One of the secrets to consultancy, I learnt, is to answer a question before it is asked and the release tomorrow by MHCLG of the net additional dwelling data for 2023/24, which Neal Hudson has already predicted does not look pretty for the South East (see below), may very well prompt Ministers to ask why there has not yet been an increase in applications for new homes.
Were that question to be asked of me this is what I would say...
Firstly, the proposed changes to the standard method and the Grey Belt proposition are, in my humble opinion, ‘game changers’. There is a sophistic argument to be had about whether the presumption has actually been strengthened pursuant to the 2012 iteration, but, regardless, it will be triggered in many more LPAs than is the case presently and Grey Belt, a tightening here and a clarification there, is a route to securing consent on sites years earlier than might otherwise be the case.
Whilst the 50% affordable Golden Rule may have spooked some parties with applications in train, any organisation with a strategic land portfolio will have been reviewing it as soon as the NPPF emerged to see how each of the proposed changes in the NPPF, and LPA's responses to it vis a vis the transitional arrangements, would affected the specific strategy for securing consent on each individual site within it.
Four months on, those organisations will have completed those reviews, but the changes still need to be formally confirmed (Grey Belt, especially) and LPAs still need to submit or not submit local plans before the buttons on the planning application dashboard can be pressed with absolute confidence.
Those buttons might include, for example, the need for a landowner to agree a change in strategy (most option and promotion agreements include provisions for owners to be updated regularly, to agree onward strategy, and to review all formal submissions).
That approval process might include the need for a legal opinion from leading counsel and there would be little point soliciting such an opinion until the NPPF was finalised.
Further, whilst there is a base level of technical material that is instructed in order to undertake a site appraisal prior to the exchange of a contract, and then further ‘visioning’ work to demonstrate to a LPA and a local plan inspector that a site is ‘deliverable’, the amount of further material to support a planning application can be substantial. There may be a need, for example, for ecological surveys that cannot be undertaken until the Spring. The fact that this work is also very expensive also leans prospective applicants towards waiting for the draft NPPF to become the actual NPPF.
On the cost front, one wonders too if, as the presumption started to soften a little while ago, offers for strategic land at that time may have been based on promotion through a plan rather than an application ahead of one. This is less risky obviously (or at least should be...) and so, perhaps to seal the deal, bidders may have agreed to a lower promotion spend cap as a result (the amount of planning spend that can be deducted in the final analysis – promoters like this to be as high as possible, landowners like it to be as low as possible). It may be the case that where applications are now being contemplated ahead of a local plan instead that promoters need to renegotiate spend caps to take into account the appeals that would not (should not…) be necessary where an allocation has been secured.
All of this relates, of course, to sites with a development partner in place. If the new NPPF convinces hitherto reluctant landowners to accept that now might indeed be the time then they will need to instruct an agent to market their site and first agree and then exchange a contract for it's onward promotion. That process itself could take, conservatively, at least a year.
The NPPF could and should precipitate an increase in applications for new homes, but that is likely to be from next spring and into the summer. That though, of course, is only a third of the challenge. Those applications then need transacting (the flood risk sequential test is back in the news this week, for example) and builders then need to be able to get onsite (there seems to be a rise, for example, in Grampian conditions relating to occupancy pending water companies upgrading sewerage treatment plants).
Perhaps more importantly the NPPF must precipitate an increase in applications for new homes because otherwise Ministers will be prompted to ask some much more probing questions.
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