Wednesday, 29 October 2014

If we're going to build enough homes 'speculative' cannot be a dirty word

It would be interesting to know (and perhaps I'll ask at my next public exhibition...) what winds our NIMBY friends up more. The prospect of the green fields over which they have enjoyed a view being used to house the next generation, or the prospect of 'speculative developers' benefiting from the process.
The phrase, speculative developer, is an emotive one and one that I imagine sub-editors quite like because it instantly invokes an image of someone in a pinstripe suit waving a fifty pound note around. Notwithstanding the plain and simple fact that people profit from the development process (and I do like to ask NIMBYs at exhibitions whether they would promote any land that they owned for development...) the two component words represent an amalgamation of two distinct players in the process.
The first word first. The dictionaries that I have just consulted define speculative in a number of ways, but common ones include 'a high risk of loss', and 'a venture undertaken on the chance of success, without a pre-existing contract'.
The promotion of land through the planning system is an expensive business. The work required to present a suitable, available and achievable urban extension at a local plan EIP (which might take a couple of years...), followed by the technical work required for an environment statement to support a planning application (which might take another year), in addition to liaison with all interested parties throughout both processes would probably require a budget of at least £250,000. If we were to add a public inquiry (and another year...) it would probably rise to £400,000.
Other definitions of speculative include 'to think about something and make guesses about it' and 'to form ideas or theories about something usually when there are many things not known about it'. Ten years on from the Planning & Compulsory Purchase Act and two years on from the NPPF local plan coverage remains poor (and local plan's consistent with the NPPF is worse). The rhythmic swinging of the political pendulum contrives to make the promotion of land through the planning system a risky business as well.
The result of this cost and risk, directly or indirectly, is a planning system that simply does not allocate enough land, which contributes to situation whereby farmland can become fifty times more valuable upon the grant of planning permission (and that's in the North West, the multiple in the south is considerably higher).
Here then we need to draw the distinction between speculator and developer, for whilst both might be making guesses when many things are not known about an emerging local plan, the motivations are very different. 
A housebuilder promoting land through the planning system will, of course, benefit from some discount in open market land value at the point of purchase, but when taking on the landowner's cost and risk it is predominantly in exchange for the security of medium or long term supply, and when planning permission is granted and the purchase is confirmed, homes get built. When a land promoter takes on the landowner's cost it is solely to benefit from the uplift in land value, and when planning permission is granted the land has to be sold to a housebuilder before homes get built.
The rise of the former has grown in recent years, which reflects some fundamental issues with our land and planning systems, but it is also important to note that it is an essential activity. To consistently build 240,000 homes a year means planning permissions being consistently granted for at least 240,000 homes a year, and the housebuilding industry cannot account for such an amount alone.
For as long then as the time-consuming, uncertain and costly nature of the planning system make in accessible to all but the wealthiest landowners, the promotion of land will be a speculative process undertaken by either promoter or developer. Are our NIMBY friends self-aware enough to spot their role in making the system so time-consuming, uncertain and costly? I'll put that, and the distinction between promoter and developer, to them when I see them next, but I suspect that they won't care...

Thursday, 16 October 2014

The housing crisis is a national one so why aren't new settlements of national significance?

Ah, Garden Cities. Like Matthew Le Tissier in an England shirt, everybody agrees that they should work, but nobody seems able to get them to. The Lyons Review has added to the growing body of support for the concept.

The evidence is clear that Garden Cities will not happen without local support and therefore we propose that the process will be locally-led with designation proposed by local authorities; proposals from other parties including LEPs or private developers could be valid where the support of local communities and alignment with local plans is clearly evidenced.

Regular readers will know that I regard locally-led Garden Cities as the planning equivalent of turkey-led Christmas dinners so I shan't dwell on the need for local support, but the suggestion that non-locally-led proposals should be clearly aligned with local plans demands closer inspection. Advice to the review has suggested that progressing through the Local Plan process is likely to take at least three years.

Three years? It is ten years since the Planning & Compulsory Purchase Act introduced the need for Core Strategies and still only 57% of LPAs have an adopted plan. It is almost inconceivable that a Garden City or indeed any new settlement of scale could fully align with a local plan process. Putting aside our NIMBY friends, the influence of local elections three years out of four, and squabbles between LPAs about cross-boundary housing requirements, new settlements are a leap of faith. Only a bold promoter would invest in a scheme to the point of indisputable deliverable without the confidence that an allocation will be forthcoming. By the same token, only a bold LPA would submit for examination a local plan that included a new settlement with indisuptable evidence of delivery. Boldness is a rare quality and leaps of faith are unlikely to stand up to the test of soundness.

