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...

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