand.
- Support local authorities and housing associations to build more homes
Helping people now
The report notes that safeguards need improving in the private rented sector and more work needs to be done to prevent homelessness. Since building the required amount of homes will take time, the government proposes that:
- The NPPF will be amended to introduce a clear policy expectation that housing sites deliver a minimum of 10% affordable home ownership units. This is a back-track on previous policy announcements to have “starter homes” making up 20% of new developments and having 200,000 new starter homes by 2020.
- The Autumn Statement announced an extra £1.4bn for the Affordable Homes Programme, taking total investment £7bn to build 225,000 affordable homes by 2021. Restrictions on funding have been relaxed so providers can build affordable rented homes as well as shared ownership schemes.
- Consultations will begin early this year to ban letting fees to tenants, and introduce banning orders to remove the worst landlords from operating and enabling local councils to issue fines and prosecute.
- Further consultations will investigate further abuses such as ground rents with short review periods and potential to increase significantly
- The Government is introducing a new statutory duty through the Neighbourhood Planning Bill to provide guidance for local authorities on how their local development documents should meet the housing needs of older and disabled people.
- The Government will also support the Homelessness Reduction Bill, which will place a duty on local authorities to take steps to prevent the homelessness of anyone eligible and threatened with homelessness.