That is the current square that needs circling, but since Mr Lyons goes no further than the extent of Government intervention proposed in the Garden City prospectus (identifying broad areas of search, setting criteria, and inviting proposals on specific sites), there is no sign that it will be circled any time soon.

What could the answer be? Well, the since the housing crisis is a national one why aren't new settlements of national significance in planning terms? This is a
call made in 2012 by an advisory panel chaired by Tony Pidgely to classify large housing developments as major infrastructure projects.

Under the Planning Act 2008, Nationally Significant Infrastructure Projects (NSIP) are approved by the Secretary of State via a single Development Consent Order, circumventing the need to apply to the LPA for planning permission. The Government extended the NSIP regime last year to cover certain business and commercial projects.

If the test for non-locally-led proposals is to be clearly aligned with local plans then, like Matthew Le Tissier in an England shirt, we may as well consign Garden Cities to the 'what might have been' file. Those planets will just not align. Adopting a local plan is akin to sailing a ship that is constantly buffeted by winds that change direction and threatened by rocks that are not marked on any maps. New homes, at scale, is surely a matter of national significance and new settlements are surely worthy of having their planning merits examined in a forum that offers some solace from the storm.

On Lyons, Localism & Leadership

Putting aside the terrible title ("Mobilising across the nation to build the homes our children need" sounds like a key words were thrown into a hat and picked out at random) and the glaring difference between an identified need for 243,000 homes a year and an identified target of 'at least' 200,000 homes a year, there is much to commend the Lyons Review. Despite though a promise of 'national leadership', the key issue for many practioners, the return of regional planning, has been sidestepped. 
On the plus side, of the ten key recommendations for planning reform summarised here by Planning Magazine there is merit in nine (I imagine that the policy of 'local homes for local people' was thrown in by a SpAd because I cannot think that any of the Commissioners felt that was a sound idea that is workable in practice).

A "national spatial dimension to the NPPF to identify opportunities for substantial housing growth created by national infrastructure investment" is a welcome, if tentative, step towards a national plan and Housing Growth Areas point councils towards the kind of enabling role that is more commonly adopted on the continent (see here notes of Nick Lee's (NJL Consulting) visit to Hammerby) .
The 'Use It Or Lose It' provisions have been widely trailed and certainly we at Barratt Development's have no issue with this in principle. As my colleague Philip Barnes said here, our business model requires that we get on site and start building as soon as possible. For the reasons I set out here though, in response to the charge that some planning permissions can 'sit in limbo', the shortening of a life of a consent would be a concern.
What is striking to me, however, especially given the trap that the current Government fell into, is that localism is still seen as being able to address one of the identified causes of the nation's inability to house itself, which is that not enough land is being brought forward. Apparently, the "artificial scarcity of land" is compounded by the fact that communities "do not have all the powers they need to ensure that homes are built in the places they want, and some are not taking responsibility for meeting local housing need."

Hmm. The planning system might restrict the use of land, but local plans should plan to meet objectively assessed housing need so land for development should not be scarce. Similarly, the local plan system provides all the power a community could possibly want to ensure that homes are built in the places it wants.
"Decisions about how and where new homes should be built should be taken locally by local authorities and their communities with the tools, flexibilities and devolution of funding needed, but on the basis of clear commitments that housing need will be met."
Well that sounds nice. Who could possibly object to that? Let us not forgot though what happened when housing targets in the RSS' were scraped and when regional planning was replaced by a 'duty-to-cooperate' (DtC)? This happened. As the report recognises, only 190 of 336 (57%) LPAs have adopted plans in place and though the reasons for this will be different in each case, I would wager that when are boiled down many of those reasons will actually be the same: an absence of political will. 
The deadline for the submission of a plan (2016), the requirement for a 'Strategic Housing Market Plan', the 'Right to Grow', and the simplified two-stage local plan making process all skirt around the fundamental problem, which is that the higher-than-local planning does not sit comfortably alongside the clamour to devole power to the lowest possible level. The Lyons remedy is, therefore, something of a fudge.
"Where there is a failure to cooperate across boundaries to meet needs in a housing market area, councils will be required to produce a joint strategic plan, with the Secretary of State having the ability to intervene and instruct the Planning Inspectorate to ensure that it happens. This will address the weaknesses in the current Duty to Cooperate and ensure that
NLP published a review of the NPPF's impact  earlier this year (here) and found evidence that cooperation with surrounding LPAs is becoming "an integral concern for many Inspectors’ reviews of Plans". Brandon Lewis told the Commons Select Committee examing the operation of the NPPF that ten local plans had failed the DtC so far. Why then wait for LPAs to fall out or to fail the DtC test? Why allow a plan, or more often than not more than one plan since it takes at least two to tango, to get all the way to examination before intervening. Why not a requirement to produce a joint strategic plan at the start of the process rather than the end? As the GMCA has already recognised, the higher-than-local nettle needs grasping. Others will no doubt follow, but we need more local plans and more planning permissions now. 

Interestingly, a recent YouGov poll has suggested that the public would actually support regional planning. Only 14% of 1,715 people surveyed thought that local councils should take decisions on the siting of new towns and major new housing projects. Will this be enough for the election strategists to reconsider their commitments to localism? That is perhaps a little optimistic, but it will hopefully provide food for thought. The Lyons Review states that  "the Government must provide long term political leadership by making housing a national priority", which sounds good, but including 'housing is a national priority' on an election pledge card is not leadership. Leadership would be to state that it is for the Government to approve the number of new homes within a particular authority, and for the authority and the communities within in to determine where they are built. That would not only be popular with planners, but it might just be popular with the public too.


Tuesday, 7 October 2014

On the time lag between consent and construction

Sitting here in limbo
But I know it won't be long
Sitting here in limbo
Like a bird without a song
Well, they're putting up a resistance
But I know that my faith will lead me on

Ok, Sam. I hear you say. What tenuous way have you found to crow bar a Jimmy Cliff song into a 50 Shades blog... 

Well. Barbour ABI, a supplier of data to the construction industry, has announced that, while 238,000 homes received planning permission in England and Wales last year (September 2013 to August 2014), only 129,000 units started construction in the same period.

This, it was stated, "indicates a significant disparity between planning permissions and builds starting on site". 24 Dash, a social housing and local government 
website, went on describe 109,000 planned dwellings as...
wait for it...
"sitting in limbo".

The suggestion that planning permissions can be implemented within the same calender year will raise a chortle from anybody working in the development profession who knows that planning permission is but a staging post on the long journey from inception to implementation. As my colleague Philip Barnes tweeted in response to the 24 Dash piece:

"What drivel. Do they know about Reserved Matters, pre-commencement conditions and the need to complete land purchase?"

Beyond that initial chortle though is the implication that this lack of awareness and misrepresentation of the data has for the status quo lobby. By that I do not mean leather-clad fans of Rick Parfitt and Francis Rossi. I mean those who Jimmy Cliff would describe as putting up a resistance. Those who think that the we can dance around Green Belt question and build enough homes by bringing vacant brownfield sites back into use and stopping those nasty volume house builders from land banking.

As Philip Barnes alluded to, there is no disparity between planning permissions and builds starting on site, but there is a time lag. If a planning permission is a detailed one and it has been secured by a builder with a controlling interest in the site then that time lag might be a short one and might be dependant solely on satisfying pre-commencement conditions. If though that planning permission is in outline then that time lag might be a considerable one. If an outline approval secured by a builder triggers an option to purchase the site then agreement will need to be reached with the owner on what the site's market value is. If an outline approval secured by a promoter triggers a requirement for the owner to dispose of the site for development then a marketing process will need to be commenced and completed. These are lengthy processes and, co-incidentally, the 129,000 homes identified by Barbour ABI as starting between September 2013 to August 2014 is almost identical to the 129,904 homes granted planning permission in England and Wales in 2009.

There is also a second time-lag to have in mind. In 2012, when the NPPF was published, 144,885 homes were granted planning permission so it has taken two years for the planning system to start to deliver anything like the number of permissions required. Even now, as the HBF has pointed out, whilst the overall number of plots getting permission is back to 2008 levels, the number of actual sites getting approval (and therefore actual new home sales outlets) remains low in comparison, which is an indication that in many cases it is bigger strategic sites that are coming forward.
So, 109,000 planned dwellings are not "sitting in limbo". They are working their way through a system that needs to deliver 240,000 permission each and every year if we are to build 240,000 new homes each and every year. That is something that should be borne in mind by either an old Government with an eye on an election or a new Government with a reforming mandate...